The Veon Group said it has agreed to sell its mobile network towers in Russia to Service-Telecom for a total of RUB 70.65 billion (USD 970 million). Service-Telecom is a partner to VimpelCom, Veon's holding company in Russia for the Beeline brand services, and it already provides the company with passive infrastructure across various regions in Russia. The transaction, subject to the usual regulatory approvals, should close in the fourth quarter.
The sale reflects Veon’s continued focus on active portfolio management and the pursuit of opportunities to realise the value of its infrastructure portfolio. The company has over 50,000 towers across nine markets.
The transaction involves the sale of 100 percent in National Tower Company (NTC), a subsidiary of Veon, which operates a portfolio of 15,400 mobile network towers in Russia. All of the active mobile network infrastructure currently operated by Beeline and the majority of the rooftop towers will remain with the company.
Under the terms of the deal, VimpelCom and Service-Telecom have entered into a long-term master agreement regarding the provision of tower infrastructure services for an initial period of 8 years, and multiple extensions of 8 years at the discretion of VimpelCom. Both parties will additionally enter into a new build-to-suit programme for up to 5,000 sites by 2029.
The master agreement provides a framework for a long-term strategic partnership with Service-Telecom to pursue investments in network roll-out and upgrade, and share the benefits from potential future infrastructure market consolidation in Russia. The agreement also provides Beeline with strict service commitments and protections enabling Beeline to place an even greater focus on ongoing strategic initiatives and improve the quality of mobile services for its customers.
The purchase price for the transaction corresponds to an EV/EBITDA multiple of 11.7x 2021 based on projected EBITDA of NTC post-completion.
Commenting on the transaction, Kaan Terzioglu, Veon’s CEO, said that by entering into a long-term partnership with a strong, experienced counterparty in Russia, Beeline will enjoy the operational and financial flexibility to serve its customers with market-leading services through one of the nation’s largest and most technologically-advanced mobile networks.
Veon will also use money from the deal to improve its balance sheet and to invest in critical aspects of active network and digital opportunities.
