Unternehmensprofil

• Tele Columbus reinforces its position as third largest German cable player and the key consolidation platform of the German cable market with approximately 3.7 million homes connected
• Expansion of geographic footprint with pepcom’s established presence in economically attractive cities such as Munich, Nuremberg, Leipzig and Frankfurt am Main
• Well established pepcom B2B business adds strategically important pillar and new customer base to the Group for upside growth potential going forward
• Strong housing association relationship portfolio to augment current Tele Columbus’ customer base
• Significant potential for growth in Internet & Telephony and Premium TV services
• Attractive opportunity for scale and synergy effects across the combined businesses of Tele Columbus, primacom and pepcom
• Acquisition multiple of 9.5x pre-synergies, and 7.9x post-synergies based on pepcom’s expected adjusted EBITDA 2015

Berlin, 13 September 2015. The Tele Columbus Group, the third largest German cable network operator, today announced that it has entered into an agreement to acquire pepcom GmbH (“pepcom”), the fourth largest German cable network operator, from Star Capital (Lead Luxembourg 2 S.à r.l). The purchase price amounts to EUR 608 million on a cash and debt free basis (enterprise value). The purchase price payable after taking into consideration net debt, debt-like items and the 30% minority participation in KMS[1] amounts to approximately EUR 505 million (equity value). Following the acquisition of primacom in July, Tele Columbus again reinforces its position as one of the leading German cable players and key consolidation platform of the German cable market now serving approximately 3.7 million connected homes.

pepcom is the 4th largest cable operator in Germany offering cable TV, high-speed internet and telephony with over 580k unique subscribers out of approximately 810k homes connected. The company has operations nationwide with a strong presence in the economically attractive cities such as Munich, Nuremberg, Leipzig and Frankfurt am Main. In 2014, pepcom generated total revenues of EUR 126 million and normalized EBITDA of EUR 57 million (45% margin)[2]. The company has a controlling stake of 70% in the Bavarian TV and broadband cable company KMS^[3] together with Vodafone Kabel Deutschland which owns the remaining 30%. In 2012, pepcom acquired HL komm, a Leipzig-based provider of telecommunication services for business customers. pepcom currently employs approximately 370 people, with corporate headquarters in Unterfoehring near Munich. The purchase price of EUR 608 million represents a multiple of 9.5x pre-synergies, and 7.9x post-synergies^[4] based on pepcom’s expected adjusted EBITDA 2015^[5].

The combination will bring together approximately 3.7 million homes connected[6] on one platform, with complementary geographic expansion to pepcom’s key locations of Munich, Nuremberg, Leipzig and Frankfurt am Main. Tele Columbus and pepcom have 57% and 58% of homes connected that are two-way upgraded and provided with own signals via independent networks respectively. Tele Columbus’ strategy is to continue to grow the percentage of households two-way upgraded and connected to Tele Columbus’ own network. In addition, pepcom’s B2B business will contribute over 1,600 business customers to the Group and provide a strategically important pillar for Tele Columbus potential growth going forward.

The combination of the third and fourth largest cable operators in Germany creates significant tangible synergy opportunities due to scale effects and sharing of best practices and expertise. As a result, annual run-rate cost synergies of EUR 13 million and capex synergies of EUR 2 million are expected to be fully realised within 24 months of closing[7]. Furthermore, the transaction offers significant potential for accelerated growth in Internet, Telephony and Premium TV services across the combined customer base.

The closing of the acquisition of pepcom is subject to approval of the proposed capital increase with intended proceeds of EUR 240 million by the extraordinary shareholders’ meeting (EGM) to be held on September 14, 2015. The timing of the closing is dependent on the registration of the resolution regarding the capital increase. The closing is expected to occur by the end of 2015, at the latest by April 30, 2016. It is planned to finance the purchase price through a combination of cash on balance sheet, additional senior financing under the existing SFA and an equity bridge loan. The equity bridge financing and potentially a proportion of the debt financing shall be repaid by an equity rights issue based on the planned resolution to be adopted by the EGM on September 14, 2015.

Post transaction and repayment of the equity bridge financing, leverage is expected to stay at approximately 5.0x pro forma the acquisition of primacom in July 2015, but may be lower depending on the size of the equity rights issue and/or other equity and equity-like measures. Leverage is expected to return to the communicated medium-term range of 3.0-4.0x within 18-24 months after closing.

J.P. Morgan acted as exclusive financial advisor to Tele Columbus.

Tele Columbus will hold a conference call tomorrow at 4pm CEST for investors and financial analysts. Information about the conference call is available at www.ir.telecolumbus.com.

Key financials side-by-side

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About Tele Columbus

The SDAX listed Tele Columbus Group is one of Germany‘s largest cable network operators. Via its origins - individual regional cable network operators that were merged into Tele Columbus - the company dates back to 1972. About 2.8 million connected households in Germany use Tele Columbus' TV signals and, increasingly, digital broadcast packages, Internet and voice connections provided via high-performance broadband cable. As a national provider with a regional focus and a partner of the housing industry, the Group is present throughout its core markets Berlin, Brandenburg, Saxony, Saxony-Anhalt and Thuringia as well as in numerous key regions in western Germany. In tune with current demand trends, the company is upgrading its networks in a hybrid fibre-optic infrastructure for superfast Internet connections of up to several hundred megabits per second with the state-of-the-art Internet transmission standard DOCSIS 3.0. The broadband cable caters to the entire range of innovative media applications from analogous, digital and high-definition TV to high-speed Internet and voice connections to telemetry services, tenant portals and interactive services. Beyond merely transmitting signals, Tele Columbus uses its own product platform in order to actively increase the programme offering and to develop additional services.

Disclaimer

This Investor Relations release may contain forward-looking statements. These statements are based on management's current expectations or beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Although we believe that such forward-looking statements are reasonable, we cannot assure you that any forward-looking statements will prove to be correct. Such forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. In light of these risks and uncertainties, the forward- looking events and circumstances discussed in this Investor Relations release may not occur and actual results could differ materially from those anticipated or implied in the forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on the forward-looking statements.

This Investor Relations release may contain references to certain non-GAAP financial measures, such as Normalized EBITDA and Capex, and operating measures, such as RGUs, ARPU, and Unique subscribers calculation. These supplemental financial and operating measures should not be viewed in isolation as alternatives to measures of Tele Columbus’ financial condition, results of operations or cash flows as presented in accordance with IFRS in its Consolidated Financial Statements. The non-GAAP financial and operating measures used by Tele Columbus may differ from, and not be comparable to, similarly titled measures used by other companies. For further information please see in particular the Footnotes in this Investor Relations release and the financial statements.

We disclaim any obligation to publicly update or revise any forward-looking statements or other information contained in this Investor Relations release. It is pointed out that the present Investor Relations release may be incomplete or condensed, and it may not contain all material information concerning Tele Columbus AG or the Tele Columbus group.