EQT joins top 5 Dutch operators, important decisions awaited

Friday 26 January 2018 | 16:06 CET | Background


Consolidation on the Dutch market has reached a new plateau, resulting in five significant players on the consumer market. EQT is the newest player, after acquiring Delta and Caiway, and is now at work integrating its business. Given the private equity nature of EQT, its aim is to be able sell the company at some point in the future, with VodafoneZiggo the most obvious candidate. The question is how to maximize the value of the company, or for marketwatchers, what commercial strategy will EQT choose? Its management faces the fundamental question of buy or build. Expanding the footprint, offering nationwide broadband and TV, and entering the mobile market are the most important issues to address. 

Five players

The five major players on the Dutch consumer market are:

  • KPN. After a long series of acquisitions, the incumbent has been still for a time after buying Solcon. Only on the ICT market has KPN added a few more arrows to its bow.
  • VodafoneZiggo. A similar story. 
  • T-Mobile. Its planned merger with Tele2 will create a strong number three on the Dutch market. 
  • M7. Its diverse portfolio in the Netherlands (Canal Digitaal, Online.nl, Fiber NL, Stipte) makes the strategy somewhat unclear. It has shown itself able to offer broadband using virtual networks (DSL and FTTH) and TV over both satellite and IPTV.
  • EQT. A vertically integrated provider with only regional coverage (CIF/CAIW and Delta). Its strategy for the long term is equally unclear. 

Commercial strategy

EQT Netherlands, led by Marco Visser (ex KPN, M7, Delta), is the newest conglomerate on the Dutch consumer market. The management faces the triple task of 1) integrating the various acquisitions and reducing the total costs; 2) developing a commercial strategy to maximize value; and 3) selling the company.

We can be brief about the last task. Interest in a regional player will be small, and KPN is already excluded (it was blocked already from buying CAIW a few years ago). There is only one good fit, VodafoneZiggo, although T-Mobile could also make an offer. EQT's task is to sell the business for as much as possible. This brings us back to the first two tasks. At the moment, 2) is the most interesting for the market. What does Marco Visser plan to do with his new company?

Decisions will need to be taken on a number of fronts:

  • Fixed network. CIF has rolled out a significant amount of fibre. The question is whether the Delta network will continue with Docsis 3.1 technology or if the group chooses to go completely fibre. 
  • Brands. It would be a waste to get rid of the existing brands Delta and Caiway. The question is whether these will be limited geographically in their use. The company may choose also for a demographic split, such as Delta to serve the low end of the market.
  • National broadband and fixed telephony offer. This is possible via a wholesale agreement (VULA) with KPN.
  • National TV offering. IPTV makes this possible, and Delta is already working on a service.
  • Bundling telecom and energy. Delta is active in the energy market, will this be extended to the whole footprint?
  • Mobile market. The current market trend is for offering multiplays with fixed/mobile convergence.

Buy or build

Like most companies in this phase, a choice needs to be made over whether to buy or build assets. Developing a network is possible, but takes time. Acquisitions can help EQT along quickly, although this adds the obligation of having to integrate disparate assets. A few suggestions:

  • Expanding the footprint. Ziggo and CIF have not been able to swalow up the last few independent cable operators in the country. EQT may have better luck.
  • Offering TV nationwide, for example with Delta's system.
  • Bundling telecom and energy. The acquisition of an independent energy seller such as NLE/Budget Energie or Oxxio would provide national coverage. An acquisition of NLE/Budget would also give the company a triple-play platform.
  • Mobile market. An acquisition of a MVNO, such as Simpel or Youfone, would make good business sense. Youfone would also bring a TV platform to the company.

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