In the last decade, the Swedish cable market has developed rapidly, moving from a largely utility-type market to a more commercial pay TV industry. The value of Comhem has increased in line with this development. TeliaSonera originally sold the group for €235m, representing €165 per home. Carlyle and Providence paid €352m just two years later, valuing each home at €237. Since taking control, the two private equity groups claim to have invested Skr4bn (€440m) in network upgrades and the roll-out of new services. This has included DOCSIS 3.0 upgrades to develop a top-tier Internet service offered at 200Mbit/s.  

But if the reported deal value is correct, the current value placed on the company is a sizeable premium, valuing each of Comhem's 2.4m homes at €780 or more than three times the value agreed back in 2006. BC partners said the buy would bring continued growth opportunities thanks to the operator's 'strong infrastructure and non-cyclical growth profile'. But while large operators like Comhem with steady subscription income prove attractive to private equity buyers, the Swedish cable market is not without its challenges. Comhem has struggled to boost uptake of digital TV among its subscriber base with more than 60 per cent of its TV customer base still analogue.

While it has had some success with telecoms services, less than a quarter of ComHem homes take internet services from the provider and fewer still take telephony. This goes some way to explain why the sale involved yet another private equity player rather than an industry group: the low uptake of digital and telecoms services leaves massive headroom for future revenue and ARPU development while the stable subscriber base offers good cash flow. Competitive worries are also limited in Sweden. Recent growth of pay satellite, IPTV and DTT has been limited and threats of extensive local fibre-to-the-home network roll-out have failed to materialise on any scale.

BC Partners previously owned Germany's Unity Media, but sold it to Liberty Global in 2009. German market experience, where sale of digital TV and internet services is also a struggle, should prove valuable in the Swedish market. The deal remains subject to competition authority review.