Carlyle buys Telecable for €400m

Susannah Birkwood
19 October 2011

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The Carlyle Group has won the bidding war for Spanish telecommunications provider Telecable de Asturias, beating CVC at the last hurdle with its offer, which values the company at €400m.

An 85% stake will now be owned by the private equity firm, while the vendor of 77%, regional savings bank Liberbank, will retain 15%. Press group Prensa Ibérica sold off the other 8%.

The strategy for growth will involve enabling the business to continue introducing innovative technologies into the Spanish market.

Carlyle was attracted to Telecable due to its strong historical performance, the perceived talent of its management team and its growth potential in new product areas and geographies. It believes the continuing involvement of Liberbank will maintain the firm's strong Asturian personality.

The investor, meanwhile, won the auction run by Goldman Sachs and Société Générale due to its industry expertise and strong local understanding. Other influencing factors included Carlyle's offer of a guarantee for Telecable to continue operating as an independent company, retain all staff members and maintain its headquarters in Asturias. It was agreed that if Carlyle buys any more Spanish telecoms businesses, the investment should come from Asturias. This is possibly a response to critics who claim Telecable should have been sold to a bidder who was prepared to consolidate the sector.

Though analysts view the telecoms sector as challenging because of the tough competition between businesses and the pressure to reduce prices due to Spain's economic problems, Carlyle says regional cable companies have a strong track record in the country. HDTV and broadband services – often packaged up with other mobile solutions – are also in demand and the cable market commands an 80% share of the fixed-line broadband market.

Other Carlyle-backed telecoms companies include Sweden's Com Hem, France's Numericable and Completel, and Casema in the Netherlands.

Carlyle injected the equity for its fourth portfolio company in Spain via its Europe Partners III fund, which closed on €5.3bn in 2006.

The deal is expected to be completed by the end of the year.

Debt
A club of banks provided a debt package worth more than €220m to support the deal.

Company
Headquartered in Oviedo, Telecable de Asturias is a TV, telephony, broadband and advanced business solutions provider for the Asturias region of Spain. It was the first operator to broadcast HDTV channels in the country.

The company was founded in 1995 and generated an EBITDA of €47.6m on a turnover of more than €121m last year. It employs 170 people.

People
Alex Wagenberg, managing director in Carlyle's European buyout team, represented the investor. Alejandro Martínez Peón is the CEO of Telecable, while Juan García-Conde is chairman of the company's board.

Advisers
Equity – Linklaters, Alejandro Ortiz (Legal).
Vendor – Goldman Sachs (M&A); Société Générale (M&A); Freshfields, David Franco (Legal).
Debt – Clifford Chance, Stuart Percival (Legal).