Vodafone to sell Hungarian arm in £1.5bn deal

August Graham
Mon, August 22, 2022 

(PA) (PA Archive)

Vodafone has said it plans to sell its Hungarian arm in a £1.5 billion deal with a domestic company.

The telecommunications giant said it had “entered into heads of terms” – similar to a letter of intent – for the deal.

It would see Hungarian company 4iG take over Vodafone Hungary.

4iG will pay 715 billion Hungarian forints (£1.5 billion), which is 9.1 times its Ebitdaal (earnings before interest, tax, depreciation and amortisation, after leases) for the last financial year.

Bosses said the deal fits well with the hopes of the Hungarian government to create a large locally owned telecommunications giant.

After the purchase, 4iG will be the second biggest mobile and fixed communications company in Hungary.

Vodafone chief executive Nick Read said: “The Hungarian government has a clear strategy to build a Hungarian-owned national champion in the ICT (information and communications technology) 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.”

Victoria Scholar, head of investment at Interactive Investor, said: “It is clear the Hungary government is keen to build its own national telecoms champion with Vodafone prepared to take the cash in exchange for the spin-off.

“In November last year Vodafone’s CEO Nick Read said he was pursuing consolidation in Europe.

“Now the telecoms giant can focus more of its attention on Germany instead, a market it considers to be the most attractive on the continent.

“There is also M&A (mergers and acquisitions) potential for Vodafone in the UK amid recent reports that it considered a merger with Three’s UK division.

“Vodafone’s share price has been in long-term decline, halving since the peak in January 2018, but it still offers an attractive dividend yield.”