The decision by Telenor to sell up in Central and Eastern Europe comes as no surprise.
It is nevertheless an important development and comes against the backdrop of growing M&A activity in the region and the emergence of the Czech Republic’s PPF Group, headed by the billionaire Petr Kellner, as a key player, especially in Bulgaria.
The basics of the deal are that Telenor has agreed to sell its CEE assets, which include wholly-owned mobile operations in Hungary, Bulgaria, Montenegro and Serbia, to PPF Group for €2.8 billion. The parties have agreed on a deferred purchase price in which €400 million of the proceeds will be paid in four instalments over four years, and they expect to obtain the necessary regulatory approval for the transaction in Q3 2018.
Telenor says that the CEE assets accounted for only 9% of its revenues and 8% of EBITDA in 2017 and that their sale will allow it to focus on regions with most potential, essentially Asia and its home market Scandinavia.
Meanwhile, PPF Group sees the deal as an important step in its objective to become a mid-sized European operator.
Interestingly, the Hungarian media have reported that Telenor’s operations in the country may not necessarily end up being owned by PPF Group.
Konzum Group, which is majority owned by L?rinc Mészáros, an entrepreneur close to the Hungarian government, is understood to be interested in acquiring the assets should PPF Group decide to spin them off.
The real change will be in Bulgaria, where should the deal, and previously announced acquisition of the Nova Broadcasting Group, receive regulatory approval PPF Group will become the largest single investor in the country’s media and telecoms market.
As to the future, it will be interesting to see if PPF Group replicates the strategy it has adopted with the incumbent O2 in the Czech Republic. This, almost certainly, will include a greater emphasis on the development of multimedia services.