What’s up with… Lebara, Eutelsat & EQT, TalkTalk

• Euro MVNO Lebara acquired by PE firm 
• Eutelsat to spin out and sell terrestrial assets
• UK’s TalkTalk strikes funding deal

In today’s industry news roundup: European MVNO Lebara Group is being acquired by Waterland Private Equity for an undisclosed sum; Eutelsat has coined a new term that we hope doesn’t get abbreviated too often – ground station-as-a-service; UK telco TalkTalk finally strikes funding agreement; and much more!

European mobile virtual network operator (MVNO) firm Lebara Group, which has more than 4.4 million customers across five markets, is being acquired by Waterland Private Equity for an undisclosed sum. Waterland said it has been in talks with Alchemy and Triton Partners, which took control of Lebara in 2019 in a debt-for-equity swap deal, since January of this year. According to Waterland, “Lebara’s strategic positioning as a value-focused challenger brand in the mobile SIM markets presents significant growth opportunities as consumers across Europe increasingly seek high-quality services at competitive prices. Lebara’s strong track record across its five markets” – the UK, Netherlands, Germany, France and Denmark – demonstrates its ability to grow and adapt, making it a prime candidate for further expansion in partnership with Waterland.” Lebera’s CEO Stephen Shurrock noted: “We are excited to join forces with Waterland Private Equity. Their extensive experience and successful track record in the telecommunications industry make the Waterland team an ideal partner for us. This partnership will provide us with the resources and strategic support needed to accelerate our growth and enhance our service offerings, ultimately benefiting our customers across all our markets. It has also been our pleasure to work with Alchemy and Triton over the last few years. They have been hugely supportive of the Lebara turnaround, and have invested in the company to achieve significant growth. Lebara now has the latest digital platform, a focus on customer experience and [a] strong team to continue its growth story.” Wendy McMillan, a Partner at Waterland, added: “Lebara has built a strong brand and loyal customer base by providing high-quality mobile telecommunications services at competitive prices. We look forward to working closely with the management team to continue on Lebara’s growth journey together, leveraging our expertise in the telecommunications sector.”

Here’s a new take on the asset spinout trend that has resulted in many mobile operators selling their towers to wholesalers and then becoming an anchor tenant. French satellite operator Eutelsat, which merged with low-earth orbit (LEO) satellite player OneWeb about a year ago, has struck a deal to spin out its passive terrestrial assets (land, buildings, support infrastructure, antennas and connectivity circuits) into a new company valued at €790m and sell 80% of it to infrastructure investor EQT. “Eutelsat Group will remain committed as long-term shareholder, anchor tenant and partner of the new company with a 20% holding,” it noted in this announcement. It added: “The new entity would be the world’s largest pure-play, operator-neutral, ground station–as-a-service company, bringing together top-level teams combining satellite-specific knowledge with highly experienced infrastructure service operators for optimum customer service.” Eutelsat’s CEO Eva Berneke noted: “We are proud to become the first satellite operator to embark on this innovative transaction which would allow us to build on the model adopted in other industries, and to optimise the value of our extensive ground network. In EQT we have found a partner of the highest quality, who shares our vision. This transaction would represent a win-win situation for all parties, and would enable Eutelsat to strengthen its financial profile, whilst continuing to rely on the unparalleled quality and reliability of its ground infrastructure. Moreover, we are confident that with the backing of EQT, the business would be in a position to fully embrace the opportunities opening up to it as the new Global leader in this dynamic sector.” As you’d expect, EQT is just as pumped about the planned transaction – Carl Sjölund, a partner within the EQT Value-Add Infrastructure advisory team, stated: “At EQT, we identified satellite ground stations as an attractive digital infrastructure vertical several years ago. They play an important role in ensuring global connectivity, especially for those not covered by fixed and mobile connectivity solutions and require deep global expertise in developing and operating telecommunications infrastructure businesses. We are delighted to partner with Eutelsat Group to create a ground station leader and capture the growth opportunity fuelled by technological innovation.” The deal looks like it’s going to be a tricky one to get past the regulatory authorities and the French trade unions, though, as it isn’t expected to be completed until the beginning of 2026. News of the deal came as Eutelsat announced full fiscal year sales growth: For the 12 months that ended 30 June, the company generated revenues of just over €1.2bn, up by 7.2%, and adjusted EBITDA (after one-time items) of €719m, down 12.9%. 

After a somewhat tricky few months, UK telco TalkTalk Group has managed to secure a new refinancing deal with its lenders and alleviate its near-term concerns about defaulting on payments. Earlier this year it looked like investment group Macquarie might take a majority stake in the operator, which now comprises a retail broadband services company, simply called TalkTalk, and a wholesale company called PlatformX Communications (the group’s business services unit was sold last year). But that Macquarie deal didn’t materialise and reports suggested that TalkTalk Group chairman Charles Dunstone was struggling to agree a new deal with the operator’s lenders. That deal, though, has finally been brokered and also comes with £65m of interim funding to help with current capital needs, with additional funding of £170m in place if TalkTalk Group can meet some agreed (but not shared) business targets. As part of the agreement, current group CFO James Smith will, from 1 September, become Group CEO as well as becoming the CEO of PlatformX Communications: Current Group CEO Tristia Harrison will become a non-executive director on the TalkTalk Group board. Susie Buckridge remains CEO of TalkTalk, while Dunstone continues as Group chairman. Read more.     

Latin American network operator Millicom has, as expected, rejected the $4.4bn cash takeover offer made by Atlas Luxco (part of Atlas Investissement), one of Iliad founder and owner Xavier Niel’s investment vehicles, on 2 August. That bid, equal to $25.75 a share, was an improvement on the initial $4.1bn offer made in July, but even the new offer is regarded  by the Millicom board as one that “significantly undervalues” the operator, in which Atlas Investissement already holds a 29% stake. As part of the many reasons why it is recommending that shareholders reject the improved Atlas Investissement offer, the Millicom board pointed to the service provider’s second-quarter results, which included a 4.7% year-on-year increase in revenue to $1.46bn and a net profit of $78m. “Millicom has undergone an important transformation aimed at significantly increasing the company’s equity free cash flow generation. These efforts began to pay off in Q2, with EBITDA [earnings before interest, taxes, depreciation and amortisation] up almost 20% organically,” stated Marcelo Benitez, who took over as CEO in June, at the time. Millicom’s share price currently stands at $25.61, which suggests investors don’t believe Niel would be prepared to further improve his offer. 

Cisco is expected to announce further job cuts this week when it publishes its latest quarterly earnings report on Wednesday, according to Reuters. Earlier this year, the networking and security systems vendor announced it was cutting about 4,200 jobs. 

Things are not going too well at EchoStar, the US provider of pay-TV, mobile and satellite communications services. The company, which earlier this year completed its merger with greenfield 5G network operator Dish Network, has reported an 8.8% year on year decline in revenues to just under $8bn for the first half of this year and a 31% decrease in operating income to $912.3m. The operator’s net loss for the period was $313m, compared with a net profit of $466.2m a year earlier. EchoStar has just over 8 million pay-TV customers, but that number is shrinking each quarter, and 7.3 million mobile customers (including about 500,000 5G users), and that number is also on the slide. It also has 955,000 satellite broadband customers (that number is also dipping each quarter). Its mobile operation, which includes the greenfield Open RAN 5G network built by Dish, sells services under the Boost Mobile brand and recently relaunched its 5G plans in an effort to attract customers, but it is struggling against the might of T-Mobile US, AT&T and Verizon. Concerns remain that EchoStar might be forced to apply for Chapter 11 bankruptcy protection at some point this year, as time is running out for the company to address its debt payments. CFO Paul Orban noted on the company’s earnings call late last week that “at the end of the second quarter, our cash and cash equivalents and marketable investment securities totaled $521m. Roughly $2bn of debt will be maturing this November, and currently, we do not have the necessary cash on hand and projected future cash flows to fund fourth quarter operations or the November 2024 debt maturity… we are currently working to address this with our refinancing activities and are in discussions with funding sources at all levels in our capital structure.” Yikes! 

South Korea’s SK Telecom is working with Nokia on the deployment of “fibre sensing” technology that can detect environmental changes where fibre lines are deployed: The hope is that the South Korean telco will ultimately be able to pre-empt any impact on its fibre infrastructure from extreme weather, earthquakes, construction and more. For further details, see this press release (in Korean). 

- The staff, TelecomTV