Market Insight

Bulgarian incumbent Vivacom changes ownership

November 20, 2012

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Russian and Bulgarian investors have bought BTC, the Bulgarian incumbent telcoms company. VTB, a Russian investment bank, and Bromak, controlled by Bulgarian businessman Tzvetan Vassilev, acquired 93.99 per cent of shares of BTC, which provides fixed and mobile telecommunications, satellite TV and IPTV services under the Vivacom brand. The deal has been cleared by the European Commission.

VTB has added €130m to the operator's capital, which has been used to partially pay off debt and to restructure its balance sheets. As a result, Vivacom's debt has been reduced from €1.7bn to €588m.

Listed on Bulgarian Stock Exchange, BTC reported profits of €7m on revenues of €895.9m in 2011, after making a €75m profit the year before. BTC total liabilities maturing in 2012 were about €1bn. From 2007, 90 per cent of BTC's shares were owned by AIG.

Over the last three years BTC has invested in developing its businesses. In mid-2010 it launched a satellite TV platform, two years later it launched an IPTV service, and throughout the period it has also invested in deploying a fibre network. Vivacom's satellite TV platform attracted well over 100,000 subscribers in mid 2012, although growth slowed in the third quarter of 2012. Thanks to BTC's expenditure programme, necessary for increasing its competitiveness, the operator's debt grew considerably, pushing the need to look for new investors.

Restructuring the debt and the new investors should enable BTC to continue investing its infrastructure. The incumbent is facing fierce competition from alternative telecommunications companies, as well as cable TV companies, primarily EQT-backed Blizoo, which by mid 2012 managed to move all its subscribers to digital. More investment will be required for BTC's mobile service, ranked third in the country, and its new IPTV platform.

There is still room for growth in satellite TV, although Vicacom is competing with two other platforms, Satellite BG and market-leader Bulsatcom. Multichannel TV penetration is 75 per cent of total homes and no DTT service has yet launched (the results of the tender called in 2009 were questioned by European Commission and currently there is no DTT transition schedule in Bulgaria). This means that satellite has the opportunity to grow in rural areas without competition from other platforms. 

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