Deutsche Telekom to boost fixed line capability with GTS acquisition

German operator group Deutsche Telekom has announced its intention to acquire fixed line player GTS Central Europe for €546m.

Deutsche Telekom said the deal will enhance its ability to offer pan-European telecommunication services and offer integrated products and services in countries where it currently has limited fixed-line access network infrastructure.

GTS has extensive network and datacentre infrastructure across Central Europe, in markets including Poland, Czech Republic, Hungary and Romania. It also has a portfolio of services focused on business customers. In 2012, GTS reported revenues of €347m and EBITDA of €87m pro-forma excluding the Slovak assets, which will be retained by the sellers as part of the transaction.

” GTS is a further element for developing our integrated market position comprising mobile and fixed-line network services. Strengthening our position with business customers is also a core element of our strategy,” said Timotheus Höttges, CFO at Deutsche Telekom.

Claudia Nemat, board member for Europe and technology at Deutsche Telekom, added: “Our existing mobile-centric national companies in the Czech Republic and Poland will benefit most from the added fixed-line infrastructure. Therefore, GTS is an ideal addition to our portfolio.”

The German firm is not the only mobile operator group looking to in-market consolidation. In October this year, Norwegian operator Telenor moved to strengthen its position in the Swedish broadband and television services sector with the acquisition of Tele2 Sweden’s fiber and cable business for SEK775m ($121.4m).

Meanwhile, Vodafone’s African subsidiary Vodacom announced in September that it has entered into exclusive discussions regarding a potential acquisition of South African fixed line provider Neotel.

And Vodafone’s €7.7bn bid for German cable company Kabel Deutschland was recently accepted by shareholders.The two firms plan to offer premium unified communications services to consumer and enterprise customers. They believe that they could create an integrated communications operator that generates around €11.5bn in revenue each year in Germany.

GTS is owned by a consortium of international private equity firms, including Columbia Capital, HarbourVest Partners, Innova Capital and M/C Partners. The transaction is subject to regulatory approvals.