Denis O’Brien has joined an advisory group with Lastminute.com co-founder Brent Hoberman to advise Russian tycoon Mikhail Fridman on how to spend US$16bn on telecoms assets in Europe and the US.
O’Brien, who made his fortune through Esat Telecom, which he sold to BT, and who controls a large media empire in Ireland, has built up a considerable international presence through mobile operator Digicel, which is active in the Caribbean, the Pacific, and South and Central America.
LetterOne (L1) Technology can best be described as an investment vehicle that Fridman and his partners want to employ to snap up vital telecoms assets in Europe and the US.
According to the Financial Times, Fridman has recruited an all-star cast of seasoned advisers, including O’Brien, Brent Hoberman, former Skype executive Russ Shaw, Vodafone co-founder Julian Horn-Smith and Poynt founder Osama Bedier.
The networked economy is all for the taking
The move suggests an interesting land grab in the telecoms world. This comes at a point where telecoms assets will give investors an edge in the increasingly-networked economy, but also at a time where traditional operators are losing vital messaging and call revenue to free apps like Whatsapp, Facebook Messenger, Snapchat and Viber.
This is both the best of times and the worst of times for telecoms operators that are eager to serve broadband-hungry consumers at a time when business models are being turned upside down and debts are mounting.
It is understood that LetterOne will focus on incumbent operators across Europe and the US that have valuable assets but are heavily indebted, including operators such as Eircom, which could benefit from investment led by telecoms experts who appreciate the value of these networks.
L1 Technology CEO Alexei Reznikovich said that the traditional telecoms industry needs a root-and-branch overhaul to make money for investors.
Available funds for L1 could be expanded to US$25bn.
L1 Technology already controls assets belonging to Fridman and his partners, including a 48pc stake in Amsterdam-based VimpelCom and a 13pc stake in Turkey’s Turkcell. Combined, the two stakes are worth US$14bn.
Telecoms image via Shutterstock