Proximus buys all of BICS, consolidation on the cards

Proximus is taking sole control of international carrier business BICS, 15 years after it created the company via a merger with Swisscom.

The Belgian incumbent said it will pay a total of €217 million to acquire Swisscom’s 22.4% stake in the operator and MTN’s 20% holding.

Belgacom International Carrier Services, to give the firm its full, legacy title, came into being in July 2005 when it subsumed Swisscom’s international carrier business Fixnet. The pair added South Africa’s MTN into the mix in late 2009, when it contributed its MTN ICS assets in return for that 20% stake, and BICS’s ownership has remained constant ever since.

Last summer though it was pretty clear that the three shareholders were no longer an international carrier happy family. Following media speculation, Proximus announced in July that the shareholders were considering divesting a 51% stake in BICS via a transaction that would have seen it retain the remaining 49%, to reflect its commitment to the future development of the company. The trio were holding talks with potential investors, but clearly were not able to broker a satisfactory deal.

“After investigation of different options, Proximus has concluded that the best way to have the necessary flexibility to create long-term value for BICS and TeleSign was to acquire 100% ownership of BICS,” Proximus said in a statement on Tuesday…which actually doesn’t tell us much about what really went on. (BICS acquired Communication Platform-as-a-Service (CPaaS) outfit TeleSign for US$230 million just over three years ago, incidentally.)

And its not wholly clear whether Proximus is in it for the long haul.

“From a financial point of view, this acquisition allows Proximus to combine the robust free cash flow generation of BICS with the attractive revenue growth of TeleSign,” the company said. “Going forward Proximus will execute the growth plan of BICS and TeleSign, through a combination of organic investments in key growth domains, a strict focus on cashflow generation within the legacy business and an active role in capturing consolidation opportunities.”

That focus on cashflow generation could be geared towards making BICS a more attractive prospect to investors. BICS could be a seller rather than a buyer in any future M&A.

Indeed, it notes that the deal with Swisscom and MTN means it has picked up their stakes in BICS “at an attractive valuation.”

“Proximus is confident that the increased strategic flexibility gained through this transaction, the intrinsic growth potential of both TeleSign and BICS and the prospects of a gradual recovery of the Covid-19 pandemic leave material upside relative to the transaction enterprise value,” the company said.

However, for now the telco is making the right noises about holding on to the international carrier business.

“I am excited to conclude this agreement, allowing us to retain a growth engine within the Group and maintain full control over the globally renowned assets of BICS and TeleSign,” said Proximus chief executive Guillaume Boutin. “I am convinced we can unlock the next growth phase of BICS and leverage BICS’ potential to consolidate a scattered market, while continuing to invest in key growth areas.”

That will be the job of a new leader, after the BICS board parted company with longtime CEO Daniel Kurgan a fortnight ago “due to different views on the company’s strategy.” Kurgan left BICS – by mutual consent, apparently – after 14 years in the role and has been replaced by company insider Matteo Gatta. Prior to his appointment to the top job at BICS, Gatta was serving as Director Network Strategy, Innovation & Partnerships at Proximus. At the same time, the firm appointed Joseph Burton as the new CEO of TeleSign, replacing Ryan Disraeli.

We will have to wait and see if – and how – Gatta deploys his experience in M&A and partnerships, amongst other things, that BICS credited him with when it announced his appointment.