Telenor and NENT merge DTH operations to form TV distribution JV
23 Oct 2019
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Norwegian telecom service provider Telenor Group and Nordic Entertainment Group (NENT Group) on Tuesday announced the merger of Telenor’s Canal Digital and NENT’s Viasat Consumer (satellite pay-TV & broadband-TV operations) to form a new TV distribution company.
This will create a vibrant Nordic TV distribution business and capture synergies in a maturing direct-to-home (DTH) segment.
Telenor and NENT Group will each hold 50 per cent of the new company.
The combination will create a Nordic player with combined net sales of approximately NOK 7 billion and around 1.25 million subscribers (as of Q2 2019).
The combination is expected to yield peak annual cost synergies of approximately NOK 600 million, with full effect from 2022.
Integration and other related costs are expected to total approximately NOK 830 million.
The company will be headquartered in both Oslo and Stockholm, and will also have a substantial presence in Copenhagen. The joint venture will operate at arm’s length to its parents. The Nordic consumer offering will focus on satellite distributed pay-TV (DTH) and streaming services, as well as IPTV on open fibre networks, and will continue to develop market-leading TV distribution services.
“The joint venture will combine the respective strengths of Canal Digital and Viasat Consumer, leveraging synergies for the benefit of our customers and shareholders. There is a compelling business rationale behind combining the DTH operations of Canal Digital and Viasat Consumer, with large synergies to be captured within areas, including transponder capacity, IT and opex,” Jørgen C. Arentz Rostrup, CFO, Telenor Group, said.
“The joint venture will use Telenor Satellite’s services on 1° west for DTH transmission, representing a solid foundation for Telenor Satellite’s broadcast operations,” he added.
“We have achieved complete alignment of ownership interest through a 50/50 joint venture structure and a shared vision for brands, products and how to provide an even better consumer experience. This deal will drive significant shareholder value and it fits perfectly with our strategy to focus on the substantial opportunity we see in the fast-growing streaming sector. The new joint venture will be a major distribution partner for both our Viasat channels and Viaplay,” Anders Jensen, president and CEO, NENT Group, said.
The board of the joint venture will have equal representation from Telenor and NENT Group, with a rotating chairmanship. The CEO of the company will be Bjørn Ivar Moen (currently CEO of Canal Digital and Telenor Broadcast), and Jonas Gustafsson (currently CEO of Viasat Consumer) will be the CFO and head of operations.
The joint venture is the latest in a series of measures Telenor is taking to address its business structures and core systems, in order to find and leverage strategic opportunities to modernise and optimise its customer offerings in next-generation networks.
The transaction is subject to regulatory approval, and is expected to be completed during the first half of 2020, Telenor said.
Telenor today released its third quarter results, which the company reflected continued strong execution on strategy, focus on growth, efficiency and simplification. Overall, the group deliverd an almost flat organic subscription and traffic revenue growth and organic EBITDA decline of 2 per cent, when adjusting for project costs this quarter and non-recurring items last year. Telenor said its cost base remained stable, excluding DNA and project costs.
The modernisation in Norway is progressing according to plan, and we see a 3 per cent mobile subscription and traffic revenue growth combined with a 5 per cent reduction in operating expenses this quarter. In Thailand and Myanmar, the momentum seen earlier in 2019 continued and both operations have now returned to positive subscription and traffic revenue growth. However, headwinds in Pakistan as a result of the telecom tax re-introduction and a difficult macroeconomic environment have made the situation locally challenging.
During the quarter Telenor also successfully concluded the acquisition of 97.96 percent DNA in Finland.
Based on the performance so far this year and expectations for the fourth quarter, Telenor said it would maintain our outlook for 2019.
