Versatel to be acquired by Tele2

Wow, this is a surprise, this news release. Versatel will be acquired by the Swedish telecom operator Tele2 and the investment company Apax. After the false press release of last week and the failed talks between Versatel and Belgacom, comes now in the hands of a price fighter. This morning Tele2 and Versatel held an webconference.

The shareholders of Versatel are making a nice profit from this acquisition. Tele2 has now gotten its own network in the Benelux (Belgium, Netherlands and Luxembourg). Apax will acquire the German part of Versatel. And John de Mol makes another nice profit on the sales of his majority share (42 per cent). Only thing I wonder about it how the Dutch Soccer Association is going to react on this news.

Versatel has an agreement with the Dutch Soccer Association to broadcast the Premier league in the next season. Versatel has promised to distribute the soccer games through it ADSL2+ network and aims at 100.000 users. So far the campaign for ADSL2+ has gone slowly and the Dutch Soccer Association might consider the acquisition by Tele2 as an occasion to break the contract.

John de Mol, chairman of Talpa Investment and the Talpa television and radio stations makes it clear that he is not going to buy Versatel in order to have an exclusive internet and television distribution channel, as has often been said. It is clear that John de Mol can separate investments and interests in his own company activities. He stands to make a handsome 475 million euro from the shares with a nice profit of 100 million.

After the acquisition of Versatel by Tele2, the German part will be split off and acquired by Apax the investment company for 565 million euro. Of course this company does not buy it just for the heck of it. It will have undoubtedly some intention to make it lean and mean and sell it off or merge it with one of the telecom companies it possesses now like Kabel Deutschland, Primakom and Tropolys. Versatel bought the company, which is mainly active around Berlin, some years ago. It was a strange buy as the networks were not close to each other geographically.

Tele2 is a Swedish telecom operator, which has grown over the back of incumbents throughout Europe. With pre-carrier, private virtual mobile networks and internet it has built up a company with a turn-over of 43 billion euro. For Tele2 the acquisition will be a consolidation in the Benelux market and a larger share. Besides there will be synergy between Tele2 and Versatel as Versatel has its own network. Of course the agreements with amongst others KPN and its recently acquired mobile company Telfort will not be renewed, which will drive down the share price of KPN.

As for Versatel itself, a lot of things will happen. The name Versatel will disappear from the Amsterdam Exchange. After two or three years most likely the name of Versatel will disappear and be brought in line with Tele2. As Tele2 has learned the hard way to get its administration in order in 2002, being hunted by the Dutch Consumer Association and the television program Radar, it might share its experience with Versatel. And Versatel can use a marketing lesson or two from Tele2.
Just an example. Versatel has SOHO clients with Business all in agreements, which come down to an internet package and ISDN ADSL (1052/254). When it launched the ADSL2+ service some clients wanted to change to the higher speed. Clients were sent from the business desk to the consumers’ desk. They would have to change from ISDN to analogue through KPN. Now months after the announcement of the offer Versatel still does forward an offer to the SOHO clients. No wonder they will not reach 100.000 connections by the end of the year. Unless Tele2 tells them the trick that the internal organisation is completely irrelevant to the customer and the present base of business customers are also potential consumers at another time of the day.