“Merger fever” continues to raise temperatures among European operators. This time around it’s Dutch operator KPN who is rumored to be “open” to a deal with Belgacom.
It’s been 10-15 years since the two operators last were rumored to be pondering a tie up, said KPN CEO Eelco Blok, who said a deal today makes more sense than it did a decade ago; the markets – and technology — have changed drastically.
In an interview with Dutch paper Het Financieele Dagblad Blok said that with more services based in the Cloud and the gradual move to an all IP-based operator ecosystem synergies have grown.
And, KPN recently agreed to terms for the sale of Belgian mobile operator Base, clearing the way for KPN to make another move into Belgium.
One stumbling block? Belgacom biggest stakeholder remains the Belgian government. And, he said, the track record for
But Blok said he really doesn’t a deal with Belgacom to happen any time soon because its newly appointed CEO, Dominique Leroy, as been merger-averse, saying there are “too many complications” in putting those deals together.
Blok, on the other hand, sees M&A activity in KPN’s future… somewhere.
“We have to be realistic and not just think about today, but also how the company will serve customers 5-10 years from now,” he told the paper.
Pay-TV operators worldwide are facing rising costs – and competition – that’s making it more difficult to achieve the bottomline growth shareholders are looking for.
Although studies show that Western European pay-TV subscriber growth is likely to grow through 2019, revenues aren’t likely to follow.
Video ARPU is being driven down by the arrival of new platforms in the ecosystem – specifically SVOD and OTT – as well as increased competition among existing operators and a drive toward triple-play packaging of products. Those bundles, while valuable to operators on several fronts – including subscriber retention – also tend to lower the margin on video products.
And, globally, the cost of content continues to increase, with even catalog content reaching new highs.
The biggest price hikes have occurred with live sports, the new gold standard of the industry.
Mergers are seen as one way that operators can trim their costs, giving them more leverage to negotiate better deals for content.
Time will tell.