It has acquired almost 100,000 new customers mostly via companies close to the group since the beginning of 2014, industry sources told ZF, paying more than EUR10 million in the process.
“The latest acquisition is Pan Electro SRL, which has customers in Calarasi and Ialomita Counties. RCS&RDS took over 14,000 subscribers for EUR2 million plus VAT,” a market source told ZF.
Pan Electro had a little more than 10,000 subscribers, another source said, confirming the takeover.
RCS&RDS also bought a Cluj company with about 50,000 customers last November, a source told ZF. “RCS&RDS paid EUR130 plus VAT for each subscriber,” the source said, estimating the deal value at over EUR6 million, payable in installments.
RCS&RDS and Pan Electro representatives did not return ZF’s calls for comment by press time. Pan Electro’s owner is Adrian Margescu, who is also vice-president of the Association of Electronic Communications of Romania, an organization of cable companies.
The two deals were closed after those conducted by RCS in January-September 2014, when it took over about 50,000 customers from Electrosim (Alba Iulia), Vesatel (Reghin), Canal 7 (Baia Mare), KATV Star (Cisnadie). Some of the takeovers were done via Clever Media Network, run by Adrian Tomsa, who is close to Teszari.
This is a significant figure, considering rival UPC gained a little more than 50,000 customers for its fixed Internet services in 2014, without resorting to any acquisitions. There were 6.65 million cable TV subscriptions and 3.9 million broadband Internet subscriptions in Romania in mid 2014.
RCS&RDS accounts for more than 60% of the cable TV market and for about 50% of the fixed Internet market, and is still run by entrepreneur Zoltan Teszari, despite the size of the business. Revenue stands at more than EUR400 million a year in Romania alone.
Teszari, who bet on fiber optic long before his rivals did, continues to expand his fixed and mobile networks aggressively, with a greater emphasis on mobile telephony. This strategy cost Orange, Vodafone and Telekom more than 200,000 customers who switched to Digi, once the operator introduced an unprecedented offer – the EUR4 monthly plan with unlimited calls to any network, several times cheaper than the market average, last spring.
RCS&RDS’ race to expand its infrastructure comes at a time when Orange and Vodafone, the mobile telephony market leaders, have clearly signaled intention to operate fixed networks. However, they are still considering options to pursue this strategy.
The Telekom group, the only one with an even wider fixed-mobile network than RCS&RDS, is now focusing on integrated packages and is also looking into the option of making infrastructure investments together with a partner, due to pressure to meet its profit targets.
Taking advantage of the cautiousness of multinationals on the local market to approve takeovers of small cable companies, RCS&RDS stepped up efforts in this department in recent years, pressuring small cable operators into selling.
After former Romtelecom (now part of the Telekom group) stopped buying cable companies, the only real competitor RCS&RDS has in buying small players is Digital Cable Systems (AKTA), held by Asian-American private equity firm Pinebridge.
However, there is no other company in Romania that can match the size, the know-how and the swiftness of Teszari’s team.
RCS&RDS and AKTA’s efforts plus Telekom’s past endeavors are showing in statistics, too. Small players have been disappearing at a faster rate over the last few years due to the rise in content costs and to the taxes introduced by the Ponta government overnight: from 494 cable companies in 2009 only 320 were still in business by June 2014, according to communications industry watchdog ANCOM.
(English version by Loredana Fratila-Cristescu)