E& in €2.5 billion Eastern Europe entry

E& has brokered a deal worth up to €2.5 billion that will see it take control of PPF Group's telecoms operations in four markets in Eastern Europe.

Mary Lennighan

August 2, 2023

3 Min Read
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E& has brokered a deal worth up to €2.5 billion that will see it take control of PPF Group’s telecoms operations in four markets in Eastern Europe.

The United Arab Emirates-based company revealed a month ago that it was in talks with PPF Group regarding a possible strategic collaboration. Now it has confirmed that talks were fruitful and that the partnership will involve it buying into the investment group’s services and infrastructure businesses.

Specifically, e& will take a stake of 50% plus one share in in PPF Telecom’s assets in Bulgaria, Hungary, Serbia, and Slovakia. Those assets comprise the Yettel operations in in the first three markets listed, plus O2 Slovakia, and the CETIN and O2 Networks infrastructure businesses in all four countries.

It will pay an initial €2.15 billion for the assets, but the bill could rise by as much as €350

million in earn-out payments over the three-year period after the deal closes, based on the PPF assets exceeding certain financial targets. There’s also a €75 million claw-back clause should it fail to reach its targets.

“This transaction is consistent with e&’s strategic ambition to accelerate international growth and diversify into new geographies,” the operator group said in a statement.

Indeed. We have been talking about that ambition for some time. The telco famously rebranded to its current moniker just over a year ago and simultaneously set its stall out to transform itself into more than just a telco and to expand internationally. Earlier this year it shared more on its expansion strategy, making it clear that it is looking for investments in Africa, Europe and Asia.

And, of course, it has been increasing its stake in Vodafone over the past 15 months. It now holds 14.6% of the group, but is looking to up that to 20%, Reuters reported on Wednesday, citing an interview from e& CEO Hatem Dowidar with CNBC Arabia.

That Vodafone hike could be a few months coming, but in the meantime e& can focus on its forthcoming arrival into Eastern Europe, regulatory approvals permitting.

“This acquisition is an unparalleled opportunity to establish a strong presence and foster developments within the CEE region. PPF Telecom, spanning four countries, exhibits a well-balanced structure, underpinned by robust macroeconomic fundamentals, as well as stable currencies. The markets of its operations are characterised by stable regulatory environments, healthy competition, and attractive returns. The transaction also enables e& and PPF, the leading investor in the region, to potentially partner on further expansion opportunities,” it said.

That last sentence is particularly noteworthy. It strongly suggests that this is not the end of the road for e& as far as European expansion is concerned. On the contrary, it appears to have a potential investment partner in PPF Group to help further its ambitions.

It does need to get this deal over the line first though. E& made its usual comment about keeping the market updated of any developments, but did not share any projected timeline for the completion of the transaction. There should be no competition issues, but national regulators will want to have their say on the potential arrival of growing name from overseas.

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About the Author(s)

Mary Lennighan

Mary has been following developments in the telecoms industry for more than 20 years. She is currently a freelance journalist, having stepped down as editor of Total Telecom in late 2017; her career history also includes three years at CIT Publications (now part of Telegeography) and a stint at Reuters. Mary's key area of focus is on the business of telecoms, looking at operator strategy and financial performance, as well as regulatory developments, spectrum allocation and the like. She holds a Bachelor's degree in modern languages and an MA in Italian language and literature.

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