Level 3 Said to Vie With Deutsche Telekom for Poland’s GTSAaron Kirchfeld
Level 3 Communications Inc., a U.S. telecommunications company with operations in 55 countries, is bidding for Polish fixed-line operator GTS Central Europe, said two people familiar with the discussions.
Level 3, which is based in Broomfield, Colorado, is competing against Deutsche Telekom AG, Germany’s biggest phone company, said the people, who asked not to be identified because the talks are private. GTS, based in Warsaw, may fetch about 500 million euros ($667 million), one of the people said.
GTS, a provider of telephone and Internet services to businesses including Coca-Cola Co. and General Motors Co., would offer any buyer a platform for growing demand in central and eastern Europe. The company, which has 38,000 customers and a network consisting of 26,000 kilometers of fiber, reported revenue of 387 million euros and earnings before interest, tax, depreciation and amortization of 103 million euros for 2012, according to its website.
Representatives for Deutsche Telekom, Level 3 and GTS all declined to comment on the process.
Meanwhile, Poland’s second-largest fixed-line phone company, has expressed interest in the Polish part of GTS. Netia SA’s Chief Executive Officer Miroslaw Godlewski said yesterday the company “was, is, and will be interested” in the Polish assets of GTS, which accounted for about 30 percent of revenue for 2012, according to the company’s website.
Level 3 shares have declined 2.4 percent this year, valuing the company at about $5 billion. The firm, which was founded in 1985, reported sales of $6.4 billion and a net loss of $422 million for 2012.
Founded in 1993
GTS, which was founded in 1993 and operates in Poland, the Czech Republic, Hungary, Romania and Slovakia, was acquired in 2008 by a group of private-equity funds including Columbia Capital, M/C Venture Partners, Innova Capital, HarbourVest Partners, Oak Investment Partners and Bessemer Venture Partners. GTS has made at least nine acquisitions since 2005, its website shows.
More than $60 billion of phone companies worldwide have been targeted this year, according to data compiled by Bloomberg, as bidders take advantage of low valuations for telecommunications assets.
Vodafone Group Plc sparred with John Malone’s Liberty Global Inc. for control of Germany’s Kabel Deutschland Holding AG. Liberty bought U.K. Internet and television provider Virgin Media Inc. in June and has since raised its holding in the Dutch cable-TV provider Ziggo NV.
Deutsche Telekom, which completed a merger of T-Mobile US with MetroPCS Communications Inc. in May, yesterday reported its first increase in quarterly revenue and U.S. mobile-phone contracts in three years. Finance Chief Timotheus Hoettges said in a speech yesterday that within Europe, the strongest positive contributor to earnings came from Poland.