4iG and Hungarian state to take over Vodafone Hungary

Vodafone has struck a ‘heads of terms’ agreement with Hungarian IT and telecoms company 4iG and state holding outfit Corivinus to sell its Hungarian unit in its entirety for an enterprise value of HUF715 billion (€1.8 billion).

Vodafone said in a statement that the transaction would create a number two operator in Hungary and would also support “the Hungarian state’s goal of creating a national ICT champion”.

The pair expect the deal to complete by the end of this year, pending due diligence a binding transaction agreement and regulatory approval.

4iG, which is an active player in the Hungarian telecom market already, notably through its acquisition of Romanian operator Digi/RCS&RDS’s Hungarian operation, said that the merger would generate synergies worth over HUF150 billion.

Under the proposed deal, 4iG will take a 51% stake with the Hungarian state taking a 49% stake.

The company said the acquisition would “fundamentally reshape the Hungarian telecoms market” with the combined entity offering a combination of fixed voice, internet, pay-TV and digital terrestrial broadcasting along with mobile telecoms.

Vodafone Hungary is already the number two player in Hungary in terms of the number of subscriptions, with over 3.8 million residential and business customers, including 700,000 fixed broadband customers.

The pair together will have five million customers and 7.6 million revenue-generating units.

“The acquisition of Vodafone Hungary will be the most significant domestic telco transaction in the last 30 years, of a similar extent to the privatisation 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,” said Gellért Jászai, chairman and CEO of 4iG.

“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.”

Nick Read, CEO of Vodafone, said: “The Hungarian Government has a clear strategy to build a Hungarian owned national champion in the ICT sector. This combination with 4iG will allow Vodafone Hungary, which has a proud history of success and innovation in the country, to play a major role in the future growth and development of the sector as a much stronger scaled and fully converged operator. The combined entity will increase competition and have greater access to investment to further the digitalisation of Hungary.”

The deal is the latest engineered by 4iG and the Hungarian government as part of the latter’s strategy to create a ‘national champion’ to take on Deutsche Telekom-owned Magyar Telekom.

In addition to Digi, 4iG recently pped its stake in local transmission services company and digital-terrestrial TV service provider Antenna Hungária to 76.78%. The Hungarian state holds the residual 23.22% stake in Antenna Hungária.