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DGAP-News: Tele Columbus AG: Tele Columbus announces its intention to launch an Initial Public Offering
[September 30, 2014]

DGAP-News: Tele Columbus AG: Tele Columbus announces its intention to launch an Initial Public Offering


(DGAP Corporate News Via Acquire Media NewsEdge) DGAP-News: Tele Columbus AG / Key word(s): IPO Tele Columbus AG: Tele Columbus announces its intention to launch an Initial Public Offering 30.09.2014 / 08:20 --------------------------------------------------------------------- Press Release The information contained herein is not for publication, release or distribution (directly or indirectly) in or into or to persons in the United States of America, Canada, Japan and Australia or any other jurisdiction in which publication, release or distribution would be unlawful.



Tele Columbus announces its intention to launch an Initial Public Offering - Listing on Prime Standard of the Frankfurt Stock Exchange planned by the end of 2014 - Tele Columbus is well positioned to capture attractive growth opportunities in Germany, one of Europe's most attractive cable markets - Tele Columbus has market leading positions in its core regions in Eastern Germany - high-performance cable networks and attractive customer base will enable accelerated growth in the coming years - Revenue and EBITDA growth in the first half of 2014 highlights the success of the Company's strategy - Proceeds to the Company will be used to provide more financial flexibility to continue executing its growth strategy Berlin, 30 September 2014. Tele Columbus AG ("Tele Columbus" or the "Company"), the third largest German cable network operator, is preparing its initial public offering (IPO). The Company intends to list its shares on the regulated market (Prime Standard) of the Frankfurt Stock Exchange by the end of 2014 subject to market conditions. The IPO will consist of new shares from a capital increase and shares from existing shareholders through a holding company. Tele Columbus would expect the primary proceeds from the offering to be not less than c. EUR 300 million. The Company intends to use the primary proceeds to reduce its current financial indebtedness and provide more financial flexibility to continue executing its growth strategy. The planned IPO will be combined with a refinancing of the existing debt to fully align its capital structure to the new profile of the Company and generate significant interest savings. Tele Columbus expects to reduce its financial leverage to around 3.5 times Normalised LTM EBITDA post the offering. As a future listed cable network operator with a strong presence in Eastern Germany, Tele Columbus seeks to substantially accelerate its growth potential and increase profitability in the coming years. The company has a clear investment plan to deliver further benefits to its customers and strengthen its relationships as a trusted partner of the housing industry.

"We are very excited about the future prospects of Tele Columbus as a public company. The significant growth potential of Tele Columbus is based on one of the best performing cable networks in the German market and a very attractive customer base with significant potential for selling additional products and services beyond cable TV services. This puts us in an excellent position to further grow our business over the coming years in one of Europe's most attractive cable markets", says Ronny Verhelst, Chief Executive Officer of Tele Columbus AG.


High-performance network, stable customer base and clear growth strategy Tele Columbus provides a variety of attractive television and telecommunication services to its customers. These include basic cable television, premium television packages as well as Internet and Telephony services. With c.1.7 million connected households, as of 30 June 2014, Tele Columbus is the third largest cable network operator in Germany, Europe's largest cable market. The Company has leading market positions in its core regions in Eastern Germany, with market shares of c.66% in Saxony-Anhalt and c.40% in Berlin-Brandenburg in 2013. The Company also operates successfully in selected regions in Western Germany, primarily in North-Rhine Westphalia and Hesse.

Tele Columbus has a stable and attractive customer base that ensures reliable income streams and additional selling opportunities through up- and cross-selling. A considerable part of the customer relationships are based on long-term contracts with a diversified base of large and small housing associations.

Tele Columbus is an integrated Level 3 / Level 4 operator with 54% of homes connected upgraded for two-way communication and connected to its own Level 3 network as of 30 June 2014. The Company's hybrid fibre-optic cable networks have a high node density with an average of 450 homes per node and are largely upgraded to the internet transmission standard Docsis 3.0 providing the ability to deliver speeds of up to 150 Mbit/s with potential to increase these speeds at any time in the near future.

Going forward, the Company plans to continue investments to further migrate networks from third party Level 3 operators and increase the share of homes connected to its own networks. These migrations are an important pillar of the Company's growth strategy, as they are expected to result in further savings on signal fees to third parties driving margin expansion and will also allow for substantially increased up-selling and cross-selling potential for additional services - such as premium TV products, Internet and Telephony via cable. The Company also aims to increase the number of homes connected beyond the existing footprint.

Strong momentum in operating business The success of the Company's strategy and strong execution by the management team are already reflected in the financial results for the first half of 2014. Tele Columbus secured medium-term financing and completed an organisational and strategic realignment at the beginning of 2014. Driven in large part by the positive momentum in the Internet and Telephony service business, revenues increased by 3.6% year on year to EUR 107.0 million whereas Normalised EBITDA increased by 11.6% year on year to EUR 48.8 million representing a 45.6% normalised EBITDA margin.

"Our positive business development in the first half of 2014 confirms that we have made the right choices to drive growth and further increase our operating profitability. We have also intended to create the necessary financial leeway for further investments in the next years to expand our own cable network and strengthen our position in the German cable market.

We expect our leverage to be approximately 3.5 times Normalised LTM EBITDA post the offering. In the medium term, we intend to maintain a target leverage of 3.0 to 4.0 times Normalised EBITDA, although our leverage may temporarily increase in case of accelerated investments or acquisitions", explains Frank Posnanski, Chief Financial Officer of Tele Columbus AG.

"We set ourselves three clear objectives we want to achieve over the medium term in the context of our growth strategy: firstly, we want to increase the number of products per customer from today's 1.4 to 1.7. Secondly, we want to grow the monthly average revenue per customer from EUR 14 to EUR 17. Thirdly, we want to facilitate this by growing the share of upgraded households supplied with own signals from 54% to 70%. With our high-performance network, our clear growth strategy and the greater financial and strategic flexibility we would gain from the planned IPO, we are in an excellent position to achieve these goals", says Ronny Verhelst.

Goldman Sachs International and J.P. Morgan Securities plc are acting as Joint Global Coordinators and together with BofA Merrill Lynch and Berenberg as Joint Bookrunners. Rothschild is a financial advisor to the Company.

Tele Columbus highlights Single-country exposure to highly attractive German cable market with strong macro backdrop - Germany has sound macro fundamentals and secular cable market growth - Significant upside potential for fixed broadband penetration - with cable winning market share mainly at the expense of DSL - and strong growth outlook for the Pay TV market - Tele Columbus provides a unique opportunity to invest in "pure" German cable #3 German cable operator with strong presence in regional markets - Tele Columbus has market leading positions in core regions of Eastern Germany, where fixed broadband penetration upside is even more pronounced - Attractive expansion strategy in selected Western German regions Stable, long-term customer relationships supported by housing association business model - German housing market characterized by high share of housing associations - Strong and stable long-term relationships characterizing current housing association contract portfolio, ensuring reliable income streams and additional selling opportunities - Proximity as key differentiator, Tele Columbus is perceived as a trusted partner State-of-the-art, integrated and flexible network providing competitive advantage - Tele Columbus has built one of the top performing cable networks in the German market - Ability to deliver speeds of up to 150 Mbit/s in homes upgraded to Docsis 3.0 - with significant further upside potential - Flexible network readily adaptable to growing customer demand and geographic expansion Clearly defined network investment plans driving proven cable growth strategy - Majority of future Capex purely success-driven, due to advanced, high capacity network - Investment focus on migration away from third party Level 3 operators to increase share of homes connected to its own networks and driving mechanical margin expansion - Continued migration and network upgrades increase the base for up- and cross-selling Strategic option value providing further upside - Potential upside from further German telecom and cable market consolidation Highly experienced management team with strong track record - Clean-up works constraining the growth strategy in the past are completed - Stable management team since 2011 has successfully realigned the Company and turned the focus to growth - Clear growth strategy implemented - and already showing early success Financial highlights EURmm 2011 2012 2013 H1 2013 H1 2014 Revenue 204.7 205.3 207.7 103.2 107.0 Growth, y/y % 0.3% 1.2% 3.6% Normalised EBITDA(a) 78.4 87.1 89.6 43.8 48.8 Normalised EBITDA margin, % 38.3% 42.4% 43.1% 42.4% 45.6% Normalised EBITDA growth, 11.1% 2.9% 11.6% y/y % Capex 68.1 59.6 51.5 15.5 18.5 Capex / Revenue, % 33.3% 29.0% 24.8% 15.0% 17.3% (a) Normalised EBITDA is defined as earnings before financial results (earnings from investments in associates, interest income, interest expense and other financial results reported using the equity accounting), income taxes and depreciation and amortization of intangible assets and goodwill, and adjusted for non-recurring items.

About Tele Columbus The Tele Columbus Group is one of Germany's largest cable network operators. Via its origins - individual regional cable network operators that were merged into Tele Columbus - the Company dates back to 1972. As of June 30, 2014, c.1.7 million connected households in Germany use Tele Columbus' TV signals and, increasingly, digital broadcast packages, Internet and voice connections provided via high-performance broadband cable. As a national provider with a regional focus and a partner of the housing industry, the Group is present throughout its core markets Berlin-Brandenburg, Saxony, Saxony-Anhalt and Thuringia as well as in numerous key regions in western Germany. In tune with current demand trends, the Company is upgrading its networks in a hybrid fibre-optic infrastructure for superfast Internet connections of up to several hundred megabits per second with the state-of-the-art Internet transmission standard DOCSIS 3.0. The broadband cable caters to the entire range of innovative media applications from analogous, digital and high-definition TV to high-speed Internet and voice connections to telemetry services, tenant portals and interactive services. Beyond merely transmitting signals, Tele Columbus uses its own product platform in order to actively increase the programme offering and to develop additional services.

Disclaimer These materials may not be published, distributed or transmitted, directly or indirectly, in or into the United States, Canada, Australia, Japan or South Africa. These materials do not constitute an offer of securities for sale or a solicitation of an offer to purchase securities of Tele Columbus AG (the "Company") in the United States, Germany or any other jurisdiction.

The securities of the Company may not be offered or sold in the United States absent registration or an exemption from registration under the U.S.

Securities Act of 1933, as amended (the "Securities Act"). The securities of the Company have not been, and will not be, registered under the Securities Act or under the applicable securities laws of Australia, Canada, Japan or South Africa. The distribution of this announcement may be restricted by law in certain jurisdictions and persons into whose possession any document or other information referred to herein comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

Any offer will be made solely by means of, and on the basis of, a securities prospectus which is to be published. An investment decision regarding the publicly offered securities of the Company should only be made on the basis of a securities prospectus. The securities prospectus will be published promptly upon approval by the German Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht - BaFin) and will be available free of charge from Tele Columbus AG, Goslarer Ufer 39, 10589 Berlin, Germany, or on the Company's website.

This announcement may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements may be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. Forward-looking statements may and often do differ materially from actual results. Any forward-looking statements reflect the Company's current view with respect to future events and are subject to risks relating to future events and other risks, uncertainties and assumptions relating to the Company's business, results of operations, financial position, liquidity, prospects, growth or strategies. Forward-looking statements speak only as of the date they are made. None of the Company, Goldman Sachs International ("Goldman Sachs"), J.P. Morgan Securities plc ("J.P. Morgan"), Merrill Lynch International ("BofA Merrill Lynch") and Joh. Berenberg, Gossler & Co. KG ("Berenberg", and, together with Goldman Sachs, J.P. Morgan and BofA Merrill Lynch, the "Underwriters") or their respective affiliates assumes, and expressly disclaims, any obligations or undertaking to update, review or revise any forward-looking statements, whether as a result of new information, future developments or otherwise.

The information contained in this announcement is for background purposes only and does not purport to be full or complete. No reliance may be placed for any purpose on the information contained in this announcement or its accuracy or completeness. The information in this announcement is subject to change.

This announcement does not constitute a recommendation concerning the potential offering of securities described in this announcement (the "Offering"). Acquiring investments to which this announcement relates may expose an investor to a significant risk of losing the entire amount invested. Potential investors should consult a professional advisor as to the suitability of the Offering for the person concerned.

The Underwriters are acting exclusively for the Company and no-one else in connection with the Offering. They will not regard any other person as their respective clients in relation to the Offering and will not be responsible to anyone other than the Company for providing the protections afforded to their respective clients, nor for providing advice in relation to the Offering, the contents of this announcement or any other matter referred to herein.

In connection with the Offering, the Underwriters and any of their affiliates, acting as investors for their own accounts, may subscribe for or purchase securities of the Company and may otherwise deal for their own accounts. Accordingly, references in the Prospectus, once published, to the securities being issued should be read as including any issue or offer to the Underwriters and any of their affiliates acting as investors for their own accounts. In addition certain of the Underwriters or their respective affiliates may enter into financing arrangements and swaps with investors in connection with which such Underwriters (or their affiliates) may from time to time acquire, hold or dispose of the Company's shares. The Underwriters do not intend to disclose the extent of any such investment or transactions otherwise than in accordance with any legal or regulatory obligations to do so.

None of the Underwriters or any of their respective directors, officers, employees, advisers or agents accepts any responsibility or liability whatsoever for or makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of the information in this announcement (or whether any information has been omitted from the announcement) or, with limited exception, other information relating to the Company, its subsidiaries or associated companies, whether written, oral or in a visual or electronic form, and howsoever transmitted or made available or for any loss howsoever arising from any use of this announcement or its contents or otherwise arising in connection therewith.

Press Contact: Hannes Lindhuber Director Communications Press Spokesperson Tele Columbus AG Tel. +49 (30) 3388 4177 Fax +49 (30) 3388 9 1999 Mobil +49 (170) 417 33 43 [email protected] --------------------------------------------------------------------- 30.09.2014 Dissemination of a Corporate News, transmitted by DGAP - a service of EQS Group AG.

The issuer is solely responsible for the content of this announcement.

The DGAP Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases.

Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------- Language: English Company: Tele Columbus AG Goslarer Ufer 39 10589 Berlin Germany Phone: 030 3388 4177 E-mail: [email protected] Internet: www.telecolumbus.de ISIN: DE000TCAG172 WKN: TCAG17 Listed: Regulierter Markt in Frankfurt (Prime Standard) Notierung vorgesehen / Intended to be listed End of News DGAP News-Service --------------------------------------------------------------------- 289321 30.09.2014

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