PPF Group set to become mid-sized operating group; will use Telenor brand until at least 1H 2021

Telenor on Wednesday agreed the 27 billion kroner (€2.8 billion) sale of its Central European operations to Czech billionaire Petr Kellner’s PPF Group.

The deal will see the Norwegian incumbent exit Bulgaria, Hungary, Serbia and Montenegro, leaving it with operating units concentrated in Scandinavia and Asia.

"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," said Telenor chief executive Sigve Brekke, in a statement.

When the dust settles, Telenor will be left with European opcos in Denmark, Sweden and of course Norway. It will also still operate in Pakistan, Myanmar, Bangladesh, Thailand, and Malaysia.

For PPF’s part, the deal significantly expands its presence in the telecoms sector; the investment group currently has O2 Czech Republic and O2 Slovakia in its stable.

"With this purchase, PPF Group is expanding it 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, who oversees PPF’s telco assets.

The four opcos that PPF has agreed to buy had a combined 9 million customers as of Q4 2017. Together, the assets generated NOK11.8 billion in revenue and NOK4.1 billion of EBITDA last year, equivalent to 9% and 8% of Telenor Group’s revenue and EBITDA respectively.

Telenor confirmed in January it had received an unsolicited expression of interest in its CEE operations.

"Telenor is confident that PPF Group’s experience in both the region and sector will make it a good owner of the CEE assets," Brekke said on Wednesday.

The deal requires regulatory approval and is expected to close in the third quarter. Telenor said it plans to use the proceeds to pay a special dividend of NOK4.4 per share.

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