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Private Equity Groups Agree $730Million GTS Sale

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November 13, 2013

A group of Private Equity firms, including HarbourVest Partners and Innova Capital, are set to share a $730million windfall after successfully negotiating the deal of GTS Central Europe to Deutsche Telekom, reports Bloomberg.

 

Heike Pauls, of Commerzbank AG, told Bloomberg, the deal “is not a bargain but still an acceptable price.” Deutsche Telekom would certainly appear to agree with this analysis.

 

Already a well-known telecoms giant with a global reach, this deal gives them landline ownership in countries close to home where they currently do not have such a presence, namely Poland, the Czech Republic, Slovakia, Hungary, and Romania, to complement the already large portion of the mobile market they hold in these locations.

 

A statement from the company, carried in the same Bloomberg news story, said, “We are investing against the trend. GTS is a further element for developing our integrated market position comprising mobile and fixed-line network services.”

 

Pauls added, “The acquisition makes perfect sense within Deutsche Telekom’s strategy of repositioning in Eastern Europe for when the economic recovery begins, as well as growing in integrated offerings where it only has mobile-phone services.”

 

GTS CEO Danny Bottoms told Reuters, “We see Deutsche Telekom as the best partner for GTS and are excited about the benefits and opportunities this will create for our customers and employees.”

 

GTS is based in Warsaw, and the Financial Times recently highlighted the Polish capital in an article exploring the PE hubs of Europe. While it was their belief that the power of the market lies in Poland, this deal is likely to bring a great deal of exposure to the emerging PE markets in the other countries.

 

It is not just Deutsche Telekom who are likely to benefit when sustained economic recovery hits Eastern Europe, but PE investors and dealmakers across all industries.
Away from PE, publicly traded shares in Deutsche Telekom dropped over the weekend, as reported by The Fly on the Wall, while Goldman Sachs downgraded their stock from “hold” to “sell,” it having been listed as a “buy” as recently as the end of last month.

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