Great telecom transaction in Poland: Netia acquires Dialog and Crowley

2011-10-10



Netia, the largest alternative fixed-line operator in terms of both revenues and subscribers, has acquired a fixed services provider, Dialog, and a radio operator, Crowley Data Poland. The acquisitions’ combined value topped PLN 1bn (€226.7m). However, the takeover still awaits for approval from the Office of Competition and Consumer Protection (UOKiK), which should be given by the end of June 2012. Otherwise, the transaction will expire.

In accordance with the agreement signed between the operators, Netia is going to pay PLN 944m (€214.6m) for Dialog and PLN 100m (€22.7m) for Crowley Data Poland. The negotiations were provided in September 2011. Along with a 100% stake in Dialog, Netia will overtake its two subsidiaries, Petrotel, a Plock-based operator servicing PKN Orlen, and Avista Media, a specialised contact service centre.

Dialog is to be taken over by the largest Polish copper miner, KGHM, which as part of disposing of its telecommunication assets, sold its share in Polkomtel, a Plus mobile network operator, earlier this year.

In Dialog’s acquiring were also interests in Hawe (a Polish fibre-optic network operator) and MNI (a group of telecom and media companies).

The acquisition will strengthen Netia’s position as the second largest fixed-line telephony provider in Poland, and accelerate the consolidation of the country’s fixed-line services market.


New telecom group in numbers

With Netia taking over Dialog and Crowley Data Poland, the new telecom group emerged in the Polish telecom scene, whose revenues this year are estimated by Netia at PLN 2.25bn (€512m).



By taking over Dialog’s services users, Netia’s current subscribe base will grow by 54%, to nearly 3 million customers. The combined number of voice services subscribers will grow by 64%, thereby exceeding 2 million. Broadband services will be provided to 875,000 customers. The new group’s IPTV and MVNO services will have 42,000 and 55,000 receivers, respectively.

Netia ended H1 2011 with a net loss of PLN 10.1m (€2.5m), despite showing a net profit of PLN 12.9m (€3.2m) in Q2 2011. The result is a PLN 40m year-on-year decline from a net profit of PLN 29.9m (€7.3m) in H1 2010.



Meanwhile, in H1 2011, Dialog reached revenues in the amount of PLN 256.7m (€58.3m) against PLN 260.6m (€59.2m) year on year. Its EBIDTA grew on a yearly base by PLN 3.7m (€0.8m) and accounted for PLN 25.8m (€5.7m) in H1 2011. The company reported a minor decrease in net profit from PLN 21.8m (€4.9m) in H1 2010 to PLN 20.1m (€4.6m) in H1 2011.

Selected financial indicators of Capital Group Dialog (PLN m), H1 2010-H1 2011
Dialog, 2011
Indicator	H1-end 2010	H1-end 2011	Change (% y-o-y)
Sales revenue	260.6	256.7	-1.50%
Operating profit	22.2	25.9	16.67%
EBIDTA	64.8	69.7	7.56%
Profit before tax	19.4	24.7	27.32%
Net profit	21.8	20.1	-7.80%

As found Rzeczpospolita, Crowley Data Poland ended H1 2011 with revenues amounting to PLN 51.4m (€11.7m), recording a 1.3% increase year on year. At the same time, the company registered an 8.1% year-on-year growth in its EBIDTA, reaching PLN 8.5m (€1.9m) in H1 2011. Its net profit has not yet been disclosed to the public domain.


Consolidation to be continued

Netia eyes other acquisitions opportunities and proceeds with the buy-back started in August 2011. For share repurchase, the company plans to PLN 350m (€79.4m) by June 2013. As potential buyouts, Netia sees TK Telekom and Exatel. The decision regarding the latter company, being a Polish fixed-line operator, is to be taken by the end of 2011. A disclosure of sale memorandum of state-owned fixed-line operator, TK Telecom, took place in September this year. The actual sale is scheduled for Q1 2012.