Consolidation continues in Europe’s telecommunications industry, as the big players shed assets they consider secondary to their refocused strategies.
In the latest round of deal-making, the Spanish telecom giant Telefónica agreed on Tuesday to sell a 66 percent stake in its Czech subsidiary for around 2.5 billion euros, or $3.5 billion to the PPF Group, founded by a local billionaire, Petr Kellner. Rumors that the deal was in the works had circulated in recent days.
Also on Tuesday, the French conglomerate Vivendi announced that it was shedding its 53 percent stake in the Moroccan company Maroc Telecom to Emirates Telecommunications, or Etisalat, for €4.2 billion.
The sales come as many of Europe’s largest telecom companies, including Vodafone and Deutsche Telekom, are fighting for users across the Continent. At the same time, European policymakers are trying to cut roaming charges and other fees in an attempt to create a pan-European market for cellphone coverage.
The industry changes have caught many of Europe’s smaller telecommunications companies off guard. Many of the companies do not have the financial resources to invest fully in so-called fourth generation high-speed data connections. And even larger companies like Telefónica continued to be weighed down by debt that has hindered their investment plans, just as Europe’s consumers are increasingly using their cellphones and tablets to access the Internet through mobile data services.
As a result, analysts say more acquisitions and disposals will probably follow, as Europe’s mobile carriers sell unwanted assets and pick up other businesses, like cable operators, that provide new streams of income. International players, including AT&T and the Mexican carrier América Móvil, are also on the hunt for cheap acquisitions across the Continent to take advantage of the flux.
“The European telecoms industry is about the survival of the fittest,†said Adrian Baschnonga, a telecom analyst at the consulting firm Ernst & Young in London. “Everybody is expecting some form of consolidation.â€
By selling its stake in its Czech unit, Telefónica will raise much-needed cash to help pay down its outstanding €49 billion euros of debt. The Spanish company has been shedding assets in peripheral markets to focus on its operations in its core regions like Latin America and Germany.
Under the terms of the deal, Telefónica will retain a 4.9 percent stake in the Czech unit.
Earlier this year, Telefónica agreed to buy the German unit of the Dutch carrier KPN for around €8.6 billion. The Spanish company has also increased its stake in its European rival Telecom Italia, which competes with Telefónica across Latin America.
For Vivendi, analysts said the deal to sell its stake in Maroc Telecom was part of the French company’s strategy to refocus its operations around its core businesses like subscription television and music.
Vivendi, which also owns the French telecom firm SFR, is moving to sell most of its stake in the video game maker Activision Blizzard for $8.2 billion. The French company also agreed last month to buy the remaining stake in the French pay-TV channel Canal+ that it did not already own from the French conglomerate Lagardère for €1 billion.
Etisalat, which is acquiring the majority stake in Maroc Telecom from Vivendi, has operations across the Middle East and Africa. Etisalat first made an approach for the stake in the Morroccan operator in July. The deal is expected to close by early next year.
Shares in Telefonica fell more than 1 percent in afternoon trading in Madrid on Tuesday, while Vivendi’s stock price rose less than 1 percent in Paris.
