Xavier Niel’s Iliad to acquire UPC Poland from Liberty Global

Liberty Global has reached a definitive agreement to sell 100% of its operations in Poland to iliad Group’s Polish mobile subsidiary Play.

The deal, which will see Liberty Global complete its exit from central and eastern Europe and marks a major expansion for Xavier Niel’s Iliad in the country, values its Polish assets at PLN7 billion (€1.5 billion), subject to customary debt and working capital adjustments at completion. The sale price represents a multiple of approximately nine times UPC Poland’s estimated 2021 Adjusted EBITDA, and close to 20 times its estimated 2021 operating free cash flow. Closing of the agreement, subject to regulatory approvals, is currently expected in the first half of 2022.

The signing of the agreement follows an indicative offer made by Iliad for UPC Poland at the end of July.

For Iliad Group, the acquisition of UPC Poland represents a big step forward in its ambitions for the Polish market following its acquisition of Play last year. The deal comes as Iliad’s founder Xavier Niel is in the process of taking it private with a view to focus on long-term investment.

“The acquisition of UPC Poland is inscribed in the logic of the acceleration of investments in fibre and consolidates our vision and determination to invest in next-generation mobile and fixed networks and services in Poland. The ambition will contribute to the digital transformation of the Polish economy and will benefit consumers and businesses with innovative and performative offerings. Pending the completion of the operation, we are delighted to unite our forces and to welcome the employees of UPC Poland to the Play/Iliad family,” said Iliad Group CEO Thomas Reynaud.

Liberty’s networks in Poland passed 3.7 million homes and served 1.5 million customers who subscribed to 1.3 million broadband, 1.4 million video, and over 600,000 telephony services as of June 30.

Iliad Group, which operates as Free in France and iliad in Italy, owns the Play mobile network operator in Poland with over 15 million subscribers. It provides mobile voice, messaging, data and video services for consumers and businesses.

“This transaction highlights, yet again, the significant value of fibre-rich HFC networks in Europe, as well as the substantial synergy benefits inherent in fixed-mobile convergence (FMC) mergers. We have been operating in Poland for over 20 years and are proud of our contributions to the country’s growing digital economy and the impact that we’ve made in the communities where we operate,” said Mike Fries, CEO of Liberty Global.

“I’d like to thank and commend the entire UPC Poland management team, most recently under Robert Redeleanu’s leadership, for their hard work and dedication over the years. UPC Poland, the largest cable television operator and a leading provider of triple play services in Poland, and Play, which covers 99% of the Polish population with its mobile services, together will have the scale from day one to be a powerful force in the Polish market. We are highly supportive of the rationale behind this combination and are excited to watch this converged national champion deliver high-quality connectivity across the Polish market.”

Fries said that the cash proceeds, net of debt repayment, from this asset sale of approximately US$600 million would boost Liberty Global’s “already substantial cash balance”, which stood at $4.1 billion as of June 30.

Proceeds from the sale (net of debt repayment at the UPC bank group) are expected to be used for general corporate purposes, which may include reinvestment into the business and share buybacks.

Credit Suisse acted as financial advisor to Liberty Global on the transaction.