Europe gives thumbs up to Telenor simplification sales

The European Commission has given its blessing for Telenor to offload assets in Eastern Europe to Dutch financial and investment group PPF.

The Telenor business units in Hungary, Bulgaria, Montenegro, Serbia will now transfer into the PPF portfolio, for a cool €2.8 billion after the bureaucrats concluded there are direct risks to competition. The initial concern had focused around the existing PPF portfolio, which features O2 Czech Republic and Bulgarian broadcast company Nova Broadcasting Group, though little or no cross-over was found.

“The Commission found that the proposed transaction would raise no competition concerns,” the Commission said in a statement. “First, it would not give rise to horizontal overlaps, as the companies’ activities are confined to the different territories in which they hold their respective telecommunication licenses.”

Another area of concern was the wholesale international roaming and wholesale mobile and fixed call termination services and the downstream markets, though the Commission stated this would be ‘unproblematic’.

The new will be welcomed by Telenor, which has been looking to simplify its business operations, consolidating spend in its Nordic and Asian businesses. The headline of this strategy is focused around restructuring and a reduction of OPEX, though offloading non-core assets is generally a theme which goes hand-in-hand with such initiatives. Discontinued operations over the last couple of months have included Telenor India, Hungary, Montenegro & Serbia and Bulgaria, Telenor Common Operation, Telenor Microfinance Bank and Telenor Banka.

Looking at the last financial results, total revenues declined by 1%, though subscription numbers in the core markets are heading in the right direction. In Norway, and across Scandinavia on the whole, numbers were solid if not glorious, though Malaysia, Pakistan and Bangladesh all grew subscriber bases. Over the course of the quarter, two million subscriptions were added to the ranks, taking the total up to 172 million.

Telenor pulls out of Central and Eastern Europe

Norwegian telecoms group Telenor has called it a day in Central and Eastern Europe by selling out to private equity firm PPF Group for €2.8 billion.

The transaction includes Telenor’s wholly-owned mobile operations in Hungary, Bulgaria, Montenegro and Serbia and the technology service provider Telenor Common Operation. The stuff its flogging contributed 9% of Telenor Group revenues and 8% of EBITDA. It employs 3,500 people and has nine million customers.

“Telenor Group’s strategy is based on growth, efficiency and simplification,” said Sigve Brekke, CEO of Telenor Group. “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.”

“Our proposed use of proceeds balances our aim to deliver attractive shareholder remuneration, while preserving strategic flexibility,” said Jørgen C. Arentz Rostrup, CFO of Telenor Group.  “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.”

“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 Bartoníček, PPF Group’s shareholder responsible for telecommunications assets within PPF.

Telenor announced back in January that is was thinking of pulling out of Central and Eastern Europe and it apparently took it a couple of months to hammer out the details of the deal. Telenor has been trying to consolidate its operations back to its core geographical areas after a few foreign misadventures and this looks like a major step in that direction.