Publicly-listed Netia bought El-Net for zł.96.5 million (20 million), which includes long-term liabilities. Elektrim Telekomunikacja and a BRE Bank-led consortium sold the asset after entertaining several offers, including from Raiffeisen Investments. BRE Bank was for a time also interested in taking majority control of the asset.
Łapiński explained that the company would be able to dive anew into its aggressive acquisitions strategy after only a brief interlude for fusing with El-Net.
"The first three or four months are crucial," he said, referring to Netia's experience with past acquisitions.
The market perceived the deal as a long-due victory for the recently restructured Netia, whose CEO, Wojciech Mšdalski, has often publicized the company's intention to play a fundamental role in the essential consolidation of the fixed line segment of Poland's roughly zł.30 billion (E7.8 billion) telecommunications sector. Acting the consolidator is not only attractive because Poland is the largest telecom market in Central Europe, but also because it is one of the least penetrated in terms of mobile and fixed line.
There's plenty of business opportunities that Netia intends to grab.
The ideal next step for the company, executives have said, would be to take over the next largest alternative provider Telefonia Dialog, as well as other smaller communications operators.
Łapiński pointed out that if all goes according to Netia's plan, Telefonia Dialog will be the next major buy. KGHM, a part owner of Dialog, has sent out a memorandum of understanding to a litany of investors, including Netia, and news will be forthcoming.
While the sale of Dialog has been rumored in the market for some time, Łapiński is optimistic that Netia can get its hands on the assets.
Using the El-Net acquisition as an example, he said, "You never know ... and then it happens."
He explained that press reports have hinted that the asset would be awarded to several different financial institutions before it was actually sold to Netia.
As such, he does not want to predict exactly when and if Netia would be able to buy Dialog.
In the meantime, as the Dialog owners discuss selling options, Netia will also narrow its sights on smaller operators.
Łapiński declined to say which smaller companies Netia is eying. But he did allow that targets would be in line with the size of last year's acquisition of TDC Internet Polska, now called wiat Internet.
In terms of merging with El-Net, he said the company would like to have all El-Net personnel reporting to Netia by year-end. And he said the company is looking to expand the operations that now come under the El-Net umbrella, noting that there was not much overlap between the two companies. "Moreover," he said, "there are synergies"
"It's very clear that we intend to develop El-Net, not trim it down," he noted. "Clearly we do not want to cut anything out of that business."
In El-Net, it added 61,000 new customers in both Warsaw and Bydgoszcz, where it previously had no business. Some 17,000 of those are business customers, a group that is increasingly becoming Netia's target market as it pushes higher-end business-oriented services to customers, rather than simply traditional voice services. In terms of demand, traditional voice services - compared to high-speed data, for instance - are expected to continue to lose ground in the future.
On the heels of the announcement, CEO Mšdalski noted the specific impetus behind the purchase.
"The acquisition of El-Net is in line with Netia's strategy to double revenues by 2008 based on superior customer proposition supplemented by M&A activity," he said.
Besides improving revenues and widening margins, Netia's acquisition strategy is expected to allow the company to chip away at the market domination of Telekomunikacja Polska, which controls 91 percent of the market share in local loop. The jury is still out on just how and when a shift in market share will occur, but Netia expects to be at the forefront of it, if it does occur. And analysts perceive the El-Net purchase as a first major step.
Following its much-anticipated purchase of El-Net, Netia expects to have the two companies' operations - which service over 400,000 clients - fully merged by the year-end. Adhering to this time line would free up the country's largest alternative fixed-line operator to pursue the laundry list of other acquisitions targets as early as within the next three months.
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