MTEL is reportedly bidding for Invitel, the second largest fixed operator in Hungary. Invitel is reportedly being valued at EUR 500m. Hungary is divided into 54 concession areas, 39 of which are served by MTEL, while Invitel serves 9 concession areas covering 1.4m people, roughly 14% of the population.
Invitel offers most of the fixed-line services that MTEL offers, and serves both the residential and corporate segments, and therefore would not require additional capex. Invitel had 398k lines at the end of 2004 in its concession areas, but is also increasingly operating outside its concession markets. We view the news as positive as it will allow MTEL to consolidate its domestic market and reduce competition. We reiterate our Buy recommendation on MTEL