Second quarter results boost Versatel hopes

Versatel, the Dutch telecommunications company whose board and main shareholder have agreed a €1.34bn cash bid by Sweden's Tele2, on Wednesday posted second-quarter results that analysts said would bouy the hopes of minority investors demanding a higher offer price.

However, brokers believe the impulse given the dissident shareholders will prove short-lived. Dutch stockbroker Stroeve said Tele2's offer was still likely to gain the necessary approvals at a shareholder meeting in late September or early October.

That is because Versatel warned that it would fall back into the red, as marketing costs associated with a Dutch digital television launch eat into earnings from the third-quarter.

It reported quarterly net profit of €1.8m, boosted by a €1.4m tax credit and a stronger dollar, with sales of €191m, 33 per cent higher, thanks to an increase in German subscribers. The German business will be sold by Tele2 to Apax, the venture capital company, on completion of the takeover.

Stroeve called the results “outstanding”, saying an higher than expected gross margin and lower than anticipated operational costs delivered earnings before interest, tax, amortisation and depreciation of €40.3m, compared to its forecast for [euro]25.2m.

A group calling itself "TeleNee" and claiming to represent 3.14 per cent of Versatel stock, has insisted the company is worth more than the €2.20-a-share offered by Tele2. Versatel shares added three cents to €2.22.

The group says it is “not against a takeover... but is convinced there are better options than the current plan”. It does not have sufficient support to derail the bid, which requires 95 per cent approval, but claims to be able to rely also on an unspecified number of US investors.

Mark Lazar, Versatel chief financial officer, said the company was flattered that shareholders believe it is worth more, but pointed out that more than half its investors, including billionaire television tycoon John de Mol, had already agreed the offer.