Magyar Telekom has sold its fully owned Bulgarian subsidiary Orbitel EAD to the Internet-based telecommunication company Spectrum Net AD in a deal worth 5 million euro, the buyer and seller said Tuesday.
The deal is pending the approval of the Commission for the Protection of Competition (CPC) and is expected to be finalized in early 2010.
Magyar Telekom, which is part of the group of Deutsche Telekom, acquired Orbitel for 8 million euro in 2005.
After the integration of the two companies the owner hopes to achieve revenue of over 20 million euro in 2010 and earnings before interest, taxes, depreciation and amortization of 5 million euro.
"Being the two biggest players in the alternative telecom market, Spectrum Net and Orbitel emerged as natural partners as early as the competitive procedure for the transaction", the announcement for the deal says. "Orbitel remains a stable and self-financed company but to keep up the growth consolidation is the only solution." Orbitel CEO Sandor Polani is quoted as saying that they hope in future the regulator will be able to encourage market competition in a more efficient manner.
Spectrum NET CEO and shareholder Teodor Zahariev said that the deal is a product of the ambition for consolidation of the alternative business in Bulgaria and for taking the leading position on Bulgaria's alternative telecom market.
The deal between the two biggest alternative telecom operators in Bulgaria is "the first step towards consolidation of the sector and will bring about a growth, enhanced competition and improved services", the statement goes.
Orbitel and Spectrum Net were both established in 1997. The former has a national licence for voice and data transmission which allows it to provide telephony, high-speed Internet and virtual private networks. The latter started as an Internet provider but has since grown to offer comprehensive telecom solutions for transmission of data, voice and virtual services.
In early 2008 it expanded into the market of household users to become of the technological leaders in Internet, digital TV and fixed telephony services for household users.