Veon has submitted a new offer to buy part of Global Telecom Holding, notability its mobile operators Jazz in Pakistan and Banglalink in Bangladesh. The total purchase price of USD 2.550 billion will be financed in part by the sale of its 50 percent stake in Italian operator Wind Tre. Veon said the deal is part of a renewed focus on emerging markets as the company streamlines its portfolio.
The GTH assets are already fully consolidated in Veon’s accounts. Veon will continue to hold its stake in Algerian operator Djezzy through GTH. Veon launched last November a bid for the 42.3 percent of GTH it does not yet own. However, it was forced to withdraw the offer in April this year after it was unable to meet all the conditions.
The new deal will consist of Veon taking on debt held by GTH, including bonds, of around USD 1.6 billion. The remaining USD 950 million will be paid in cash and a deferred consideration. As Veon already owns 57.7 percent of GTH and thus consolidates its debt, the total net cash outflow and deferred consideration is expected to be approximately USD 400 million, resulting in only a minor impact of 0.1x on Veon’s pro-forma net leverage ratio. The Wind Tre is already expected to reduce leverage by 0.7x, to around 1.7x.
The transaction is subject to approval by GTH shareholders at an extraordinary general meeting and certain regulatory approvals. Veon expects to complete the transaction in Q4.
Streamlined portfolio, refocused HQ
The sale of the Wind Tre stake and acquisition of part of GTH's assets is part of a broader plan by Veon to streamline its diverse portfolio. Executive chairman Ursula Burns said the company has identified four immediate priorities: simplifying the group’s structure, increasing operational focus on emerging markets, strengthening the group’s balance sheet and supporting the company’s current dividend policy. The M&A transactions are "important steps towards this goal", she said.
Veon said it will provide a more comprehensive update on its strategy in the coming weeks, which will cover, among other things, "our ambition to deliver operational excellence across our portfolio, supported by a refocused and expert HQ that provides strategic expertise and direction to our businesses." The HQ is expected to function as a center of expertise, driving key strategic initiatives across the group, while the development of local market strategies and day-to-day decision-making will be the responsibility of Veon’s operating companies. This should both improve customer service and reduce group costs, the company said.
