German mobile communications company Freenet has acquired the German technical services provider Media Broadcast through its subsidiary mobilcom-debitel, paying €295 million for 100% of its shares.
Media Broadcast’s satellite business unit is not included in the transaction. If approval by the anti-trust authorities is granted, the acquisition is expected to be completed in April 2016 at the latest.
According to Freenet, the takeover of Media Broadcast, in connection with its recently purchased 25% stake in eXaring, represents an important addition as part of the company’s strategic development to become the leading digital lifestyle provider in Germany.
Entering the new area of linear and internet-based television will open up the possibility for the company to diversify further within the digital lifestyle business and cultivate new growth potential and sources of income, Freenet explains in a statement. In total, the company expects a positive contribution to group revenue, EBITDA and free cash flow from both transactions.
Broadband TV Views: With the acquisition by Freenet, Media Broadcast will be owned by a strategic investor again, resembling good news for the company previously in the hands of private equity funds.
French technical services provider TDF Group acquired Media Broadcast (then called T-Systems Media&Broadcast) from Deutsche Telekom for €850 million in 2007. The company’s key businesses include the operation of transmitter networks for DTT, FM and DAB+ and the provision of broadband networks for contribution and exchange traffic, for example between broadcasters.
TDF’s shareholders – private equity investors TPG, Charterhouse, Ardian and French state bank Bpifrance – sold TDF’s French assets to Canadian pension fund PSP Investments and its partners in November 2014.
The subsequent sale of TDF’s German subsidiary Media Broadcast doesn’t come as a surprise following the shareholders’ exit in France. Surprising, however, is the low purchase price paid by Freenet compared with the dimension of the Telekom/TDF deal in 2007. Media Broadcast’s satellite business is a key asset, but its value is not likely to constitute the huge price difference.
For Freenet, the strategic value of the acquisition seems to lie less in synergies with its existing core business activity as a mobile virtual network operator (MVNO), but in growth potential through new ventures. Freenet’s experience in the B2C market, its online shops and local retail chains could constitute valuable assets for the brand building and sale of hardware and subscriptions for the nationwide DVB-T2 platform Media Broadcast will roll out from Q2 2016.
Freenet’s recent investment in eXaring marks another new business area in which Media Broadcast’s assets could be useful. eXaring headed by Christoph Bellmer (formerly Unitymedia/Arena, ProSiebenSat.1/maxdome) wants to develop the first fully integrated platform for IP entertainment services in Germany based on a fibre-optic network reaching more than 23 million households. The planned services include cloud-based multiscreen TV, HD/Ultra HD, gaming and 3D virtual reality services as well as targeted and localised advertising. The launch is planned for the end of 2016.