Deutsche Telekom forks out €1.9bn to boost Austrian business

After a failed attempt to buy Sprint in the US, Deutsche Telekom has proved it still knows its way through the acquisition maze, with its second purchase in a matter of days.

Last week it announced the acquisition of Tele2 for €190 million, and now it has tabled €1.9 billion to buy cable operator UPC Austria. Consolidation in the telco space is certainly a rare discussion, especially in Europe where the boresome Brussels brigade of bureaucrats are fixated on four operators per market, but DT is slowly gathering momentum across the continent.

“With this acquisition Deutsche Telekom is taking another major step to realize our strategy to become a fully converged operator in our European footprint,” said Srini Gopalan, Board Member for Deutsche Telekom Europe.

“The acquired cable network will be a perfect match with our best mobile network. It will allow customers to benefit from extended scope of services with fixed and mobile offerings from one source. We see a significant potential to accelerate growth in the Austrian market.”

Fortunes in Austria have been a big of a mixed bag for DT in recent years. There has always been a relatively solid footprint and performance in the market, though it has yet to make a genuine challenge against market incumbent Telekom Austria. DT also had to sit and watch Three charge up the market share table, as it secured second place last year.

By bringing the country’s leading cable provider into the fold, DT is starting to realise its wider European strategy in Austria; convergence. Alongside fixed and mobile broadband internet, IoT and telephony, the combined organization will have a much stronger presence in the TV and entertainment space. It might not add billions onto the bottom line straight away, but convergence certainly lowers churn, and the ability to be more creative with expenditure in the future.

In terms of the stats, UPC Austria is the largest cable operator in Austria with coverage of 36% of the households in the market, mostly in urban areas, as well as 500,000 customers in the broadband space, making it number two. It is market leader when it comes to Premium-TV market with 400,000 customers throughout Austria.

Through this acquisition, DT also gets its hands on a notable infrastructure. To date, the Austrian subsidiary, T-Mobile Austria, has mostly been a mobile player, though DT believes it has the assets and presence to be a strong competitor in both the consumer and businesses segments of the broadband market now.