Telediffusion hopes to succeed in Hungary where Swisscom failed

By bne IntelliNews May 14, 2007

Robert Smyth in Budapest -

Having finally got its hands on Hungarian broadcaster Antenna Hungaria, Telediffusion de France is hoping to use its new Hungarian investment as a launch pad to dominate the region's airwaves. However, previous owner of Antenna, Swisscom, sold up after failing to do precisely that.

"It's strategically important for us to be in Hungary," says Michel Azibert, deputy CEO of Telediffusion. "We want to grow and if we can start digital and mobile TV in Hungary then we can spread it around the region."

Telediffusion is taking over an increasingly profitable venture and has already rolled out digital and mobile TV in France. Telediffusion is also planning for Antenna to develop wireless broadband networks.

Just two years after Swisscom saw off considerable competition to acquire Antenna, concluding a long drawn-out privatization saga, Telediffusion agreed with Swisscom to buy 100% of the shares of Antenna Hungaria for HUF80.7bn (€326m) on May 8. Telediffusion was one of Swisscom's rivals during that 2005 privatization tender.

Azibert said that the purchase price at a premium of 23% in Hungarian forint terms compared with the 2005 price is good value and also that the time is right for Telediffusion to come into Hungary.

"Two years ago wasn't the right time for us to purchase Antenna as we were investing heavily in starting digital TV in France. Also, now there is a real willingness to introduce digital and mobile TV here, and this will was missing two years ago," says Azibert.

Providing legislation is passed that leads to the advent of digital TV and mobile TV in Hungary, Azibert says that Telediffusion will increase the investment of HUF4bn (€16.3m) per year injected by Swisscom by two to three times.

Lack of new targets

Like Telediffusion, exiting Swisscom had also planned to use Antenna as a springboard to expansion across the CEE region and cited frustration with the lack of available follow-on acquisitions of broadcasters as one of the reasons for getting out.

"We couldn't further implement our international broadcasting acquisition strategy. Hungary was the first step in the CEE region, but other targets were not available due to political and commercial circumstances," says Jurg Rotheli, chairman of Antenna's board of directors and Swisscom's CEO of related businesses.

"In the Czech Republic, the government sold its broadcasting entity together with the mobile network. We didn't need a stake in T-Mobile," he says.

Azibert is sanguine about the prospect of other regional broadcasters becoming available for sale in the short to medium term, but also expects Antenna to help boost its fledgling operations in Poland.

Rötheli added that Antenna was not at all prioritized for offloading, but that the sale price at CHF540m, a 38% mark-up in terms of the company's native currency was very good business. He also revealed that Antenna is not being offloaded specifically to raise funds for the acquisition of Italian internet provider FastNet, although Swisscom is basing its foreign business on broadband rather than broadcasting.

Telediffusion operates in France, Finland, Spain, Poland, Estonia and Monaco, and posted revenues of €945m in 2006, out of which €140m came from its international subsidiaries. Telediffusion's largest shareholders are Texas Pacific Group, Caisse des Depots et Consignations, AXA Private Equity and Charterhouse.

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