Great news for the telecommunications industry! On 1 August 2023, Emirates Telecommunications Group Company “e&” took a significant step towards expanding its international presence and diversifying into new geographies. They signed a binding agreement with PPF Group to acquire a controlling stake (50% + 1 economic share) in PPF Telecom’s assets in Bulgaria, Hungary, Serbia, and Slovakia.
PPF Telecom is a prominent player in the Central and Eastern European (CEE) region, with subsidiaries such as Yettel Bulgaria, Yettel Hungary, Yettel Serbia, and the O2 Slovakia service operations, as well as the CETIN and O2 Networks infrastructure businesses. With more than 10 million customers and leading positions in its markets, PPF Telecom reported impressive combined revenues and EBITDAaL of €1.8 billion and €0.7 billion, respectively, in 2022.
This strategic acquisition aligns perfectly with e&’s goal to accelerate international growth and capitalize on opportunities in the CEE region. The markets in which PPF Telecom operates boast stable regulatory environments, healthy competition, and attractive returns, making them ideal for further expansion.
The deal involves an upfront consideration of €2,150 million for a 50%+1 share economic stake in both the service and infrastructure companies (excluding Hungary, where Corvinus owns a 25% stake). Additionally, there’s a potential for up to €350 million in earn-out payments if PPF Telecom exceeds certain financial targets within three years after closing, and a claw back of up to €75 million if the targets aren’t achieved. Furthermore, PPF retains a put option for its remaining stake, exercisable five years after closing, and e& has a reciprocal call option.
It’s worth noting that the transaction has not associated with related parties and financed by debt. Upon closing, e& will fully consolidate the acquired assets under its international vertical, leading to an incremental increase of approximately 14% and 11% in e&’s total revenues and EBITDA, respectively, based on FY 2022 financials. As a result, e&’s telecom portfolio will expand to 20 countries.
Before this deal finalized, regulatory approvals and certain closing conditions need to met. However, we are optimistic that the transaction completed successfully.
This exciting development promises a bright future for e& as they solidify their position in the CEE region and explore new opportunities for growth and innovation in the telecommunications sector. Rest assured that we will keep you updated on any further developments regarding this matter.
