Is RCS&RDS buying UPC Romania?

Newsroom 25/02/2011 | 14:24

Rumor on the telecom market goes that Romanian telecom operator RCS&RDS is in negotiations to buy UPC Romania, part of Liberty Global.

 The idea first appeared yesterday on the blog of Catalin Tolontan, who wrote: “These days there are discussions abroad regarding a deal through which RCS RDS would take over UPC Romania.

 Both RCS and UPC have businesses on various Eastern European markets, so the transaction could mean that UPC gives up Romania in exchange for another region that RCS would give up,” says the blogger.

 If the two companies close the deal and if the transaction is approved by the Competition Council, the new organization would be a giant that would only be opposed by Romtelecom as a matching competitor on the television market. On the internet and telephony segments, it would also compete on an equal footing with telecom players such as Orange, Vodafone and Cosmote.

 According to the financial results announced by the company today, the number of clients of UPC Romania decreased last year with 7.4 percent to 1.15 million.

 “Economic indicators worsened in some sectors, such as budgetary sector, and these have maintained economic pressure on clients, especially those with revenues below average, and this in turn triggered a reduction in the customer base on the segment of analogic television,” according to the company statement.

 The UPC customer base decreased in 2010. Thus, the number of customers of UPC in 2009 was 1.249 million, while at the end of last year the customer base was 1.15 million.

 The company has been losing clients on the segment of the most accessible television services, the analogue cable services, while gaining new ones on the digital television segment.

 Thus, the number of customers of analogue cable services went on a downward slope by 22.8 percent, down to 645,900.

 However, UPC posted a 23 percent growth in the number of digital television customers, up to 283,900 customers.

 

 The number of internet clients decreased slightly from 267,400 to 255,000 while the number of customers of telephony services went up by 6.5 percent to 140,800 users.

 “Over the last quarter of 2010, UPC Romania posts a slight growth in the total number of clients. Thus, in Q4, the number of subscribers on the television-digital, analogue and DTH- reached 1,156,000, a growth which is due to the digital; segment (8 percent growth) and DTH segment (14 percent growth),’ says the company.

 During the next period the company is preparing to launch the service of high-speed internet for residential clients through the platform Eurodocsis 3.0 at national level.

 RCS RDS is mainly controlled by Romanian businessman Zoltan Teszari, who has been a rather discrete presence in the media. The company is run by Alexandru Oprea, who is the RCS RDS president (in picture).

 RCS RDS posted revenues in excess of USD 700 million. The company is leading a very aggressive model of business based on offering many products and services for free, with a view to attracting as many clients as possible. This, however, has also resulted in the fact that RCS RDS has outstanding loans of USD 175 million this year and another USD 375 million in 2012, according to Moody’s.

Otilia Haraga

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