BT Leads New Euro M&A Charge

TeliaSonera buys integrator
Scandinavian powerhouse TeliaSonera is buying Cygate AB , a systems integrator and managed IP services provider, for 567 million Swedish Krona ($80 million) in cash.

Cygate, based in Stockholm, has about 250 on staff and reported revenues of €90.6 million ($116 million) in 2005.

"This transaction strengthens our position as an integrator of our corporate customers' total telecom and IT solutions, a major future growth area for TeliaSonera," said the carrier's CEO Anders Igel in a prepared statement. "This is an additional step to become the leading player within IT and IP integration and to secure long term growth in integrated enterprise services."

The ability to offer a wide range of IT, outsourcing, integration, and hosting services to business customers, both large and small, is becoming increasingly important to carriers as they see the revenues from traditional voice and data connectivity services dwindle.

BT has made great strides in beefing up such capabilities during the past few years, while the likes of Orange (NYSE: FTE), with its Orange Business Services (formerly Equant), and Deutsche Telekom AG (NYSE: DT), with its T-Systems International GmbH business, are also expanding their capabilities. (See BT Plans Further Global Push, Orange, HP Win EU Deal, FT Takes Over Diwan, FT Unifies Business Services, Sonus Lands T-Systems Deal, and T-Systems Picks New Edge.)

Telefónica buys into Hong Kong
Spanish giant Telefónica is buying an 8 percent stake in Hong Kong carrier PCCW Ltd. (NYSE: PCW; Hong Kong: 0008) for €323 million ($413 million), subject to PCCW shareholder approval. (See Telefónica Buys into PCCW.)

If the deal goes through, Telefónica plans to combine its stake with the 19.94 percent stake already held by its partner China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906). That combined 27.94 percent stake would make the two carriers, which plan to set up a "special purpose vehicle" for the holding, the biggest single shareholder in PCCW. (See Telefónica Boosts Chinese Ties.)

Telefónica also noted in a regulatory filing that it has signed a memorandum of understanding with China Netcom and PCCW "to develop a strategic alliance in relation to certain areas of business in the telecommunications and media sectors, including, amongst others, IPTV and international wholesale services."

The Spanish giant has also just released its latest financials, reporting revenues of €38.7 billion ($49.6 billion) and net income of €5.2 billion ($6.7 billion) for the first nine months of this year. (See Telefónica Reports Q3.)

Euro M&A tidbits
  • British virtual network operator Sirocom Ltd. , which builds IP VPNs and other services for enterprise customers, has been acquired by Azzurri Communications for an undisclosed sum. Azzurri's CEO is a candidate for "Name of the Month" -- Martin St Quinton. (See Azzurri Buys Sirocom and Standard Life Picks Sirocom.)

  • Telecom Italia (TIM) is looking to offload its 81 percent stake in Brazilian mobile operator TIM Brasil, and, according to a Reuters report that quotes the unit's CEO, Mario Cesar de Araujo, two offers have been received from unidentified parties.

    With Latin American reports valuing Telecom Italia's stake at between €6 billion and €7 billion ($7.7 billion and $9 billion), the number of likely buyers is limited. Analysts have reportedly named Brasil Telecom Participações SA (NYSE: BRP), Mexico's America Movil , and Telefónica, which already has a 50 percent stake in Brazilian mobile operator Vivo Participacoes SA , as the most likely bidders.

    The divestiture is part of Telecom Italia's current restructuring. (See Telecom Italia Does the Splits, Telecom Italia Upheaval Continues, and Telecom Italia Splits Access.)

  • Private equity firm Kohlberg Kravis Roberts & Co. (KKR) is scouting around for telecom and media assets, and has already had a word with Vivendi , which owns a 56 percent stake in French mobile operator SFR and a 51 percent stake in African incumbent Maroc Telecom as well as significant TV and music assets.

    In a brief statement earlier this month, Vivendi confirmed it had "received and reviewed a friendly expression of interest from KKR. This review, which included maintaining the current Vivendi assets within the group in order to create value, did not result in any proposition and has now ended."

    Media reports suggested KKR had bid as high as €40 billion ($51.2 billion). Vivendi today announced revenues of €14.5 billion ($18.6 billion) for the first nine months of 2006.

    KKR is no stranger to the telecom world, as it already holds a number of assets and is regularly linked to takeover bids. (See Aricent Crashes Telecom Software Party, FT Sells Directory Biz, Reports: Equity Firms Approach NTL, and TDC Unveils $12B Offer.)

    — Ray Le Maistre, International News Editor, Light Reading

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    digits 12/5/2012 | 3:34:38 AM
    re: BT Leads New Euro M&A Charge How long before one of Europe's Big Five -- BT, Deutsche Telekom, France Telecom, Telefonica, and Telecom Italia -- get swallowed up? Or will they be the ones left standing?
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