Cyfrowy Polsat Group acquires Midas Group

29 Feb 2016

Cyfrowy Polsat Group, through Polkomtel, acquired Litenite - a company controlling 66% of shares in Midas Group. Under the second stage of the transaction a tender offer for shares was announced to buy back the remaining 34% of shares of Midas Group. The transaction will be financed from Cyfrowy Polsat Group’s own resources.

As a result of the agreement to acquire Litenite from Ortholuck concluded by Polkomtel, Cyfrowy Polsat Group acquires 66% of shares in Midas Group. The transaction involves the acquisition of Litenite’s net liabilities in the amount of PLN 788 million and EUR 1 payment to Ortholuck for equity (value of net liabilities as at 31 January 2016). The equity value of Midas Group was thereby set at PLN 0.81 per share.

“Our Group has cooperated with Midas Group for many years. There are strong business and operational connections between us, and the assets of Midas Group are not only complementary to our services, but also constitute one of the cornerstones of our strategy. The transaction is therefore another natural, well thought-out and analyzed step on the development path of our Group which brings about many current as well as future business benefits for our entire Group” , Tobias Solorz, President of the Management Board, Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. explains.

Benefits of the Midas Group’s acquisition

  • Securing the key frequencies:

-    securing the key frequencies –1800 MHz band fully dedicated to LTE services, 900 MHz band for HSPA+ services and 800 MHz band based on which the first LTE800 network in Poland will be launched,

-    thanks to the continuous 19.6Mhz bandwidth block in the 1800 MHz spectrum, only customers of Cyfrowy Polsat Group will be able to achieve transfer speed of up to 150 Mb/s in the LTE service,

-    securing access to the infrastructure used by Cyfrowy Polsat Group in providing mobile Internet access services, a key element of the multpilay strategy,

-    the existing infrastructure ensures 96.8% LTE outdoor population coverage and 99% HSPA+ outdoor population coverage.

  • Higher flexibility – adding flexibility in creating sales policy and both single play as well as multiplay tariffs, which is essential for the Group’s strategy.
  • Low costs of data transmission – elimination of internal costs that the Group incurs as network inherent effect of successful sales of services based on data transmission.
  • Transparency – improved transparency of the shareholding structure of the Group and key assets ownership, which is essential for more transparent dialogue with our shareholders.


Valuation of Midas Group

Valuation of Midas Group was carried out based on “fair value” standard in DCF (discounted cash flow) approach and on income approach in ANBV method (adjusted net book value). Price terms of the transaction of Litenite’s acquisition are fair, which has been confirmed by an independent fairness opinion issued by EY, an advisory firm, prepared at the request of Polkomtel.

In my opinion, confirmed also by an independent opinion of EY, an advisory firm, the valuation of Litenite is attractive and fair”, Tomasz Szeląg, Management Board Member, CFO at Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. says,Our goal is to acquire 100% shares in Midas Group, therefore under the second stage of execution of the transaction, we immediately announced a tender offer for the sale of 34% of shares by the remaining shareholders. I hope that due to the parameters of the announcement it will be successful.”

Main parameters of the tender offer


Nearly 97% of Poles within LTE coverage and the strategy of network roll-out in the years 2016 – 2018

Cyfrowy Polsat Group, as a result of regular deployment of transmitters, has the LTE network covering 96.8% of the country’s population. It is the biggest LTE network currently operating in Poland. Furthermore, according to the latest survey of the quality of mobile telephony services commissioned by the Office for Electronic Communication, Plus Internet was the fasted mobile Internet in Poland in the data transmission category, and furthermore the survey indirectly confirmed that Plus has the biggest LTE coverage in Poland.

After the end of the LTE800 auction, in which the prices of 800 MHz frequency band reached the highest levels in Europe, and based on the analysis carried out by us which show that the cooperation with the entities who have won frequency blocks at such a high pricing level would be financially inviable and irrational, both for the company and its customers, we decided to continue the network roll-out based on the frequency resources owned by Polkomtel and Midas. We will continue with the roll-out of LTE 1800 MHz and 2600 MHz network, while actively supporting the LTE ODU-IDU Home Internet technology, and we also plan to carry out the refarming of 900 MHz and possibly 2100 MHz spectrum. The cost of the aforementioned work will be significantly lower than the price of 800 MHz frequency band under the auction, and simultaneously it will enable us to accomplish all the assumed business goals”, Tobias Solorz, President of the Management Board, Cyfrowy Polsat S.A. and Polkomtel Sp. z o.o. claims.

Main assumption of the network roll-out by the companies from Cyfrowy Polsat Group:

  • Capacity development:

-    adding more LTE1800 stations will allow for maintaining high quality of services

-    the new 2600MHz band will be fully dedicated to LTE/LTE Advanced

  • Finalization of LTE coverage:

-    finalization of the initiated investments in LTE800,

-    continued roll-out of the LTE 1800 MHz network, supported by 2600 MHz band and the ODU-IDU solution,

-    ODU-IDU technology may improve the effective coverage of a single LTE1800 station even threefold.

  • Refarming:

-    first successful tests: 4.2MHz of the 900MHz band refarmed to HSPA+ standard in the area near Słupsk

-    next step: refarming of 5MHz of the 900MHz band to LTE standard

-    optional: in the longer term, refarming of the 2100 MHz band to LTE standard

  • Planned CAPEX:

-    network roll-out plan will cost no more than PLN 1bn in 2016-18 period

-    CAPEX/Revenue ratio in 2016-18 will not exceed the previously announced maximum level of 10%

-    this plan is much more cost-efficient than the purchase of 800 MHz band.


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Last updated 03/01/2016