Eurobites: Upheaval, M&A, and Disaster

Merger and acquisition activity continues to dominate Europe's telecom landscape in 2007. So here's the latest takeover tapas, plus the region's other tasty news snippets, including concerns at the European Commission of a potential communications disaster.

Swedes stoke TeliaSonera speculation
Scandinavian carrier Telia Company is likely to attract private equity interest following a top-level upheaval this week that saw five board members ousted by the carrier's main owners, the Swedish and Finnish governments (45.3 percent share and 13.7 percent share, respectively).

Sweden's new center-right government, which won the country's elections last September, intends to cut its stake in the carrier, a move that could tempt all-out takeover bids. Swedish private equity firm Cevian Capital has been linked to a potential bid in the past.

TeliaSonera currently carries a market value of 269 billion Swedish Kroner (US$38.1 billion). In the first nine months of 2006 the carrier generated revenues of SK67.9 billion ($9.7 billion) and net income of SEK14.7 billion ($2.1 billion). (See TeliaSonera Reports Q3.)

In other M&A news:

  • Russian giant Sistema JSFC (London: SSA) fancies taking a stake in Telecom Italia (TIM) , according to a report in Russian daily newspaper Kommersant.

    Sistema president Alexander Goncharuk told Kommersant that he was interested in a stake in the Italian incumbent, but that no deal had been agreed upon. Talks are due with Pirelli SpA (Milan: PECI.MI), which holds a controlling 80 percent interest in holding company Olimpia SpA, which in turn owns 18 percent of Telecom Italia.

    Sistema is already heavily involved in telecom, as it owns two Russian carriers, Mobile TeleSystems OJSC (MTS) (NYSE: MBT) and Comstar United Telesystems JSC (London: CMST), as well as European software and hardware vendor JSC Sitronics (London: SITR). (See Sistema Reports Q3 and Russian Vendor Plans $500M IPO.)

  • Telekom Austria AG (NYSE: TKA; Vienna: TKA) has confirmed its interest in bidding for part of the Greek government's 38.7 percent stake in national operator OTE S.A. when it becomes available later this year. The government is looking for a carrier investor to take a stake of up to 20 percent in OTE. Deutsche Telekom AG (NYSE: DT) and Telefónica SA (NYSE: TEF) have also been linked with possible bids.

  • Danish incumbent TDC A/S (Copenhagen: TDC) has sold its Latvian mobile operator Bite GSM to private equity group Mid Europa Partners for €450 million ($583 million). But TDC, itself acquired by a private equity consortium in January 2006, is not just selling assets. Its subsidiary, Hungarian Telephone and Cable Corp. (Amex: HTC), recently made a €470 million ($610.6 million) acquisition. (See TDC Sells Bité, Euro News Snips, TDC Unveils $12B Offer, and NTC Updates on TDC.)

    EC gets worried
    Following the telecom services meltdown suffered in the Far East following last month's earthquake, the European Commission is fretting about a similar situation here on the Old Continent. (See Earthquake Cuts Cables Near Taiwan, Quake Disrupts StarHub Service, Asia Netcom Restores Cable, and NTT Restores Services.)

    While significant earthquakes aren't top of the worry list, the EC is seeking feedback on how to avoid a "domino effect" that could "result in a major technological collapse of communications and the many services they support" following a criminal attack or natural disaster. (See EC Considers Attack.)

    European Commissioner for Information Society and Media, Viviane Reding, is quoted in the EC press release as saying, "Communication and information infrastructures are the nervous system of our modern society." And they'll likely be a lot more nervous now that the EC has issued its "attack" and "hazards" statement.

    — Ray Le Maistre, International News Editor, Light Reading

  • digits 12/5/2012 | 3:16:11 PM
    re: Eurobites: Upheaval, M&A, and Disaster Will the roll out of IP-based next generation networks make the interconnected regional infrastructure more prone to security threats?

    Maybe the legacy networks shouldn't be de-commissioned after all....
    mbd 12/5/2012 | 3:16:03 PM
    re: Eurobites: Upheaval, M&A, and Disaster On the contrary, IP networking was developed as a direct response to US DoD concerns about the vulnerability of legacy networks. The resiliency inherent in IP routing is the main answer to such concerns. To the extent that NGNs based on IP routing preserve the "end-to-end" principle (dumb pipes aspect), that resiliency will be maintained.

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