Wired for business
media and telecom
4
(0 France Telecom
Media and telecommunications is a market in the midst of a rapid structural
transformation triggered by re-regulation and technology. The market
offers all of the rich opportunities that such broad transformations tend to
bring. However, we must choose our commitments with care.
Long-ranging operations
Cellular deals
Connecting networks
Twofold relationship
Emerging markets
Priorities
What'sNewS Issue5-May 1998
An internationally networked bank
like our own cannot afford to ignore
the globalization of media and telecom; at
the same time, it is a market that clearly
falls outside our essential strategie focus.
This requires that a careful balance be
struck: on the one hand, we need to
devote sufficiënt resources to stay abreast
of developments in this important field,
and to piek whatever cherries the market
may bring; on the other hand, we have to
take into account the bank's overall
strategy. Hence the new regional strategy
paper and business plan produced by our
Global Media and Telecommunications
Group - which will now operate as a
centre of competence.
The goal is to service selected media and
telecom companies involved in the
process of globalization, while at the same
time insure a stable return of 15 percent
on gross RoS. This means providing
research, lending, capital market and 1PO
transactions, advisory mandates, and both
public and private equity deals. Our
relationship with France Télécom
provides a good guideline for how we
wish to proceed. The Paris-based group is
the world's third-largest GSM cellular
operator, with systems in over a dozen
countries ranging from Argentina to
Belgium and France, from China to the
Ivory Coast, from Greece to India and
Japan.
We began mid-1996 with France
Télécom Mobiles International by
underwriting Mobistar, Belgium's second
GSM operator. In 1997, Rabo Securities
played the role of manager on France
Télécom's prestigious 1PO. We received
the fee-generating advisory mandate in the
groups' acquisition of Casema, Hollands
leading cable TV group, which is now
expected to seek ntergers with other cable
operators, and we also took a 5 percent
equity stake. Other deals included the
financing of France Télécom's mobile
network in Poland (Centertel), as well as a
vendor program arranged by De Lage
Landen for the sale of equipment in
France. The relationship with France
Télécom is organized by our Paris-based
Brice Anger.
Finally and perhaps most interestingly:
our current equity investment in the
DCS 1800 project in Holland, for which
the auction was recently concluded. We
bid together with France Télécom, ABN
Amro Bank and others, and are now
Jerry van Kaathoven on-line
working with these partners under the
umbrella of a joint special-purpose
temporary company called Federa NV.
This forthcoming third digital cellular
system will, in addition to other new
players in the market, compete with two
existing networks; one controlled by
Libertel, which is backed by ING, and
another by PTT Telecom. It is also
planning to build a competing fixed-line
network. And for all of these projects,
Rabobank together with ABN AMRO has
an opportunity to structure the finance,
float the shares, and handle produets
ranging from payments traffic, treasury,
leases, insurance, pensions funds and all
the rest.
/The underlying philosophy of our
I relationship with France Télécom or
indeed any other major international
telecoms company is twofold,' explains
Jerry van Kaathoven, head of the group
which also includes Roger Jansen, Ferry
de Vries, Duco Hordijk, Marjon Wind,
Alexander Gelderman, Brice Anger, Nico
van Eijk and secretary Laylla Hassine.
'First, we should seek partnership with
strong players, whatever the market;
second, there should always be a level of
security and comfort. It we are entering a
new business, we should do so close to
our home market. A new market requires
a strong product and a very well
established partner. In other words, the
attempt to launeh a new product in a new
market would be considered a "no-go"
proposition.' fl
The overall plan is to gradually increase
our total portfolio from NLG 1.23
billion to some NLG 3 billion, by the year
2002. Of this, the proportion accounted
for by emerging markets will grow from
37 to 50 percent, and the RoS will
increase from 12 to 15 percent. Our
solvency allocation for media and
telecoms from the present NLG 77
million to NLG 200 million. Moreover,
the strategy paper envisages a focus on
infrastructure - i.e. the distribution and
transportation of media and telecom
services, which generate highly
predictable and recurring revenues -
rather than on the information service
industries like entertainment, multimedia
and other content-related businesses,
where the flow of revenue streams is
rnuch more unpredictable.
Nevertheless, we are closely following
the convergence between media and
telecommunications. The first priority will
remain mobile- and fixed-network
operators, plus cable tv operators, and the
supporting equipment providers to these
sectors. A second phase will see expansion
in satellite services. Finally, in order to
manage these commitments and further
augment our industry know-how, the
media and telecom operations will be
handled by regional competence centres:
one in Utrecht for the 'non-Americas,'
augmented by dedicated M&T bankers in
Paris and London branch, and one in
Chicago to handle the Americas.
