TALLINN - Starman, Estonia's largest cable TV and cable Internet service provider, announced that it had acquired Tele2's TV operations. Tele2 sold its three cable TV companies - Levi Kaabel, Tallinna Kaabeltelevisioon and Telset Communication Group - to Starman at an undisclosed price.
Tele2 officials justified the deal in that it would help the company focus on its core business of telephone communications.
"Cable television is not a priority business area for Tele2, and we have decided to sell our cable TV companies in Estonia," said Ullar Jaaksoo, chairman of the management board of Tele2.
"The analysis showed clearly that by continuing independently we would not have reached the same targets as by selling the cable TV operations to the market leader. The sale will definitely enable us to improve quality of service in the future," he added.
Starman CEO Peeter Kern stressed that his company could offer Tele2's current cable TV customers quality service and expand consumer possibilities by using new communication services based on cable networks.
Furthermore, Tele2's current contracts with cable TV customers will remain in place.
Starman's cable network is used for TV, Internet access and, as of February 2004, for fixed line telephone services based on the voice over Internet protocol. The network, available in 17 towns including Tallinn and Tartu, covered about 200,000 households before the deal with Tele2.
"The number of households has grown by about 20 percent, so we mainly increased our market share," said Kern.
After the deal closes, Starman will connect many more towns, including Parnu and a dozen smaller cities that, compared with the large residential districts of Tallinn and Tartu, have low population densities.
However, in the apartment block districts of larger towns, the two companies often have parallel networks.
"The first task will be to make a closer study of the technical solution of the cable communication networks that belonged to Tele2 and to prepare the investment plan for their future development and expansion of service," said Kern.
"The Tele2 network is quite good, but it has stayed within the timeframe it was built - in the years 1992 to 1999. Where there is a parallel network we will switch to ours," he said.
Representatives of STV, Starman's main competitor, which offers cable TV, cable Internet access and fixed telephones in Tallinn, Tartu, Parnu and Narva, estimate the cost of Tele2 cable operations between 4.4 million euros and 6.3 million euros.
STV was also interested in buying Tele2's cable companies.
