Investment group PPF reportedly wants to divide O2 Czech Republic into two separate businesses: one for fixed-line and infrastructure and the other for mobile and other services.
National regulatory issues, particularly to do with O2’s dominant…
Investment group PPF reportedly wants to divide O2 Czech Republic into two separate businesses: one for fixed-line and infrastructure and the other for mobile and other services.
National regulatory issues, particularly to do with O2’s dominant position in the fixed-line space, is a primary motivation for the planned split, Czech business publication Hospodarske Noviny reported without citing sources. PPF, controlled by Czech businessman Petr Kellner, also hopes the move will improve the operator’s balance sheet, the report added.
Spokespeople for Prague-listed PPF and O2, the Czech Republic’s largest integrated telecoms provider, declined to comment.
Josef Nemy, an analyst with Komercni bank in Prague, said he sees the split as unlikely at present, but not impossible.
“Generally speaking, PPF will certainly try to undertake several steps to turn around the negative trends in O2’s profitability and I can imagine they may suggest even such radical steps as dividing the company,” he said.
However, he noted that such a move could encounter opposition from the regulator and minority shareholders. If minority shareholders were against it, Nemy said PPF may not be able to keep both businesses publically traded. In such a scenario, the investment firm could opt to buy out minority shareholders in at least one of the new companies, he noted.
PPF closed its Kc63.6bn (US$3.32bn) acquisition of a 65.9% stake in O2 from Spain’s Telefonica in January.
In July, it bought an additional 7.2% stake in the Prague-based operator following a mandatory tender offer, boosting its stake to 73.1%.
O2 reported revenues of Kc21.77bn (US$1.04bn) for H1 2014, down 8.9% year-on-year. OIBDA was down 12% to Kc7.58bn (US$363.8m).
In its statement on the results, O2 said it has “intensified its effort to deliver efficiencies in both commercial and non-commercial areas of its operations”, adding that it is benefitting from “further simplification of its business model”.
