EnBW, the German electricity supplier partly owned by EdF, has sold its telecoms business, Tesion Comminikationsnetze, to the Munich-based investment firm Arques. Despite the potential synergies between utilities and telecoms, EdF should welcome the move. EnBW will now be closer to making a positive contribution to the French firm’s P&L accounts.
EnBW has agreed to sell its telecoms subsidiary Tesion to Arques.
The purchase of Tesion will add to Arques’ portfolio of telecoms companies. The Munich-based investment firm specializes in acquiring firms with good future prospects and has already acquired Germany’s second largest metropolitan network operator CompleTel Deutschland.
Tesion Communikationsnetze Sudwest is the fourth largest network operator in Germany, with 8,000 km of cable and 100,000 customers. The company was born out of the acquisition of CNS by EnBW in 1997 to offer residential and business customers voice, data and Internet services. In 2001, Tesion had 117,000 contract customers, with 32% from the business sector.
According to EnBW, the sale of Tesion is part of the company’s drive to divest non-core businesses to concentrate on energy operations. Whatever the motive, the news will be welcomed by EnBW’s shareholder EdF which is having a tough ride at the moment. In 2001, EnBW’s contribution to the EdF group was negative; prospects don’t look any better for 2002.
Most of Germany’s energy companies have acquired telecoms interests since the market deregulated. Attracted by potential synergies at both infrastructure and retail levels, they have either developed their own networks or, like EnBW, bought their way into the market.
In 2001, Yello (EnBW’s low cost power brand) launched YelloFon, a joint venture with Tesion to offer low cost energy and voice services to residential and business customers. The partnership will continue despite the sales of Tesion, although take-up rates of YelloFon are reported to be low among Yello’s 700,000 customers.
The sale of Tesion makes sense from a group perspective. EdF is in need of cash to pursue its expansionist strategy and support its energy interest in France and overseas. The purchase of HEW by Vattenfall is bringing another European giant to an already overpopulated competitive environment; EnBW will benefit from focusing on core energy activities.
Related research: Datamonitor, Selling Telecoms in the European Energy Mid-Market (DMEN0215)
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