The telecommunications giant Vodafone have announced that they are to sell their Hungarian arm in a £1.5bn deal and have “entered into heads of terms.”
This will see the Hungarian company 4iG take over Vodafone Hungary and the combined entity will “increase competition.”
4iG will pay 9.1 times its Ebitdaal by paying £1.5bn or (715 billion Hungarian forints) for the last financial year which will make 4iG the second largest mobile 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 added, “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.”