The deal comes at a time when the UK-based operator group is under pressure from investors to improve its performance
This week, Vodafone has announced that it has agreed to sell its Hungarian unit, Vodafone Hungary, for roughly €1.7 billion.
The operator group will sell 100% of its Hungarian unit to Hungarian newcomer 4iG and Corvinus, a holding company owned by the Hungarian state. 4iG will hold a 51% stake in the business, with Corvinus holding the remaining 49%.
The deal was first revealed in August last year and is expected to be formally completed later this month.
“This combination establishes a scaled converged operator across mobile and fixed communications and supports the Hungarian government’s goal of creating a national Information and Communications Technology champion,” explained Vodafone’s interim CEO Margherita Della Valle. “The combined entity will increase competition and accelerate investment in the ongoing digitalisation of Hungary.”
According to Vodafone, the proceeds from the sale will be used to pay down debt.
In fact, this windfall could not come at a better time. The company having been under significant pressure from investors for years to turn its fortunes around and bolster share prices but has found little success.
The issue came to a head in January 2022, when ‘activist investor’ and major shareholder Cevian Capital called for Vodafone to restructure and be more aggressive in seeking consolidation in highly competitive markets.
A year later, however, and Vodafone’s outlook appears much the same. Despite the successful spin off and partial sale of the company’s European tower infrastructure in the form of Vantage Towers, as well as a burgeoning merger with Three in the UK, the Group’s share price has continued to stagnate.
As a result, at the start of December, Vodafone announced that CEO Nick Read would step down from his position at the end of the year, having failed to achieve the scale of consolidation he had championed for so long.
Under his four-year tenure, Vodafone shares had fallen in value by almost 50%.
Della Valle, the company’s finance director, is serving as interim CEO until a replacement can be found.
4iG, on the other hand, has been making something of a splash in the Hungarian market over the same period. Backed by billionaire Lőrinc Mészáros, a close associate of Prime Minister Viktor Orbán, 4iG has been on an acquisition spree throughout the Balkans, aiming to become a major telecoms powerhouse and the second largest operator in Hungary.
With the acquisition of Vodafone Hungary, the company moves one step closer to this goal, creating a converged operator able to deliver fixed broadband, pay-TV, and mobile services on a national scale.
“The acquisition of Vodafone Hungary opens a new chapter in the Hungarian telecommunications market. It is the first info-communications group in almost thirty years that can operate as a Hungarian majority-owned convergent operator,” said Gellért Jászai, chairman of 4iG.
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