East Capital Explorer-owned Cgates has acquired the Lithuanian regional operator Kava for an undisclosed fee.

The purchase will be financed through debt and finalised following approval from the relevant authorities in Lithuania.

Kava is a growing telco with around 20,000 subscribers. It has one of Lithuania’s most modern fibre networks, covering more than 100,000 households in Vilnius, Klaipeda, Siauliai and Panevezys. Of these cities, Cgates’ current network covers only the capital, Vilnius.

Commenting on the deal, Mia Jurke, CEO of East Capital Explorer, said: “Cgates’ acquisition of Kava is another step in the creation of a leading pan-Baltic cable TV and broadband internet player, with Starman and Cgates as strong platforms in Estonia and Lithuania. This is a business with clear scale benefits for operators with strong product offerings and efficient networks, and we will continue to leverage on that”.

Gert Tiivas, chairman of Starman, added: “Cgates is now becoming a nationwide operator, which is a milestone in our strategy for the company. The acquisition of Kava will increase the company’s household coverage by 30% and thereby strengthen its position in the market. Cgates is already a strong number two, but it is still a fragmented market with many growth opportunities”

Cgates is a wholly owned subsidiary of the leading Estonian cable operator Starman, of which East Capital Explorer owns 63%. Cgates is Lithuania’s second largest cable TV and broadband internet provider with a network covering 300,000 households in 12 cities. Cgates has about 120,000 pay-TV and 70,000 broadband RGUs. Its revenues in 2014 were €15.8 million, with an EBITDA margin of 44.7%.

As previously reported in Broadband TV News, Starman acquired a 100% in Cgates for €56.3 million in December 2014.