e& buys €2.15 billion stake in PPF Telecom Group’s assets

UAE-based telco holding company Emirates Telecommunication Group Company (e&) has signed a deal with PPF Group to acquire a 50% plus one share in its telco assets in Bulgaria, Hungary, Serbia and Slovakia, with the aim to build a major telecommunications business in central and eastern Europe.

The companies had been engaged in talks about a possible partnership “to explore strategic collaboration opportunities in central and southeastern Europe (excl. Czech Republic) that are mutually beneficial to both groups”.

As part of the agreement, e& will pay €2.15 billion upfront at the closing for the acquisition and additional earn-out payments of up to €350 million within three years after the deal is closed on the condition PPF Telecom exceeds certain financial targets. PPF noted if the financial targets are not met the transaction will be subject to a claw back of up to EUR €75 million .

PPF Telecom’s CEO, Balesh Sharma will keep his role and continue to lead operations with support from PPF Telecom’s teams in their markets.

PPF Telecom’s existing assets in the Czech Republic, including O2 Czech Republic and telecommunications infrastructure provider Cetin is excluded from the deal. PPF will retain its 100% indirect share in O2 CZ and its current indirect share in Cetin Czech, with Cetin Czech to transfer all of its non-Czech subsidiaries to PPF Telecom.

PPF Group CEO Jiří Šmejc said that the company’s telco assets in the Czech Republic are excluded from the deal due to the home market’s specific position and PPF plans to create synergies between the companies operating in the Czech Republic.

He said, “The purchase price of up to €2.5 billion, including contractual earn-out payments, represents one of the largest ever deals for PPF. I am proud of how we have managed to grow the value of this asset since its purchase. I believe that the know-how and experience that PPF has in the region, combined with the global scale of our partner, will enable us to jointly share ambitions for synergies and further growth.”

“As e& continues on its path to be a leading global technology group, our priority remains focused on expanding our customer base and providing them with more digital services, both for consumers and enterprises. This exciting partnership with PPF Group in Bulgaria, Hungary, Serbia, and Slovakia exemplifies our commitment to seeking new opportunities for collaboration and investment opportunities that will further accelerate our expansion,” said Hatem Dowidar, Group CEO, e&.

“By combining PPF Telecom’s expertise with our own innovative capabilities, we are poised to establish a major telecommunications presence in Central and Eastern Europe. We aim to realize synergies, optimize procurement efficiencies, and enhance customer offerings, establishing our position as a leading global tech group.”

The transaction is expected to close in or before the first quarter of 2024 and is subject to regulatory approvals.