Emirates Telecommunications Group Company (e&) has informed Abu Dhabi Securities Exchange that it has received the European Commission’s (EC) approval to acquire a controlling stake in PPF Telecom Group’s assets in Bulgaria, Hungary, Serbia, and Slovakia.
The UAE telecom giant had announced in August last year that it was taking a controlling stake (50 per cent + 1 economic share) as a step towards its strategic ambition to accelerate international growth and diversify into new geographies.
The deal’s total value is €2,150 million ($2.395 billion). Based on FY 2022 financials, the transaction’s financial impact represents an incremental of approximately 14 per cent and 11 per cent of e&’s total revenues and EBITDA, respectively. It would also mean that e&’s telecom portfolio will increase to 20 countries.
The EC go-ahead came three months ahead of the legal deadline and in its filing with the ADX, e& said: “This milestone marks the conclusion of e&’s extensive and fruitful dialogue with the Commission’s Foreign Subsidies Directorate that has enabled the EC to grant Foreign Subsidies Regulation (FSR) approval of our transaction on an accelerated basis, almost three months ahead of the applicable legal deadline.”
The EC had asked for e&’s commitments on three issues – that e&’s articles of association do not deviate from ordinary UAE bankruptcy law; no financing by e& to PPF Telecom’s business in the EU subject to certain exceptions; and requirement that e& inform the Commission of future acquisitions that are not notifiable concentrations under the FSR.
The EC had opened an investigation in June to determine if e& was unfairly benefiting from subsidies, as sovereign wealth fund Emirates Investment Authority (EIA) holds a 60 per cent stake in the company.
e& acquires PPF Telecom
The commission concluded that e& and EIA received foreign subsidies from the UAE, these “subsidies received by e& did not lead to actual or potential negative effects on competition in the acquisition process”. In a press statement, it added that e& has sufficient resources of its own to make the acquisition, “which reflected the target’s market value, so that foreign subsidies did not alter the outcome of the acquisition process”.
The e& filing added: “The commitments have been carefully considered by e& and provide a proportionate and workable basis for our investment in PPF Telecom Group.”
All regulatory approvals have now been obtained. Closing of the transaction remains subject to customary remaining closing terms.
PPF Telecom serves over 10 million customers and enjoys leading market positions. It owns Yettel Bulgaria, Yettel Hungary, Yettel Serbia, and the O2 Slovakia service operations and the CETIN and O2 Networks infrastructure businesses in these countries which are fully carved out and managed independently of the service companies.
In 2022, the company’s combined revenues and EBITDA were €1.8 billion ($2.01 billion) and €0.7 billion ($780 million), respectively.
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