THE INTERNET and IT market in Slovakia is experiencing a new wave of acquisitions, say insiders. In the face of growing competition, firms want to secure their growth capital, strengthen their position against competing players and explore new opportunities to penetrate foreign markets.
Slovanet, which is among the largest internet providers in Slovakia, announced in June that it had completed its acquisition of Micronet, a local Bratislava internet provider. IT group Asseco Slovakia, one of the leading IT groups in central and eastern Europe, and the owner of Slovanet, said it too intends to widen its acquisitions in central Europe.
The telecommunications market has already witnessed two waves of acquisitions, said Roman Greguš, marketing manager of Slovanet. The first was in 2000-01; the second in 2005-06.
“This third wave of market consolidation proves that the industry is growing vigorously,” Greguš told The Slovak Spectator.
The purchases are taking place mainly among IT services providers and in the market for local and regional internet provision, he added. These areas have developed fast over the last few years and now need the support of bigger players to begin a new round of expansion.
In a growing number of cases, mainly among internet operators, firms are looking for partners who can help them tackle increasing competition in the market, he added.
“Capital resources which these firms have, or would be able to obtain externally, are not sufficient for them to be able to cope with this pressure,” Greguš said.
It is also difficult for smaller companies to cope with the current pace of technological innovation, such as triple-play services for households. Considerable investments are needed to launch these services too, he said.
So far, Slovanet has acquired three companies. These were Kryha Prešov, covering 15,000 households, CATV Tekov Zlaté Moravce, with 2,500 households, and Micronet Bratislava, serving more than 10,000 households. Slovanet is currently pondering bids for several other local firms, Greguš added.
“Acquisitions by Slovanet are a part of its mid-term development strategy, through which the company will consolidate and develop its own infrastructure, mainly based on optical fibres,” he said. This will enable Slovanet to compete with international players in the telecommunications market.
Jozef Klein, chairman and general director of Asseco Slovakia, agrees that acquisitions in the IT industry will continue to grow.
“It is the fastest way to expand into foreign markets and strengthen your position in the local market,” he told The Slovak Spectator.
Asseco Slovakia has so far completed a range of acquisitions. The first company it bought, in 2005, was Slovanet. Two years later Datalock, MPI Slovakia and Disig followed. Also in 2007, Asseco acquired a majority share in LCS International, BERIT, and Asseco Czech Republic. Asseco Slovakia entered a the western market in November 2007 when it bought Uniquare Software Development in Austria.
Asseco’s goal is to strengthen its market position in the central and eastern European region. It also wants to enhance its portfolio in order to increase its competitiveness and attract new clients at home and abroad so that it can face international IT giants, Greguš said.
In June, Asseco Slovakia issued shares on the Warsaw Stock Exchange. Asseco wants to use the new capital of almost Sk1 billion to finance acquisitions of foreign companies.