3.2.1.1 Acquisition of OMT
On July 5, 2013 the Group obtained control of OMT, a telecommunications operator in the French Overseas Territories, by acquiring 77% of the shares and voting interests in the company. This acquisition enables the Group to expand its footprint in the French Overseas Territories.
Since July 5, 2013 OMT contributed €102.1 million to revenue and €13.5 million to operating profit to the Group’s results for the year ended December 31, 2013.
A purchase price allocation was performed following the acquisition of OMT based on the assumptions described below. Brand:
The ONLY brand was valued using the royalty relief method over an indefinite useful life and the method was built on the following assumptions :
Discount rate – 11.4% Royalty rate – 1.5% Clients:
The portfolio of clients has been valued using the excess earnings approach and based upon the following assumption: EBIT margin rate: 13.5% for fixed telephone clients, 12.4% for internet clients, 19.3% for mobile clients, 26.4% for B2B clients.
Attrition rate: 9.7% for fixed telephone clients, 29.2% for internet clients, 48.5% for mobile clients, 16.4% for B2B clients.
Discount rate: 11.4% Perpetuity growth rate: 2%
3.2.1.2 Acquisition of ONI Communication
On August 8, 2013 the Group obtained control of ONI, a business to business telecommunications operator in Portugal, by acquiring 100% of the shares and voting interests in the company. This acquisition enables the Group to expand its footprint in Portugal and eventually realise synergies with the Group’s other business within the same country.
Since August 8, 2013 ONI contributed €41.8 million in revenue and €4.9 million in operating loss to the Group’s result for the year ended December 31, 2013.
A purchase price allocation was performed following the acquisition of ONI based on the assumptions described below. Brand:
The ONI brand was valued using the royalty relief method over an indefinite useful life and the method was built on the following assumptions :
Clients:
The portfolio of clients has been valued using the excess earnings approach and based upon the following assumptions : EBIT margin rate: 14.1%;
Attrition rate: 22.9% for B2B clients; Discount rate: 6.5%;
Perpetuity growth rate: 0%.
3.2.1.3 Integration of content channels
On October 4, 2013 Ma Chaine Sport S.A.S. (“MCS”) and SportV S.A. (“SportV”), two exclusive content producing companies based in France and Luxembourg respectively were transferred to the Group by Altice IV and Valemi Corp, Altice IV S.A. being considered as a related party as it shares the same controlling shareholder as the Group at time of acquisition. In the absence of any specific guidance concerning the accounting for common control transactions within IFRS, no purchase price allocation was performed. These transactions allow the group to pursue a strategy of vertical integration and also provide a more integrated solution to its customers.
Since October 4, 2013, Ma Chaine Sport and SportV contributed €6.4 million in revenue and €0.3 million in operating profit to the Group’s result for the year ended December 31, 2013.
3.2.2 Change in the Group’s ownership interest in 2013 3.2.2.1 Acquisition of minority interests in Cabovisao
On April 23, 2013, the Company completed the acquisition of 40% of minority stake held by Apax Partners in its Portuguese subsidiary Cabovisao S.A, through an investment in the holding company of Cabovisao S.A, Altice Portugal. The total consideration of EUR 105.0 million was paid on April 23, 2013, of which EUR 90.0 million was paid in consideration for the shares acquired and EUR 15.0 million towards the repayment of an existing vendor note. An amount of EUR 9.1 million (being the proportionate share of the carrying amount of the net assets of the entity) has been transferred between non-controlling interests to controlling interest. The difference of EUR 80.9 million between the decrease in the non-controlling interests and the consideration received has been debited from the retained earnings.
3.2.2.2 Disposal of Valvision
On June 6, 2013, the Company disposed of its interests in Valvision S.A.S, a cable based service provider in France to Altice VII Bis S.à r.l., a sister concern under common control of the Company’s sole shareholder, Next L.P.
The difference of EUR 3.3 million gain generated on this transaction (representing the difference between the net asset value of the entity prior to transfer and the consideration received) has been recognized directly in equity.
3.2.2.3 Acquisition of minority interests in Coditel
Deficom Telecom S.à r.l., a majority owned subsidiary of Altice VII, is the owner of 60% of the outstanding shares of Coditel Holding Lux II and Coditel Management. On November 29, 2013, Altice Holdings S.à r.l. purchase 40% of the interest of Coditel Holding Lux II and Coditel Management held by Codilink S.à r.l. .
The total consideration of EUR 82.5 million was paid on November 29, 2013, of which EUR 30.6 million was paid in consideration for shares and EUR 51.9 million paid as repayment of subordinated debt instruments held by Codilink (the Coditel PECs). An amount of EUR (9.3) million (being the proportionate share of the carrying amount of the net assets of the entity) has been transferred from non-controlling interests to controlling interest. The difference of EUR 39.9 million between the decrease in the non-controlling interests and the consideration received has been debited from the retained earnings.