TDC's offer values Polkomtel at EUR 4.39bn, implying 2005F EV/subscriber of EUR 477, and 2005F EV/EBITDA of 7.8x. The offer price implies valuation slightly above the TPSA/Centertel transaction 4Q05, which was executed at 2005F EV/subscriber of EUR 466 and EV/EBITDA of 7.5x (note that TPSA maintains that the transaction is below 7.5x 2005 EV/EBITDA according to their own calculations, implying that 2005 actual EBITDA will come in above our forecast).
We believe the potential transaction is supportive of sector valuation, and should be positive for TPSA. Note that the mobile transaction valuation implies that the market is currently only valuing TPSA's fixed line business at 2006F EV/EBITDA of 4.1x (3.8x 2005F EV/EBITDA). The Polkomtel sale could trigger some sector valuation re-rating and impact TPSA positively. At current price, TPSA is attractively valued at 2006F EV/EBITDA of 5.4x. We reiterate our Buy recommendation on the stock with PLN 28 fair value estimate.