Financial investors eye Tele Columbus

Jörn Krieger | 15-10-2013

The next consolidation wave is about to take place in the German cable industry following the recently completed takeover of Kabel Deutschland by Vodafone. Financial investors want to acquire Tele Columbus and merge the company with PrimaCom, according to the Wall Street Journal Deutschland.

"We are in the sale process," Tele Columbus CEO Ronny Verhelst confirmed to the online newspaper. He didn't reveal any names, but spoke of strong interest from financial investors. "There is more than one interested party," he said.

The ownership change is to take place by the end of the year. Tele Columbus is owned by a consortium of creditor banks while PrimaCom is in the hands of hedge funds and creditor banks.

People familiar with the matter have named several private equity companies as interested buyers, including Cinven Group and CVC Capital Partners. They seem to not only to be interested in Tele Columbus, but also PrimaCom. Both cable operators reach a total of three million households. "I believe that the future of the smaller players in the German cable market lies in consolidation," said Verhelst. He added that Tele Columbus wants to play a leading role in this process. "Sensible synergies" would achievable through this, he added.

Originally, Kabel Deutschland wanted to take over Tele Columbus for €618 million, but the move was blocked by the German cartel office. If a financial investor succeeds in merging Tele Columbus, PrimaCom and possibly further smaller cable operators such as Pepcom and Deutsche Telekabel, the next step could be an IPO on the stock market or an exit through the sale to a mobile network operator such as Spanish Telefónica which is currently merging its German brand O2 with E-Plus from KPN. In the view of Heinz-Peter Labonte, chairman of German cable association FRK, such a scenario would be absolutely realistic as shown by the acquisition of Kabel Deutschland by Vodafone.