MTG acquires Swedish FTTH open access communications operator

International broadcaster Modern Times Group MTG AB (STO:MTGA)(STO:MTGB)(publ.) has agreed to acquire Swedish open access network operator Zitius Service Delivery AB from Quadracom AB for an undisclosed amount in cash. The agreement calls for MTG to acquire 80% of Zitius now and the remaining 20% in 2016.

Zitius, established in 2003, operates an open access FTTH network that passes approximately 150,000 homes. More than a third of these potential subscribers currently receive a service via the Zitius network. It has multi-year agreements with such infrastructure owners as local Swedish councils and real estate organizations.

Zitius provides network management and service packaging services. It installs, owns, and operates the active network equipment including routers and switches. However, it typically does not operate customer premises equipment.

Zitius has agreements with a broad range of third party providers of telephony, data, and TV services, including MTG’s Viasat Broadcasting.

Zitius generated pro forma revenues of SEK 96 million ($14 million) for the full year 2011, with SEK 14 million ($2.06 million) of EBITDA and an EBIT of SEK 6 million ($0.8 million) adjusted for non-recurring items. Pro forma capex for 2011 was SEK 10 million ($1.47 million). The company generated pro forma sales of SEK 66 million ($9.69 million) for the first six months of 2012, with an EBITDA of SEK 20 million ($2.94 million) and an EBIT of SEK 12 million ($1.76 million). Capex for the first half of 2012 amounted to SEK 14 million ($2.05 million).

Hans-Holger Albrecht, president and CEO of MTG, commented, “The acquisition of Sweden’s number one operator of open access broadband networks reflects our commitment to invest in and support the roll-out of high-speed platforms that broaden the availability and increase the consumption of our content. Video is the primary driver of Internet traffic and that demand is only growing. Zitius is a high-growth market leader in a fast-growing segment that also delivers attractive profitability levels. Our intention is to strengthen Zitius’ market-leading position even further, and to continue providing attractive offerings to customers from multiple suppliers in an open environment. We will continue to market our own Viasat channels and Viaplay service to consumers through as many platforms as possible.”