Leading Estonian cable TV operator gets new owner

TALLINN - The Emerging Europe Capital Investors (EECI) fund on Sept. 28 bought 60 percent of the shares of Estonian cable television operator Starman from Scandinavian communications enterprise Telia for 166 million kroons ($9.4 million).

Starman will retain the remaining 40 percent stake.

Emerging Europe Capital Investors was created for investments in Central European companies, to sell them later within four or six years. The fund's primary targets are Poland, the Czech Republic, Hungary, Estonia and Slovenia. EECI assets make up 1.7 billion kroons. Its major shareholders are European and North American companies.

Nigel Williams, president of European Direct Capital Management, which runs EECI, said his company is ready to cooperate with the Starman team to perfect its ability in cable TV, Internet and telephony fields.

"We are not investing in the Baltic states, we are investing in Estonia as it is in advance of Latvia and Lithuania in joining the EU," he said.

According to the Telia-EECI-Starman contract, the shareholders will invest a further 150 million kroons in Starman in the next six months. All loans guaranteed or provided by Telia to Starman were refinanced.

Hansapank Markets and PriceWaterhouseCoopers were consultants to the parties regarding the contract. Tonu Pekk, head of the investment banking department of Hansapank Markets, said the deal proved that foreign partners trust the management of Estonian companies.

Richard Golden, from PriceWaterhouseCoopers, said it was the largest deal concerning private capital this year and rather unusual, because three parties had to meet halfway.

"The buyer should have met two basic requirements: It should have the ability to develop the company (Starman) along with the other shareholders and should offer an appropriate price," said Golden.

Mart Nurk, Telia's general country manager in Estonia, did not comment on other candidates for buying the shares. However, he said that all three parties benefited from the transaction.

"As to Telia, it will concentrate on developing Eesti Telekom," Nurk added.

Peeter Kern, Starman's executive director, said the new owner of Starman will speed up the development of the company as an alternative broadband operator.

Starman is now headed toward opening an interactive TV network, better known as WebTV. Kern said it will take one or two years to bring interactive TV to Estonia.

Kern stressed that the deal would not affect the regular subscribers of the Starman cable TV service in a negative way.

According to the Estonian Cable Communications Association, Starman now has about 100,000 subscribers, and is so far the largest Estonian cable TV operator with 28 percent of the market share. Following the deal, the company's assets are 276 million kroons.