Market Insight

Providence sells on expanded satellite pay TV group

July 29, 2014

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Providence and Airbridge are to sell on the majority of their holding in pan-regional DTH (direct-to-home) satellite operator M7 Group to Astorg Partners after building the operation from its Benelux base into a group with operations across Eastern Europe and Germany. Providence has held a stake in the company since 2007, after buying a holding from Airbridge Investments. The details of the latest transaction were not disclosed, however the deal is expected to complete by the end of the third quarter of 2014, pending regulatory approval. Whilst Astorg will become the major owner of M7 following the completion of the transaction, Providence and minority shareholder Airbridge Investments will continue to hold interests in the company. Astorg currently does not have any interests in pay TV in its investment portfolio.

Today has also seen an organisational change for M7’s pan-European competitor Liberty Global, with the announcement of its plans to merge its UPC cable operations in Austria and Switzerland. The US based cable giant claims it plans to exploit scale efficiencies deriving from the combination of the two companies.

Our Analysis

Since Providence’s purchase of its stake in M7 in 2007, the satellite group has expanded into different markets and diversified its operations to incorporate both pay TV and technological services. At the time of Providence’s initial investment, the company operated DTH services in the Netherlands and the Flemish-speaking region of Flanders in Belgium. An expansion in Western Europe followed this with the launch of new pay satellite services in French-speaking Belgian territory Wallonia and Austria. The company’s most recent diversification in Western Europe came with the purchase of German cable channel distributor KabelKiosk from Eutelsat in May 2014, which may pave for the way for further expansion into the German market in future. This transaction also involved the lease of Eutelsat’s 9°E orbital slot to M7. Whilst heavy pay TV competition in M7 Group’s Western European markets will prove a challenge going forward, M7 Group may be able to compete on one level in these markets as a relatively lower tiered pay service, in parallel with Astra’s HD+ in Germany, for example.

As well as operating in Western Europe, M7 has become active in Central and Eastern Europe in recent years, acquiring pay TV services in the Czech Republic and Slovakia in 2011, and most recently entering the Hungarian market in March 2014. In addition to the non-organic growth that the purchase of these the Czech and Slovakian operations generated, IHS forecasts that these markets will also provide the most opportunity for future subscriber growth for M7.

M7 have also been active in areas outside of pay TV. This included the purchase of Dutch Internet service provider’s customers in February 2014, and the launch of M7 Platform Services in April 2014, which provides broadcasters with infrastructure for channel distribution. These activities, together with its pay TV activities across Europe, suggest that M7’s expansion has made it ripe for sale in Providence’s view.  

M7 Group
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