Deutsche Telekom AG (DTE), Germany’s largest phone company, is among bidders for PrimaCom Berlin GmbH in a return to cable assets almost a decade after paring its holdings as competition intensifies, according to people familiar with the matter.
Offers were due last week after interested buyers studied PrimaCom’s financial data, said two of the people, who asked not to be identified because the process isn’t public. PrimaCom may fetch more than 250 million euros ($310 million), they said. Star Capital Partners was among private equities that also bid, said one person.
Takeovers of Germany’s cable assets, once owned by Deutsche Telekom until the Bonn-based former phone monopoly completed their sale in 2003, is picking up as cable companies compete with telecommunications operators for phone, Internet and pay- television customers. John Malone’s Liberty Global Inc. (LBTYA:US) last year won antitrust approval to acquire Kabel Baden-Wuerttemberg, adding to its 2009 purchase of Unitymedia.
“We see Deutsche Telekom’s interest as all part of the strategy to win over housing association access to customers, so that Deutsche Telekom can lead the fiber upgrade process and win broadband and TV customers,” said Guy Peddy, an analyst at Macquarie Securities in London. “If they fail it has the added benefit of possibly increasing the price to other buyers.”
A representative of Deutsche Telekom declined to comment. Press officials at Leipzig-based PrimaCom didn’t immediately respond to phone calls.
Kabel Deutschland Holding AG (KD8), Germany’s biggest cable operator, rose 0.1 percent to 50.93 euros at 4:26 p.m. in Frankfurt. Deutsche Telekom added 0.7 percent to 9.35 euros. The stock had gained 4.7 percent this year through yesterday.
Germany is set to grow faster than any other cable market in Europe as consumers start to develop a positive attitude toward pay-TV subscriptions and cable operators enter the market for Internet and phone offerings, said Guy Bisson, a researcher with IHS Screen Digest.
Digital cable penetration among German households is projected to rise to 23.7 percent in 2016 from 11.6 percent in 2011, according to the researcher. Total TV, Internet and telephone subscriptions with cable companies are forecast to surge by 24 percent from 2011 to 32 million in 2016.
PrimaCom, with about 1 million customers mostly in eastern Germany, was taken over by lenders after it parent, PrimaCom AG (PRC), filed for insolvency in 2010. Creditors including Alcentra Group Ltd., Avenue Capital Group, ING Groep NV and Tennenbaum Capital Partners LLC took over the shares in 2011 as part of the restructuring through a new holding company.
Kabel Deutschland agreed in May to acquire Tele Columbus Group, the cable TV provider owned by creditors after restructuring its debt, for 603 million euros plus accrued interest to expand coverage of the country’s pay-TV households. The asset had also attracted interest from Deutsche Telekom and Unitymedia, people familiar with the auction said at the time.
“We are looking at everything that is on the market, so also PrimaCom,” Unitymedia Chief Executive Officer Lutz Schueler said in an interview last week. “We are an active driver of the consolidation process in the cable market, as we believe that this is necessary to be in a competitive position.”
Last week, Warburg Pincus LLC, Cinven Ltd. and some allied investors raised 681.5 million euros selling their stakes in Ziggo NV (ZIGGO), the Dutch cable operator that held an initial public offering this year. Swedish operator Com Hem AB was sold to BC Partners Ltd. last year in a $2.6 billion deal.
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