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Broadband Access
Swisscom Offers €3.7 Billion (US$4.8 Billion) For Fastweb
Takeover To Boost Revenue By 20 Percent, Says CEO
by Iain Morris
Swisscom has today tabled a €3.7 bn (US$4.8 Billion) bid for Italian broadband operator Fastweb.
Speaking to journalists on a conference call this morning, CEO Carsten Schloter said that an injection of cash flow was the primary motivation for the offer. “The transaction has the potential to increase Swisscom’s revenue and EBITDA by one fifth,” he said.
The Swiss incumbent is facing a stagnant domestic market and clearly believes that buying into what it calls ‘the most attractive European broadband market’ will present it with a new avenue for growth.
Fastweb has not yet made a profit since it was founded in 1999, but its revenues grew by 30 percent last year to €1.26 bn (US$1.66 Billion), while its customer base soared by 49 percent to 1.06 million.
Despite Fastweb’s success, Italy remains one of the least saturated broadband markets in Western Europe, with penetration of just 29 percent. Swisscom expects it will grow by another seven million customers over the next five years, and is looking to harness that potential.
Schloter says that other factors influencing the bid were Fastweb’s ‘competitive edge’ in multimedia applications, particularly IPTV, and its lead of ‘three to five years’ in the field of new technologies, including FTTx.
Stressing that Fastweb would be run separately from Swisscom, Schloter says that each company could benefit from the other’s areas of expertise. From Fastweb’s perspective, that would involve contributing its ‘know-how’ of multimedia and NGNs while augmenting its MVNO offer based on Swisscom’s mobile experience.
Swisscom says the success of the deal depends on its obtaining more than 50 percent of Fastweb. It plans to fund the deal through debt.
Reports suggest that Fastweb has reacted favourably to the bid, with chairman Silvio Scaglia allegedly saying that he is willing to hand over his 18.75 percent stake unless a better offer materialises.
The other major Fastweb shareholders include SMS Finance (25 percent), Fidelity Investments (4.7 percent), Goldman Sachs (2.9 percent), Pioneer Asset Management (2.2 percent), Deutsche Bank (two percent) and CAAM (two percent). The remaining 61 percent is distributed.
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