Telenet said the decision was a response to the current operating environment, but did not provide further details. The announcement comes shortly after Telenet unveiled a new five-year investment plan to upgrade its network spectrum to 1 GHz from 600 MHz, at an estimated cost of EUR 500 million. The company also recently announced plans to commission its first TV series, extend its rights with HBO and take a stake in a Flemish broadcaster. Telenet will announce its third-quarter results on 23 October.
No bid
The press and analysts have speculated that the decision to suspend its dividend is related to a possible acquisition Telenet has planned, likely mobile operator Mobistar (73% owned by Orange). However, this does not seem very likely, for various reasons:
- The already announced investments in the network and content appear a more obvious reason to hold on to cash and not pay out to shareholders.
- Parent company Liberty Global (57%) does not operate mobile networks anywhere except Chile, even in places where it has acquired spectrum rights (Belgium, Netherlands). Instead it has plans to be a full MVNO and already operates a successful MVNO in Belgium.
- Telenet is focused on Flanders (plus a few small nearby towns). An acquisition of Voo (active in Wallonia, parts of Brussels) and/or Coditel (known as Numericable, active in Henegouwen and Brussels) seems a more logical move if it was to do an acquisition. Voo is the brand used by Publifin (previously Tecteo) and Brutélé (over which Telenet, Numericable and Publifin are fighting). Numericable is a subsidiary of Altice (84%) and Deficom (16%).
- Mobistar plans to launch soon as a reseller on Belgian cable networks. As it is one of the few players that appears willing to take on market leaders Telenet and Belgacom, it appears unlikely competition regulators would allow it to be swallowed by Telenet.
- It's also highly questionable whether Orange would want/need to sell Mobistar at the moment, as Liberty Global may not be willing to offer a sufficient price.
Convergence
Convergence of fixed and mobile services is an important theme here. Liberty Global is starting MVNOs, Vodafone is acquiring cable operators. The time of fixed-only or mobile-only operators is nearing an end. A few small fixed or mobile providers are holding out, such as Mobistar (Orange) and Base (KPN) in Belgium or T-Mobile in the Netherlands. This all leads to recurring speculation of takeovers.
If Mobistar were to be acquired by Liberty Global, the pressure could increase on KPN to do something with Base. The Belgian regulators would be unlikely to approve Base's sale to an existing player either, unless perhaps it was a smaller cable operator. Altice would be a very likely candidate, having recently done something similar in France and ready for more acquisitions after its recent IPO.
