LONDON, UK / ACCESSWIRE / December 27, 2017 / Active-Investors.com has just released a free research report on Liberty Global PLC (NASDAQ: LBTYA). If you want access to this report all you need to do is sign up now by clicking the following link www.active-investors.com/registration-sg/'symbol=LBTYA as the Company's latest news hit the wire. On December 21, 2017, the Company announced that it has signed an agreement to sell its cable business subsidiary in Austria - UPC Austria, to Deutsche Telekom's T-Mobile Austria. The total enterprise value of the deal is €1.9 billion (approximately $2.2 billion) subject to adjustments at the time of closing the deal. Register today and get access to over 1000 Free Research Reports by joining our site below:
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Details of the deal
UPC Austria is a leading cable provider in Austria and is an indirect subsidiary of Liberty Global. T-Mobile Austria has agreed to pay €1.9 billion (approximately $2.2 billion) including debts for the acquisition.
UPC Austria's network reached 1.4 million homes and served 654,000 customers as on September 30, 2017. These included 513,000 broadband subscribers, 450,000 voice subscribers, and 468,000 subscribers for its video services. The deal is expected to close in H2 2018 and is subject to receiving regulatory approvals and other closing conditions.
Additionally, as part of the terms of the deal, Liberty Global has agreed to provide certain transitional services for a maximum of four years of completing the transaction. These services include network and information technology-related functions for which T-Mobile Austria will pay certain annual charges based on the actual usage. Liberty Global will also allow T-Mobile Austria the use of UPC brand, as a part of this deal, during the transitional period for a maximum of three years of completing the transaction.
Liberty Global plans to use the funds raised from the sale of UPC Austria to pay off debts of UPC bank group, re-invest in the Company's business, support shares buyback program and other general corporate purposes.
Benefits for T-Mobile Austria
For T-Mobile Austria, the acquisition will allow it to become an integrated communications Company and significantly expand its services offerings from mobile, fixed line broadband internet, fixed line telephony, IoT as well as TV and entertainment products in Austria.
The deal will allow it to compete with its rival A1 Telekom Austria in both the consumer and businesses segments of the broadband market. UPC Austria is the largest cable operator in Austria and has a market share of 36% with concentration in the urban areas.
T-Mobile Austria plans to strengthen its broadband connectivity in rural areas by investing in LTE infrastructure.
The deal will combine UPC Austria's fiber infrastructure in urban areas with T-Mobile Austria's core fiber network building a strong premise for offering high speed mobile broadband access and for next generation 5G mobile network.
The deal allows T-Mobile Austria to add UPC Austria's 1.5 million Revenue Generating Units (RGUs) to its 5.2 million existing RGUs.
The combined revenue of T-Mobile Austria and UPC Austria is expected to cross €1.9 billion in FY17 on a pro-forma basis. The deal is expected to result in 80% synergies from cost and CapEx efficiencies from merging of functions like IT, network operations, etc. The deal is expected to be accretive to T-Mobile Austria's free cashflows and EPS within one year of closing the transaction.
Management Comments
Commenting on the sale of UPC Austria, Mike Fries, CEO of Liberty Global, said:
"We have operated in Austria for over 20 years and are extremely proud of the market-leading position we have built in both digital video and super-fast broadband. Looking forward, we believe the combination of UPC Austria and T-Mobile Austria will provide the national scale necessary to compete with larger companies like A1, and provide residential and business consumers with the highest quality services at the best price."
Andreas Bierwirth, CEO T-Mobile Austria, added:
"Broadband is the indispensable foundation for a digital Austria. It is our ambition to provide our customers, whoever and wherever they are, with the best possible seamless broadband experience for all of their needs through LTE, digital cable, fiber and future technologies like 5G."
Srini Gopalan, Board Member of Deutsche Telekom for Europe, stated:
"With this acquisition Deutsche Telekom is taking another major step to realize our strategy to become a fully converged operator in our European footprint. The acquired cable network will be a perfect match with our best mobile network."
The signing of this agreement has restarted the speculation amongst industry regarding the rekindling of Liberty Global's merger talks with Vodafone Group PLC (NASDAQ: VOD). Both companies had come to the table to discuss the possible merger in 2015 but the plans did not fructify due to disagreements over valuations. Vodafone and Liberty Global had completed the merger of their Dutch operations in December 2016. Industry insiders believe that the sale of UPC Austria paves the way for Liberty Global to reopen merger talks with Vodafone.
About Liberty Global PLC
London, UK-based Liberty Global is the world's largest international TV and broadband company with operations in more than 30 countries across Europe, Latin America, and the Caribbean. Its network connects 25 million customers who subscribe to the Company's television, broadband internet, and telephony service. The Company also has 10.1 million mobile subscribers and offers Wi-Fi service across 10 million access points.
About Deutsche Telekom
Deutsche Telekom is one of the world's leading integrated telecommunications Companies, with 165 million mobile customers, 29 million fixed-network lines, and 18.5 million broadband lines. Deutsche Telekom provides mobile telecommunications services in Austria via its subsidiary T-Mobile Austria which offers both postpaid and prepaid wireless plans. Other Austrian subsidiaries of Deutsche Telekom include T-Systems which offers cutting-edge IT services and SDS which develops standard software for the banking sector.
Stock Performance Snapshot
December 26, 2017 - At Tuesday's closing bell, Liberty Global's stock slightly dropped 0.14%, ending the trading session at $35.47.
Volume traded for the day: 980.46 thousand shares.
Stock performance in the last month - up 15.54%; previous three-month period - up 4.91%; past twelve-month period - up 14.94%; and year-to-date - up 15.95%
After yesterday's close, Liberty Global's market cap was at $30.91 billion.
Price to Earnings (P/E) ratio was at 47.61.
The stock is part of the Services sector, categorized under the CATV Systems industry. This sector was flat at the end of the session.
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