Tele Columbus on growth course

Germany’s third-largest cable operator Tele Columbus reports strong growth following its acquisitions of Primacom and Pepcom which have been included in the corporate figures since August 1 and December 1, 2015 respectively.

The company which has been serving 2.44 million customers at the end of 2015 has increased its number of internet customers by 99,000 to 462,000 in Q4 2015. The number of telephony customers rose by 75,000 to 427,000 while the number of premium TV customers grew by 11,000 to 426,000.

In total, the Tele Columbus network reaches 3.6 million households. 61% of the base has been upgraded with a return channel for internet and telephony.

Internet service provider United Internet (1&1, GMX, web.de) has recently become the largest shareholder in Tele Columbus with a 25.11% stake following the approval of the deal by the German anti-trust authority.

Tele Columbus to take over Primacom

Kicking off a new consolidation round in Germany’s cable market, Tele Columbus, the third largest German cable operator, has entered into an agreement to acquire Primacom, the fourth largest market player, for €711 million.

The combination of both companies will lead to a strong third force in the German cable market after Kabel Deutschland and Unitymedia serving a total of 2.8 million households. The transaction is expected to be closed on July 31, 2015.

“This is a transformational transaction for Tele Columbus, strengthening our position as the number three player in the German cable market,” Ronny Verhelst, CEO of Tele Columbus, said in Berlin. “Strategically and economically, this is a highly logical combination with significant network overlap between the two businesses and complimentary housing association customer bases. Primacom has shown impressive financial and operational performance over recent years and we look forward to further successes going forward.”

Joachim Grendel, CEO of Primacom, added: “Combining Tele Columbus and Primacom will build an excellent basis for the future competition with the global media and telecommunications corporates. This merger will be to the benefit not only of consumers and our partners in the housing industry, but also of Germany as a media and high-tech country.”

PrimaCom currently serves around 1.2 million households. In 2014, the company acquired cable operator Deutsche Telekabel and generated total revenues of €132 million and adjusted EBITDA of €55 million, resulting in a margin of 42%. Primacom currently employs around 450 people with corporate headquarters in Leipzig.

Tele Columbus which serves around 1.7 million households will finance the acquisition through a combination of cash on balance sheet, a fully underwritten financing including both a senior and junior tranche and a €125 million equity bridge loan. The transaction does not need regulatory approval and is not subject to merger control review, according to Tele Columbus.

A spokesman of federal cartel office Bundeskartellamt confirmed toBroadband TV News that the deal is not subject to review by the competition authority as the companies’ combined turnover in 2014 didn’t exceed the €500 million threshold stipulated in the German anti-trust law.

With the move, Tele Columbus and Primacom which used to be connected through their former joint parent company Orion Cable will be brought together again. In the past years, there have been several unsuccessful takeover attempts. In 2013, the planned purchase of Tele Columbus by Kabel Deutschland was blocked by Germany’s federal cartel office.

Industry experts expect the consolidation in the German cable market to continue. Tele Columbus could, for example, acquire Pepcom as the next step to strengthen its market position.