Vodafone sells its Hungarian business for $1.8 billion

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Vodafone has agreed to sell its Hungarian business for $1.8 billion, in a deal that will help streamline its global operations and reduce its debt.

The UK-headquartered telecoms group said on Monday it had reached a non-binding agreement to sell 100% of its business to 4iG and Corvinus Zrt, a Hungarian state holding company.

Vodafone’s strategy has been under scrutiny since January, when it emerged that Cevian Capital, Europe’s biggest activist investor, had taken a stake and was pushing for a simplification of the group’s sprawling business and the sale of little-known businesses. efficient.

Nick Read, chief executive of Vodafone, expressed his ambition to scale up and pursue mergers and acquisitions in important markets, such as Spain, Portugal, Italy and the United Kingdom. The additional cash from the sale of its Hungarian business would help reduce its net debt, which stood at 41.6 billion euros in March.

The combination of Vodafone Hungary and 4iG will create the Central European country’s second-largest mobile and landline operator, making it a stronger competitor to incumbent Magyar Telekom, a subsidiary of Deutsche Telekom.

“This combination with 4iG will enable 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 large-scale and fully converged,” Read said. in a report. “The combined entity will increase competition and have better access to investments to further digitize Hungary.”

The sale price of Ft715 billion ($1.8 billion) represents more than 9 times Vodafone Hungary’s adjusted earnings before interest, tax, depreciation and amortization for the 12 months to March. Vodafone’s services business, VOIS, is not included in the transaction and will continue to operate in Hungary.

Last month, Vodafone said it was on track to deliver its full-year guidance, expecting adjusted profit to be between 15 and 15.5 billion euros before interest, impairment. , taxes and depreciation. The group’s total turnover in the last quarter increased slightly to 11.3 billion euros, against 11.1 billion euros a year earlier.

In May, Emirates Telecommunications Group announced that it had acquired a 9.8% stake in Vodafone for approximately $4.4 billion, one of its largest investments in over a decade. . The state-controlled investment group, whose chief executive spent 17 years in senior roles at Vodafone, expressed support for the company’s management and strategy.

The company’s share price was flat on Monday morning, but has gained 6% this year to 122p.

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