The longer we were kept waiting on the outcome of UPC’s bid to buy Poland’s third largest cable operator the more likely it seemed destined to fail.
The deal, which would have seen UPC Polska acquire a 100% stake in Multimedia Polska for around $760 million in cash, was first announced in October 2016. While it came with the usual health warning of requiring regulatory approval, the time period this could take – up to 12 months – at first glance appeared long.
Still, we had been here before, again with UPC when it acquired Aster, Poland’s fourth largest cable operator, some six years ago. As in this case, the competition authority UOKiK took its time in ruling on the deal. When it eventually did, UPC accepted the precondition that it would have to sell on some of its newly acquired assets to an independent third party.
It never came to that in this instance, though, with UPC deciding to withdraw its bid after the UOKiK released the findings of its analysis into the proposed deal. These showed that had it gone ahead, the combined UPC/Multimedia entity would have had a pay-TV/fixed-line internet market share of over 40% in no fewer than 11 cities, including the capital, Warsaw. Indeed, in some of those cities the figure would have been as high as 80%.
So it’s now back to the drawing board for UPC. It will no doubt in due course set its sights on other potential take-over targets. These could well include Inea or Toya, though probably not Vectra, the country’s second largest cable operator, as any bid would also fail on competition grounds.
As for Multimedia, it had a challenging year in 2017 as it awaited the outcome of UPC’s bid, seeing its revenues fall and losses increase. It also found itself forced to dispose of its insurance and utility assets, as UPC had no interest in acquiring them. It remains to be seen how it will now fare in a rapidly changing market, with operators soon likely to be required to open up their networks to competition.
