Deliver Your News to the World

Deutsche Telekom enters into an agreement to secure undisputed ownership over Polish mobile operator PTC


* Deutsche Telekom Vivendi and Elektrim sign agreement to settle all legal disputes concerning PTC.
* Pursuant to the agreement Deutsche Telekom to increase its stake in PTC to 100 percent, making it the sole shareholder of PTC.
* As part of the agreement Deutsche Telekom to pay an additional EUR 1.4 billion to Elektrim and Vivendi
* Including the first sum of EUR 0.7 billion already paid in 2006 Deutsche Telekom to pay a total of EUR 2.1 billion for a 51 percent stake of shares in PTC and the final settlement of all litigation
* This results in an EBITDA to enterprise value relation of the whole transaction of below 4.

Deutsche Telekom has entered into an agreement with the French company Vivendi, the Polish company Elektrim and creditors of Elektrim, among which the Polish State and Elektrim’s bondholders, to secure 100 percent, undisputed ownership of the Polish mobile operator Polska Telefonia Cyfrowa (PTC). The agreement between the three parties has been signed today. Closing of the transaction is subject to conditions.

The agreement essentially includes the following stipulations:

Initially Deutsche Telekom held 49 percent of the shares in PTC. In 2005 Deutsche Telekom exercised a call option for further 48 percent of the shares in PTC (increasing its stake to 97 percent) and in 2006 made an initial payment in the amount of EUR 0.7 billion to Elektrim. Deutsche Telekom will now make a second payment on the purchase price for such 48 percent of the shares in PTC to Elektrim.

In addition, Deutsche Telekom will acquire the last outstanding 3 percent of PTC by purchasing the two interim holding companies Carcom and Autoinvest. The interests in these two holding companies are held by Elektrim (49 percent) and Vivendi (51 percent).

In consideration thereof, Deutsche Telekom will pay a total of EUR 1.4 billion to Elektrim and Vivendi. The larger portion of this payment will go to Elektrim as the remainder of the purchase price for the 48 percent of the shares in PTC being the subject of the call option. The payment by Deutsche Telekom will also include the purchase price for Vivendi’s and Elektrim’s shares in the two holding companies. A smaller portion of DT’s total payment will be in consideration of a settlement of all remaining legal disputes among the parties involved.

The agreement now reached will - once closing has occurred - conclusively settle all legal disputes between the three parties before various courts and arbitral tribunals - some of which have lasted for years - and ensure a 100 percent shareholding in PTC for Deutsche Telekom.

“This is a good day for the Polish mobile communications market and our Polish customers. The absolute legal certainty that is now recognized by all parties is a clear message regarding PTC’s strategic development and paves the way for the future”, said Deutsche Telekom CFO Timotheus Höttges, adding, “We have untangled the knot.”

Based on the payments now agreed and the first purchase price payment following the exercise of the 2005 call option, the total price of the acquisition of a 51-percent-stake in PTC is approximately EUR 2.1 billion. Taking into account the Polish company’s cash balance of approximately EUR 1.5 billion and based on the adjusted EBITDA expected for 2010, this results in a multiple of the transaction of below 4.

In terms of customers and service revenues, PTC is currently the third-largest mobile operator in the largest mobile communications market in Central and Eastern Europe and lies just two percentage points behind the market leader. PTK Centertel and Polkomtel - the two main competitors of PTC in the polish mobile communications market - as well as PTC had practically the same shares of the market in the first half of 2010: PTK Centertel: 31 percent; Polkomtel: 30 percent; and PTC: 29 percent. In the first nine months of 2010, PTC achieved an EBITDA margin of 37 percent, which was high compared with its Polish peers.

Deutsche Telekom Disclaimer
This press release contains forward-looking statements that reflect the current views of Deutsche Telekom management with respect to future events. Forward-looking statements are based on current plans, estimates, and projections. They should therefore be considered with caution. Such statements are subject to risks and uncertainties, most of which are difficult to predict and are generally beyond Deutsche Telekom’s control. If these risks and uncertainties materialize, or if the assumptions underlying any of these statements prove incorrect, results may be materially different from those expressed or implied by such statements. Deutsche Telekom can offer no assurance that its expectations or targets will be met. Without prejudice to existing obligations under capital market law, Deutsche Telekom does not assume any responsibility for updating forward-looking statements by taking new information or future events or other matters into account.

About Deutsche Telekom:
Deutsche Telekom is one of the world’s leading integrated telecommunications companies with more than 129 million mobile customers, approximately 37 million fixed-network lines and 16 million broadband lines (as of September 30, 2010). The Group provides products and services for the fixed network, mobile communications, the Internet and IPTV for consumers, and ICT solutions for business customers and corporate customers. Deutsche Telekom is present in over 50 countries and has more than 250,000 employees worldwide. The Group generated revenues of EUR 64.6 billion in the 2009 financial year - more than half of it outside Germany (as of December 31, 2009).


This news content was configured by WebWire editorial staff. Linking is permitted.

News Release Distribution and Press Release Distribution Services Provided by WebWire.