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Czech investor to buy Telenor Hungary

Norwegian telecom Telenor has entered into an agreement to sell its assets in Central and Eastern Europe (CEE) to the Czech PPF Group for EUR 2.8 billion, around NOK 27 bln, the company said on Wednesday, according to media reports.   

Telenor Hungaryʼs HQ in Törökbálint, on the western outskirts of the capital.

The transaction includes Telenorʼs 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 bln, or 9%, of Telenor Groupʼs revenues and NOK 4.1 bln, or 8%, of EBITDA in 2017, and have more than 9 million customers and around 3,500 employees, noted state news wire MTI.

The transaction requires necessary regulatory approval and is expected to be completed within the third quarter of 2018.   

Online news portal index.hu notes that although there was no official tender, Telenor has long been negotiating with the PPF Group owned by Czech billionaire Petr Kellner.

"Telenor Hungary is showing a strong performance in the market and we keep pushing the boundaries to provide customer-centric and easy-to-use products," Telenor Hungary CEO Alexandra Reich was quoted as saying by MTI. "We are convinced that we can continue our successful story in Hungary. PPF Group has a clear goal for their telecommunications portfolio, and the Telenor CEE operations are key to achieve this. I want to underline that this transaction will have no impact for our customers and local partners, and going forward the business will run as usual," she added.

PPF Group, described by MTI as the largest private investment group in the CEE region, has approximately EUR 35 bln of assets under its control. It invests in various sectors, including banking, consumer finance, real estate, mining and telecommunications.  

"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 Groupʼs shareholder responsible for telecommunications assets.   

Telenor has had mobile operations in the CEE region for 25 years. It entered the Hungarian market in 1994 through the acquisition of the former Pannon GSM.

Mészáros still in the picture?

In February, financial news portal portfolio.hu reported that the IT and telecom sector is one of the main focuses of the acquisition and development strategy of Hungaryʼs Konzum group, and Telenorʼs activities fit in well with this strategy, indicating the holdingʼs potential interest in the local operations of the Norwegian telco.

Konzum is directly and indirectly majority owned by investor Lőrinc Mészáros, the mayor of Felcsút, the home village of Hungarian Prime Minister Viktor Orbán. Portfolio.hu noted in February that Minister of the Prime Ministerʼs Office János Lázár spoke earlier of the need to have a state-owned mobile company after the April national elections. The website also noted Mészárosʼs good relations with the government.

Index.hu observes today that the Czech acquisition does not necessarily mean that Telenor Hungaryʼs operations might not end up in the hands of Mészáros in future, adding that its sources indicate contact has already been established between Kellner and one of the (unnamed) firms owned by Mészáros.

The Hungarian firm has allegedly told the PPF Group that it would be interested in the Hungarian operations of Telenor were they to be spun off from the acquisition package in future. Another source, however, says the Czech firm has no intention of making another deal in the near future, index.hu adds.