Com Hem buys Boxer, declares new fibre/bundling strategy in single dwelling premises

10 Jun 2016

As part of a wider plan to expand into the single dwelling unit (SDU) market, Swedish cableco and open access fibre broadband service provider Com Hem has entered into an agreement with Teracom Boxer Group to acquire pay-TV operator Boxer, which operates over Sweden’s digital terrestrial television (DTT) network, for an enterprise value of SEK1.330 billion (USD163 million).

TeleGeography says that triple-play operator Com Hem is Sweden’s second largest broadband access provider by end-users, delivering services over its own HFC cable access network, nascent direct fibre/LAN network and also increasingly via third-party (including subsidiary) open fibre networks, but to date the UK-backed operator has been predominantly focused on serving multiple dwelling units (e.g. apartment blocks). In a press release accompanying the Boxer acquisition, however, Com Hem states that its trials in the SDU market have been successful and ‘a significant rollout to fibre-based networks beyond the coax [HFC] footprint has begun and is estimated to add 800,000 SDU households via fibre (homes passed) over the coming years’. The release adds that Com Hem’s SDU expansion programme is based on a combination of platforms including ‘unbundling fibre, using third-party open LAN networks and to a smaller extent building out Com Hem’s own fibre coax network’. The company says that it expects the SDU market to be its next major growth pillar, ‘turning the company into a true national operator’.

Explaining how the purchase of Boxer – with approximately 500,000 DTT-based pay-TV subscribers predominantly in the SDU market – will boost its own fibre-based SDU strategy, Com Hem said: ‘The fibre expansion in the SDU market [by operators including broadband market leader Telia] has over the last years put pressure on Boxer’s customer base. The Com Hem SDU expansion programme will enable Boxer to sell market leading bundled broadband and TV services to its customer base. The acquisition of Boxer thereby represents a highly attractive opportunity for Com Hem to accelerate its reach in the SDU market. The Boxer brand will … continue to operate as part of the Com Hem Group.’

Pending approval by the government and the Swedish Competition Authority, Com Hem expects its acquisition of Boxer to close in the second half of 2016. The total consideration for the transaction is SEK1.550 billion, and including Boxer’s net cash position of approximately SEK220 million, the acquisition is expected to impact Com Hem’s net debt position by approximately SEK1.330 billion. Com Hem expects that the acquisition of Boxer will add approximately SEK300 million of additional annual underlying EBITDA to the Com Hem Group, including synergies of at least SEK50 million.

Sweden, Com Hem