4iG Looking to Buy Vodafone Hungary Jointly With Hungarian State

Deals

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4iG Nyrt. (4iG), Corvinus Zrt., representing the Hungarian State, and the Vodafone Group have agreed on heads of terms for the sale of a 100% stake in Vodafone Magyarország Távközlési Zrt. (Vodafone Hungary) for a total cash consideration equivalent to an enterprise value of HUF 715 billion, according to a press release sent to the Budapest Business Journal.

According to the acquisition plans, 4iG will become the owner of 51% of Vodafone Hungary, while the Hungarian State will have a 49% stake. Vodafone Hungary is being acquired for a total cash consideration equivalent to an enterprise value (EV) of HUF 715 bln.

The acquisition of Vodafone Hungary will fundamentally reshape the Hungarian telecoms market. In addition to fixed voice, internet, pay-TV, and digital terrestrial broadcasting, 4iG will also become a major player in mobile telecommunications after the completion of the transaction.

The transaction creates significant potential for further growth through cross-selling opportunities, full fixed-to-mobile convergence, and scale, resulting in major B2B and B2C revenue synergies, according to the press release. The net present value of the combined revenue, cost, and CAPEX saving synergies is estimated to be more than HUF 150 billion.

“The acquisition of Vodafone Hungary will be the most significant domestic telco transaction in the last 30 years, of a similar extent to the privatization of Matáv after the regime change. The acquisition will create a predominantly Hungarian-owned group of infocommunications companies and a clear number two operator in the Hungarian market," emphasized Gellért Jászai, chairman and CEO of 4iG, in connection with the announcement.

"Following the successful completion of the acquisition, our group will have one of the largest digital infrastructures in Hungary, which, due to its prominent role, will become a significant player in Hungarian telecommunications for many decades to come," he added.

Vodafone Hungary is the second largest player in the Hungarian market in absolute terms of share of subscriptions, serving more than 3.8 million residential and business (3 million mobile and 0.8 million fixed) subscribers, and with 5 million (3 million mobile, 0.7 million TV, 0.7 million broadband and 0.6 million fixed voice) revenue generating units (RGU) as of July 2022. In total, the combined group created by the proposed acquisition would have 5 million customers and 7,6 million RGUs as of July 2022.

Vodafone Hungary was the first company in Hungary to offer 5G services to its subscribers, and the company’s next-generation mobile service is continuously expanding nationwide with hundreds of base stations in Budapest and the Balaton region.

In the 2021/22 financial year, Vodafone Hungary’s annual net revenue was HUF 278 billion and its adjusted EBITDA exceeded HUF 93 billion. The company has more than 3,000 employees.

The planned transaction is expected to close by end of 2022, and is subject to confirmatory due diligence, finalizing binding transaction documentation, and obtaining necessary regulatory approvals.

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