CEE ripe for pay TV consolidation says SNL Kagan

A combination of high pay TV penetration and industry fragmentation mean that the central and eastern European operator market is ripe for further consolidation, though the picture varies between territories, according to a report by SNL Kagan.

According to SNL Kagan’s analysis, Bulgaria was the hottest market for mergers and acquisitions in 2015, thanks to Telekom Austria’s acquisition of Blizoo and the sale of Vivacom. The latter sale, which included €400 million of debt, was, at €730 million, the highest value deal in the region during the year.

Other notable deals across the region last year include East Capital Explorer’s spate of acquisitions in the Baltic States, ongoing acquisitions of smaller cable operators by larger players in Poland and Romania, and the sale by Romania’s RCS&RDS of its foreign assets.

According to SNL Kagan, the value of deals per subscriber can range from US$100 to US$500, depending on the country. Mobile subscribers cost most, at about US$500, as in the case of Slovenia’s Tušmobil and T-Mobile Czech Republic. Digital cable subscribers are valued from US$300 to US$400 per sub, while subscribers of cable networks requiring digital upgrade are valued from US$100 to US$200.

Slovenian cable operator Telemach’s acquisition of Tušmobil at a a valuation of US$526 per subscriber indicated the growing importance of mobile to cable, according to SNL Kagan.

Despite the recent M&A activity in Bulgaria and Lithuania, the markets remain fragmented, with small cable operators still serving 60% and 48% of subscribers, respectively. However, the recent acquisitions by UPC and RCS&RDS in Romania leave less room for significant acquisitions, with small cable operators now representing just 28% of the country’s total cable market, according to SNL Kagan.