Opinion

Polish TMT deal has wide implications for market

people

Last updated: 7th Feb 2011

The on-going PLN 3.7 bn / EUR 930m cash and share deal between the WSE-listed Cyfrowy Polsat S.A. (CPS, Bloomberg CPS:PW) and the private shareholders of Telewizja Polsat S.A. (TV Polsat) selling 100% of their stake, announced in mid-November 2010, is a landmark transaction with wide implications for the Polish TMT sector.

CPS is the largest paid-TV satelite platform in Poland, with 3.3 million subscribers, while TV Polsat is amongst the top three local TV broadcasters. While both CPS and TV Polsat are controlled by the same shareholder, Mr. Zygmunt Solorz-Zak, the transaction was positively commented on by the market both from a business logic and investor relationships perspectives.

The terms proposed were both transparent and financially attractive (the acquisition price implied multiples with a discount vs. average peers and CPS itself) and the deal was well perceived by the market (2.3% and 4.7% CPS share price increase 1 day and 1 week from the announcement respectively).

The deal is expected to limit the risk of client churn in pay-TV of CPS, expected in view of the upcoming digitalization of terrestrial TV signal in Poland (scheduled for 2014). It is also viewed as a step towards creating a platform for the acquisition of Polkomtel, one of the three leading Polish mobile telephone operators, by Mr. Solorz-Zak (the distribution of Polkomtel’s information memoranda started in recent days), as well as for the launching of a mobile internet service based on the LTE (4G) standard.

Piotr Olejniczak
Director
IPOPEMA

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