Telenor has entered into an agreement to sell its assets in Central and Eastern Europe (CEE) to PPF Group for €2.8 billion (around NOK 27bn) on an enterprise value basis. The Board of Directors of Telenor intends to ask the Annual General Meeting (AGM) for authorisation to distribute a special dividend of NOK 4.40 per share.
The transaction includes Telenor’s wholly-owned mobile operations in Hungary, Bulgaria, Montenegro and Serbia and the technology service provider Telenor Common Operation. The CEE operations contributed approximately NOK 11.8 billion or 9 per cent of Telenor Group’s revenues and NOK 4.1 billion or 8 per cent of EBITDA in 2017, and have more than 9 million customers and around 3,500 employees.
“Telenor Group’s strategy is based on growth, efficiency and simplification. With the sale of our CEE assets, we take an important step in simplifying and focusing Telenor’s portfolio on the regions where we see the strongest potential for value creation. Following this transaction, Telenor’s footprint will consist of integrated fixed and mobile operations in Scandinavia, and strong mobile positions in Asia. Telenor is confident that PPF Group’s experience in both the region and sector will make it a good owner of the CEE assets,” says Sigve Brekke, Chief Executive Officer of Telenor Group.
“Our proposed use of proceeds balances our aim to deliver attractive shareholder remuneration, while preserving strategic flexibility. The special dividend will come on top of an all-time-high ordinary dividend and the recently executed buyback programme. We are currently focusing on developing our existing assets and driving digital transformation. In the coming years, we believe there will be value accretive opportunities within our core business areas and geographies,” says Jørgen C. Arentz Rostrup, Chief Financial Officer of Telenor Group. “We are pleased with today’s transaction, not least because of PPF’s commitment to a professional transaction process.”
PPF Group is the largest private investment group in CEE with approximately €35 billion of assets under its control. PPF Group invests in various sectors, including banking, consumer finance, real estate, mining and telecommunications. Previous transaction experience includes the acquisition of O2 Czech Republic from Telefonica in 2013 and Nova Broadcasting Group in Bulgaria in 2018.
“With this purchase, PPF Group is expanding its telecommunications portfolio to four more countries, and fulfilling our long-held goal to become a mid-sized European operator and to use our experience to strengthen our market position,” said Ladislav Bartonícek, PPF Group’s shareholder responsible for telecommunications assets within PPF.
The parties have agreed on a deferred purchase price, where €400 million of the proceeds will be paid in four instalments over four years. The transaction requires necessary regulatory approval. The transaction is expected to be completed within Q3 2018.