Netia Agrees to Acquire TK Telekom

Poland’s telecom service provider Netia had agreed to takeover its competitor TK Telekom. Netia agrees to an estimated value of around 61 million dollars. After finding the funds necessary for acquisition, Netia, the second largest telecom operator in Poland will finalize the deals with Polish State Railways, who owns TK Telekom.

Netia is Poland based telecommunication service company which owns the second-largest fixed-line network in the country. Icelandic owned Novator acquired a large stake in Netia in 2001.Netia and Novator had planned to build a 4th mobile network in Poland. Netia owns and manages around 7,500 kilometers of fiber optic networks. Netia, hopes to broaden its network with the acquisition of TK Telekom.

TK Telekom ex Telekomunikacja Kolejowa is a Polish telecommunications company, belonging to the PKP Group. TK Telekom has more than 30,000 kilometres of fiber optic cable networks that connects and spreads over 300 cities across the country. In terms of the size and throughput of the network, TK Telekom is one of the largest backbone network operators in Poland. TK Telekom offers comprehensive ICT solutions to the needs of telecommunications operators, public administration, business Customers and companies from the railway sector.

Netia will finance the deal from available credit lines. The transaction needs approval from PKP shareholders and Poland’s anti-monopoly watchdog. Europe’s telecom sector has been witnessing a hike in acquisitions since last few years. Consolidation of telecom groups helps them to exist in the market, but reduces market competition and employment opportunities. Major telecom groups become more powerful through consolidation process, while the weaker ones will feel the pressure of price reduction. Acquisition of fiber optic networks will provide service providers advantages in price.

Telecom Italia has been trying to acquire whole ownership of Metroweb in Italy, while Ono has been taken over by Vodafone in Spanish market. Acquisition of E-Plus by Telefonica gained EC’s approval in Germany. Orange is in the process of taking over its Spanish competitor Jazztel.

The acquisition deal widens Netia’s business scale by over 11 percent on the whole and by over 28 percent in the business client segment itself. The deal’s value equals 5.2 times TK Telekom’s 2014 excluding the synergies that Netia plans to achieve after the transaction.

PK is shedding non-core assets as part of restructuring aimed at curbing debt and has tried to sell TK Telekom since 2011. TK Telecom’s management has reached an agreement and signed a job guarantee agreement with unions last month that paved the way for the company’s sale to Netia.


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