Market Insight

TDC enters Norway consumer sector with Get acquisition

September 15, 2014

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TDC has agreed to buy cable operator Get for Nkr13.8 billion (€1.8 billion), marking the Danish company’s entry into the Norwegian consumer sector. TDC has bought Get from current owners Goldman Sachs units GS Capital and Quadrangle on a cash and debt free basis, and expects the deal to be completed in the fourth quarter of 2014, subject to approval from Norwegian competition authorities.

TDC estimates the deal will bring annual synergies in its Nordic businesses of some NKr185 million (€23.6 million) by 2017. The transaction will be financed through a combination of senior unsecured EMTN bonds and hybrid bonds, and TDC will cut its 2014 dividend to DKr2.50 (€0.32) per share, down from previous guidance of DKr3.70 per share, in order to maintain its investment rating.

Get had some 392,000 pay TV subscriptions at the end of March 2014, an 18% market share, and 250,000 fixed broadband connections, a 12% market share.            

Our analysis

The acquisition of Get represents a fairly major shift in strategy for TDC, after several years of slimming down its operations and international divestments. The Danish incumbent has stated that it will gain half a million new customers in Norway, giving it access to the fixed-voice, broadband, and pay TV consumer sectors. TDC already offers services to the business sector across the Nordics through its TDC Nordic unit, but the deal marks its first foray into the Norwegian consumer sector. TDC becomes the latest European operator to turn to a cable acquisition as organic growth in the mobile sector stalls, following the likes of Vodafone and Deutsche Telekom who have made acquisitions in Germany, Spain, and Poland.

TDC plans to leverage Get’s strong pay TV customer base and cable broadband network to drive multiplay growth. Get is the second-largest pay TV and broadband operator in Norway, behind the incumbent Telenor. Despite an overall decline in the Norwegian cable sector due to increasing competition, Get has managed to increase its pay TV market share to 18% at the end of the first quarter of 2014, from 17% at the end of March 2012, while its broadband share has increased from 10% to 12% in the last two years – but the cable player is struggling to dent the dominance of Telenor. The Norwegian incumbent held 46% of pay TV subscriptions at the end of March 2014, 43% of fixed broadband connections, and 64% of fixed voice, along with a majority share of the mobile sector.

Whilst Get remains behind Telenor in the pay TV market, it has not experienced the steady decline in customers that its direct competitors in cable, satellite and pay DTT have seen in the past year. Telenor sells IPTV services to its Norwegian fibre customers who take broadband and telephony, while it also offers a full range of cable-based multiplay services in Norway via its Canal Digital subsidiary, which also operates a DTH (direct-to-home) satellite service.

TDC dominates the Danish market, with over 50% of subscriptions in the fixed voice, broadband, and pay TV sectors, along with 35% of mobile. However, the operator has struggled of late with increasing competition, regulation, and challenging macroeconomic conditions in its home market, seeing second-quarter 2014 revenues fall 5.5% year-on-year (y/y) as Danish mobile subscriptions fell 7.9% y/y. As TDC’s domestic market approaches saturation, the operator will now be hoping it can bring its experience and synergies to grow its business in Norway. Elsewhere TDC sold its Finnish enterprise and wholesale units TDC Finland and TDC Hosting in early June to local operator DNA in April 2014, while the company has stated it is looking for small and medium-sized acquisitions in Sweden.

Denmark Norway
Get TDC Telenor You See
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