Tuesday, 17 July 2018

Hutch buys Veon out of Wind Tre for €2.45bn

By Mary Lennighan, for Total Telecom
Tuesday 03 July 18

Hong Kong firm takes sole control of Italian JV, while Veon makes an offer for assets in Pakistan, Bangladesh

CK Hutchison will take sole control of Italian mobile joint venture Wind Tre with the acquisition of partner Veon's stake for €2.45 billion. The Hong Kong firm and Veon merged their Italian mobile businesses, Tre Italia and Wind respectively, in late 2016, each taking a 50% stake. Veon said its exit from Wind Tre will allow it pay down debt and increase its focus on emerging markets…

CK Hutchison will take sole control of Italian mobile joint venture Wind Tre with the acquisition of partner Veon's stake for €2.45 billion.

The Hong Kong firm and Veon merged their Italian mobile businesses, Tre Italia and Wind respectively, in late 2016, each taking a 50% stake.

Veon said its exit from Wind Tre will allow it pay down debt and increase its focus on emerging markets; alongside the Italy deal, Veon has announced an offer to buy Global Telecom Holding's remaining interests in Pakistan and Bangladesh.

"We are delighted to become sole owners of Wind Tre, which gives us the strongest possible platform to drive increased and recurring value for our shareholders," said CK Hutchison's co-managing director Canning Fok.

The company said its current 50% holding in Wind Tre brought in more than €1 billion in attributable EBITDA last year.

The operators expect the deal to close in the third quarter of this year, subject to regulatory approvals in Italy and the EU.

Veon anticipates booking a net gain of around US$1.1 million (about €943 million) on completion of the sale and intends to use the proceeds to reduce debt and improve leverage. It also said it will use around $400 million of the sum to help simplify its corporate structure and focus more on emerging markets.

It has offered $2.55 billion (€2.2 billion) for GTH's holdings in Jazz in Pakistan and Bangladesh's Bangalink, assets it already consolidates with its own numbers due to its 57.7% stake in GTH.

The debt-funded portion of the deal will come in at around $1.6 billion with the remainder – around $950 million – being paid in cash and deferred consideration. Veon's majority stake in GTH means its total net cash outflow and deferred consideration will come in at around $400 million.

The deal is subject to the approval of GTH shareholders and regulators. Veon expects it to close in the fourth quarter of the year.

Veon's executive chairman Ursula Burns said Veon is striving for a more focused and optimised portfolio of assets.

"To this end, the company has identified four immediate priorities: simplifying the group's structure, increasing our operational focus on emerging markets, strengthening the group's balance sheet and supporting the company's current dividend policy. Today's transactions are important steps towards this goal," she said.

"We intend to provide a more comprehensive update on Veon's strategy in the coming weeks, which will cover, among other things, our ambition to deliver operational excellence across our portfolio, supported by a refocused and expert HQ that provides strategic expertise and direction to our businesses," Burns added.
 

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