Apax Partners

Bucking the trend by investing in an under-managed Greek mobile phone company

In June 2005, Apax Funds (AEVI) identified an opportunity to invest in TIM Hellas, the third largest mobile phone company in Greece which, at the time, was owned by Telecom Italia.

Apax Partners bucked the conventional wisdom that number three mobile players were a no-go investment area and instead saw: a stable business environment with attractive margins and market growth; an under-managed asset with potential for improvement; the possibility of further Greek consolidation; and the potential to sell on for a higher price because of a rapidly consolidating mobile market in Europe.

At the time of the Apax Funds’ acquisition, TIM Hellas was an under-performing and unloved subsidiary of a major international telecommunications group. As such, the company was losing ground to its two major competitors and also scored poorly on customer satisfaction and coverage surveys.

“The company was in a bad condition before Apax came. There was a decline in all key performance indicators, in particular in sales, which reflected on EBITDA and revenues. Apax had been monitoring the situation at TIM Hellas for a while and saw an opportunity for turnaround with a new, experienced management team installed.” Socrates Kominakis, CEO

The Apax Fund and its investment partner TPG backed a strong management team which successfully turned the company around and put it on a growth footing through investment and a series of initiatives.

New product launches captured subscribers as well as increasing the usage of existing customers. Acquisition and retention of customers significantly improved because of increased investment and focus on marketing, network coverage and distribution.

“The difference between being owned by Apax Partners and a strategic owner is interference. Apax’s interference was very selective, specifically when management asked for assistance. On those occasions, they acted promptly hiring consultants or using their own operational resources to assist. Apax placed their trust completely in the local expertise of management.” Socrates Kominakis, CEO

In January 2006, the company was further bolstered by the acquisition of the fourth-placed Greek mobile provider Q-Telecom. The combined business continued to exceed expectations throughout 2006, generating double digit revenue growth leading to a very substantial profit growth, and, towards the end of the year, after several approaches from interested buyers, a decision was made to sell.

“Concerning Q-Telecom, Apax was fully involved in the acquisition. They fully supported management’s proposal on the acquisition, realising that it was key for the turnaround and the future success of the company.” Socrates Kominakis, CEO

In February 2007, a robust company with genuine further growth prospects was sold to Weather Investments.

Apax Partners had used its sector expertise to take a risk on an under-performing business in an unfashionable market position. With renewed management focus, increased investments in network, distribution and marketing, and the acquisition of Q Telecom, the group gained positive momentum and is now in a strong position to profit from further growth.