Astral buys CVR for $8m

Astral Telecom, one of the two top cable TV companies in Romania, last week acquired Cable Vision of Romania (CVR) in a deal worth more than 8 million dollars (6 million euros).

CVR was the last remaining medium-sized player that had not been bought by one of the three top rival companies on the market – RCS&RDS, Astral and UPC – that currently control 60-65% of the market in terms of the number of subscribers.

CVR’s majority shareholder was RomTelecom and it has a market share of 2-3% with 50,000 subscribers.

“By taking over CVR we’ve regained the market leader position. A position that will soon be strengthened by acquiring another, smaller player with 20,000 subscribers,” Aurel Costea, general manager of Astral, told Ziarul Financiar.

Astral lost the leading position two years ago when one of its rivals, RCS&RDS, bought Terra Sat and reached a market share of 25%, compared to Astral’s 22%.

The two competitors subsequently united to buy FX Communications, with the largest part of the subscribers being taken over by Astral, which thereby gained some ground.

The fight for market consolidation began in the early 1990s, when the main companies understood they needed as many subscribers as possible to survive and prepare for the real goal of offering subscribers the so-called “triple play” package of services: cable TV, Internet and fixed-line telephony.

The process of consolidation is likely to continue this year with a much more interesting move: the acquisition of Astral.

The company, which is owned by Romanian businessmen and US investment fund AIG New Europe Fund, has received several bids from strategic investors and other investment funds.

According to sources close to discussions, UPC and US fund Hicks, Muse, Tate & Furst are the main players engaged in the battle for Astral.

For now, UPC has a 10% market share and is ranked third on the Romanian cable market.

In order to distance itself as a leader, UPC needs to buy one of the two companies.

Moreover, Astral telecom and RCS&RDS have developed telephony and Internet services in parallel with cable TV services.

UPC Romania does not yet offer fixed-line telephone services, and its Internet services are currently only available as part of a pilot-project in Timisoara.

Acquisition of Astral Telecom would immediately propel UPC onto these markets that are currently in full swing, particularly since UPC provides triple play access in the rest of Europe.

Hicks, Muse, Tate & Furst is one of the world’s top institutional investors in telecommunications.