One of Hungary’s largest mobile networks may soon come under Arab ownership

Soon, it might be worth reading stock exchange releases in Arabic… One of Hungary’s largest mobile networks, Yettel, could have a new owner from Abu Dhabi. Here are the details of the acquisition.

Arab ownership

Telex writes that Karim Bennis, CFO at Emirates Telecommunications Group Company Pjsc., has signed a major deal that will impact one of Hungary’s largest mobile networks too. e& aims to acquire a controlling stake (50% + 1 economic share) in the Central and Eastern European operations of the Czech PPF Telecom Group. The transaction, excluding the Czech operations, will see majority Arab ownership extending to Bulgaria, Serbia, Slovakia and Hungary, with Yettel being the notable Hungarian entity affected by this new ownership.

About the transaction

According to experts, the transaction will go through in the first quarter of 2024. It’s all a question of how fast they can acquire the regulatory approvals. In addition, the communications team will have to clarify and explain the changes to investors and customers as well. As it seems, the parties have already agreed on the financial background of the transaction. e&’s announcement states:

The upfront consideration for the acquisition is €2,150 million in exchange for a 50%+1 share economic stake in both the service and infrastructure companies (except for Hungary where Corvinus owns a 25% stake in the respective businesses). The transaction is also subject to up to €350 million in earn-out payments if PPF Telecom exceeds certain financial targets within the three year period after closing and is subject to a claw back of up to €75 million if such financial targets are not achieved.

Upcoming changes

As it is highlighted in the statement, Hungary differentiates from the other three countries mentioned above. In Hungary, the Hungarian state-owned Corvinus International Investment Ltd. has a 25% stake in the mobile network, Yettel. Whereas, in the other countries, there is no state-owned stake in any of the mobile providers affected. This might mean that Arab and Hungarian parties will have to negotiate. Other than that, people do not anticipate a change in the services – or at least not right after the transactions. According to the sources, drastic changes, such as rebranding or management changes, seem unlikely based on e&’s previous global investments. Read more about changes in the telecommunication industry in Hungary HERE.

What does the future hold for the mobile network?

Looking ahead, the future of Yettel remains uncertain. Speculation arises about the Hungarian state potentially selling its 25 percent stake to Arab investors, especially if there’s a financial need, possibly linked to Budapest Airport ownership. While the outcome remains unclear, e& commits to keeping the market informed of any developments on this subject. You can read about the possible outcome of the Budapest Airport ownership issue HERE. In addition, e& also pledges in its announcement:

Should there be any developments on this subject, we will keep the market updated in due course.