Cologne-based QS Communications (QSC) has agreed to take full ownership in DSL broadband network venture Plusnet from its investment partner Tele2 Germany. Tele2 has agreed to pay EUR66.2 million (USD86.8 million) for the early termination of the joint venture – which had been due to run through 31 December 2013 – whilst the purchase price for the Swedish-owned telco’s stake in Plusnet is EUR36.7 million, giving QSC a net gain from the transaction of EUR29.5 million. The deal is effective retroactively from 31 October 2010, QSC announced in a statement. The transaction is subject to approval by the German telecoms regulator, the Federal Network Agency (FNA, or Bundesnetzagentur).
According to TeleGeography’s GlobalComms Database, the Plusnet joint broadband network venture was formed in 2006, with QSC taking a 67.5% stake and focusing on the corporate segment, and Tele2 taking the remaining 32.5% and concentrating on the residential market. Plusnet comprised QSC’s existing unbundled DSL network along with a EUR50 million investment from Tele2 for expansion and upgrading. Telephony and DSL packages over the Plusnet network were launched in the third quarter of 2007, and via Tele2’s investment alongside the consolidation of IP-VPN/VoIP provider Broadnet’s infrastructure, QSC’s network passed 50% of German households with unbundled ADSL2+ services and 70% of all ‘VPN-compatible corporate locations’ by the end of 2009.
Tele2 had previously shifted its sales and marketing activities from broadband resale towards direct unbundled access via Plusnet. Alongside the sale of its stake in Plusnet, Tele2 has entered into two ten-year agreements with QSC, covering DSL wholesale and managed outsourcing services.
QSC’s CEO, Bernd Schlobohm, went some way to explaining the motivation behind Tele2’s exit, saying: ‘This agreement is of advantage to both parties. It enables Tele2 to change its cost structure from fixed costs to variable costs and to concentrate more on services for residential customers. QSC is improving the utilisation of its NGN. In addition, we are strengthening our financial position and increasing our flexibility in the wholesale business.’
QSC also said that, as Plusnet had already been fully consolidated by the company, the stake increase will have no impact on its forecast for the current fiscal year: it plans to grow its revenues and EBITDA and to triple net income to more than EUR16 million, in comparison to EUR5.5 million in fiscal 2009. In the past fiscal year, QSC generated revenues of EUR420.5 million and EBITDA of EUR76.9 million. It added that the share buy-back will result in efficiency gains in the coming years.