Kabel Deutschland eyeing PrimaCom assets?
PrimaCom on the brink of insolvencyCOLONGE, Germany -- Shares in nearly insolvent German cable company PrimaCom recovered slightly on Wednesday after news that Kabel Deutschland (KDG) could buy up some PrimaCom assets.
Kabel Deutschland said it would be interested in the 700,000 to 800,000 subscribers PrimaCom serves in the areas where KDG operates. Two years ago, KDG paid competitor Orion €424 million ($520 million) for 1.1 million cable customers. KDG, however, has suggested the price tag for PrimaCom's subscribers would be much lower. KDG has not said whether it is in formal talks with PrimaCom.
PrimaCom shares, which tumbled yesterday, were up 6% late Wednesday. But PrimaCom is still close to penny stock status. Shares have plunged from €4.60 ($5.60) a share in late April to €1.40 ($1.71) today.
The sell-off was triggered by mounting debt problems at the company. These came to a head Tuesday when creditors called in a €29.2 million ($35.8 million) loan. If the Mainz-based cabler cannot get its creditors to withdraw their demands, the company will be go bust.
PrimaCom's troubles come as Germany's fragmented cable TV market is consolidating. The country's three top players: KDG, John Malone's Unitymedia and Kabel Baden-Wuerttemberg are all eying four network providers, companies which control the last mile of cable to customer homes and thus have a direct relationship with their subscribers. That direct connection is key for cable companies who want to boost revenues by getting subscribers to upgrade to broadband and telephony services.
In 2008, Unitymedia paid €49 million for 100,000 PrimaCom subscribers in the western German towns of Aachen and Wiesbaden. There are only a few hundred PrimaCom subscribers left in the regions where Unitymedia operates, making a major buyout unlikely.