MmO2 no longer going Dutch

14 Apr 2003

MmO2, the British parent of O2 Ireland, has sold its Dutch subsidiary O2 Netherlands (formerly Telfort Mobiel) to independent private equity group Greenfield Capital partners for just €25m.

The business, which has 1.3 million customers, had been valued at around €100-€300m, but it’s thought that because around 75pc of the customer base are low spending prepay users it’s not likely to be a target for other mobile operators.

The widely anticipated sale of O2 Netherlands will be used to fund the operation of the ongoing core business of MmO2, according to a company statement.

In the year to 31 March, 2002, O2 Netherlands had a turnover of £200m with an earning before interest, tax, depreciation and amortisation (EBIDTA) loss of £51m and an operating loss before goodwill and exceptional items of £119m.

It expects the sale to result in a provision for loss on disposal in the order of £1.4bn, which will be treated as an exceptional item in the year ended 31 March, 2003.

The company expects that going forward the disposal would result in a slight improvement in MmO2’s EBITDA margin. It said there will be minimal effect on the group’s (MmO2) revenue and absolute EBITDA.

Today’s announcement follows a comprehensive review of the competitive five-player Dutch market.

MmO2 said that this review showed that while O2 Netherlands is expected to deliver positive EBITDA in the second half of the year ended 31 March 2003, and to be close to EBITDA break-even for the full year, it doesn’t have the critical mass to fit MmO2’s value creation strategy in the longer term.

Peter Erskine, chief executive officer of MmO2, said: “We believe that this deal is in the best interest of MmO2 shareholders and also presents a good opportunity for the Dutch business, its employees, customers and suppliers going forward. The Greenfield offer enabled us to sell at a realistic valuation given market conditions in the Netherlands. We remain focused on our strategy of delivering organic growth and continuing to improve the operational performance – and therefore, the value of the group’s (MmO2) business in core markets.”

Stef van Doesburg, partner of Greenfield Capital Partners, said: “Today’s agreement opens up an exciting new future for O2 Netherlands, its customers and employees. The business is complementary to our existing telecoms portfolio, which includes Enrtel NV, the number two dial-up telecoms operators in the Dutch market. This acquisition supports our overall strategy of investing in companies that offer a competitive range of fixed and mobile services.”

The company is expected to change its name back to Telfort Mobiel.

The acquisition is expected to be completed by May.

By Suzanne Byrne