HTCC, owner of Hungarotel, the third largest Hungarian operator, has announced that it is acquiring Invitel, the second largest operator, for EUR 470m, or roughly 6x 2006F EV/EBITDA. Recall that Invitel was originally put up for sale earlier this year by its Dutch owner, Matel, only to be withdrawn from the market in favour of debt financing.
Invitel operates as the incumbent in 9 out of the 54 telco concession areas in Hungary, whilst Hungarotel is the incumbent in 5 concession areas. Both operators also operate as alternative carriers in their non-concession areas. The combined group will have some 20% market share (behind MTEL which has almost 70% market share, and ahead of Monortel and Emitel).
Our view: Whilst the news could have a slight negative trading impact on MTEL in the near-term (since MTEL expressed interest in Invitel earlier this year), we do not see a significant increase in competitive threat from the merger. The two operators already compete with MTEL separately, but are also key customers of MTEL particularly for broadband.