Proximus has agreed to buy out the minority shareholders in its wholesale international services arm BICS. It will pay a total EUR 217 million to acquire the stakes of MTN and Swisscom in BICS, of respectively 20.0 and 22.4 percent. The acquisition is expected to simplify its plans to sell BICS.
Last summer, Proximus confirmed it was looking at a potential sale of a majority stake in BICS. The company said that after looking at the various options, it concluded that "the best way to have the necessary flexibility to create long-term value for BICS and TeleSign was to acquire 100 percent ownership of BICS".
The acquisition will allow Proximus to benefit from the full cash flow at BICS and revenue growth at its subsidiary TeleSign. The company said it would execute the growth plan of BICS and TeleSign, through a combination of organic investments in key growth domains, a strict focus on cash flow generation within the legacy business and an active role in capturing consolidation opportunities. At the same time MTN and Swisscom will remain important commercial partners of BICS.
BICS generated EBITDA of EUR 131 million and stable free cash flow of EUR 64 million in 2020. The acquisition price gives the company an enterprise value of EUR 569 million, equal to 4.4x EBITDA. Proximus will benefit from the extra cash not paid in dividends to the minority shareholders, which was worth EUR 26 million in 2020.
The company said it would finance the acquisition with its credit facility and there would be no impact on its dividend policy. Proximus said it sees upside in BICS' valuation as results improve following the coronavirus crisis.
Swisscom confirmed it signed a contract to sell its 22.4 percent stake in Belgacom International Carrier Services (BICS) to the main shareholder Proximus for EUR 110 million. The commercial contracts between Swisscom and BICS will remain in place. Swisscom manages the international telephone minutes business under a supplier relationship with BICS.
MTN Group also confirmed the deal to sell its 20 percent and said the timing of closing is dependent on customary regulatory approvals. MTN will receive proceeds of approximately EUR 100 million in cash, which the group intends to use to pay down US dollar debt and for general corporate purposes.
BICS was classified as a non-current asset held for sale and this transaction has resulted in a writedown of its carrying value of ZAR 397 million for results in 2020. MTN will record a profit on disposal of ZAR 1.2 billion during the first half of 2021. The sale represents further progress in MTN’s stated asset realisation programme, which aims to reduce debt, simplify its portfolio, reduce risk, improve returns and unlock value.
