Broadband technology Teleste has signed an agreement to sell its services business in Germany to Circet Deutschland, a telecom network service provider with activities in France, Ireland, the UK, Spain, Germany and Morocco, for €8 million in cash.
In 2019, the net sales of the German services operations was €70.1 million, representing 29.8% of the consolidated net sales of Teleste Group. The unit turned in a net loss of €1.3 million in 2019. At the end of that year the Cableway companies had approximately 470 employees.
Teleste announced in May that it intended to focus on technology business operations and the services of higher added value supporting them.
Completion of the sale is subject to approval of the Federal Cartel Office in Germany, the Bundeskartellamt. Teleste estimates that the sale will be closed in the fourth quarter of 2020.
Teleste said that the sale would safeguard its capability to invest in growth areas of the technology and the product businesses and improve its financial position.
Closing of the agreement is estimated to increase financial assets of Teleste Group approximately by €7 million and increase its equity ratio by one percentage point. Teleste will recognize an estimated impairment loss on disposal of the discontinued operations of €6-8 million in its third quarter 2020 interim report. The impairment will be recognized in the net result of the discontinued operations in the profit and loss statement. The extraordinary loss will significantly decrease parent company equity, which is estimated to be €27 million after the divestment.
Circet provides a wide range of construction, installation and maintenance services for fixed and mobile networks. In 2019, the revenue of the group was €1.4 billion and the group employed 6,300 employees.