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Minority fury at Q-telecom low

The two private equity firms buying Q-Telecom, a Greek mobile telecoms operator, are facing minority investor pressure over the €350m deal.

Texas Pacific Group and Apax Partners will pay Q-Telecom’s controlling shareholder, Greek IT company InfoQuest, €325m in cash and assume €25m in debt under the terms of the deal. They are understood to have fought off a rival bid from buyout firm BC Partners and plan to merge the business with TIM Hellas, which they bought earlier in the year.

TCS Capital Management, a New York-based media and telecoms fund, and the largest minority shareholder of TIM Hellas, has criticised the deal, however. TCS holds a 5.4% stake in TIM Hellas.

TCS contends that the deal sets a precedent for the value of its equity stake. Apax and TPG agreed to pay €16.40 per TIM Hellas share, which valued the company at €1.1bn.

But TCS said this worked out at only 5.4x TIM Hellas’ estimated 2004 Ebitda on a normalised basis. It also said that the Q-Telecom deal valued that company at 14.3x its Ebitda of a reported €12.2m on revenues up 50% at €73m in the first half of its financial year.

On the same multiple, TCS said its TIM Hellas shares were worth €46.73 each in any squeeze-out of minorities. The fund said this price would be before the integration of TIM Hellas and Q-Telecom, which would improve the group’s combined position with a 28% share of the Greek market.

TCS added that, according to JPMorgan, Q-Telecom had been an aggressive competitor, with its market share increasing from 3.5% in 2003 to 8% on October 17.