Vodafone is selling its Hungarian business to Budapest-based systems integrator 4iG and Corvinus, representing the Hungarian state, for €1.8bn.

They have agreed terms for the sale of a 100% stake in Vodafone Magyarország Távközlési (Vodafone Hungary) for a total cash consideration equivalent to an enterprise value of HUF715bn.

The combined businesses will provide digitalisation services to the enterprise and government sectors in the areas of data networks, virtual data centres and IoT technologies. The combination is seen as a step towards building a Hungarian owned national champion in the ICT sector.

The planned transaction creates potential for further growth through cross-selling opportunities, full fixed-to-mobile convergence and scale, resulting in major B2B and B2C revenue synergies. The potential of infrastructure consolidation creates sizeable long-term shareholder value from in-market cost and capex saving synergies.

With the proposed acquisition, 4iG will acquire a 51% stake in the second largest Hungarian telecommunications operator, while the Hungarian state will acquire a 49% stake. The transaction is expected to close by the end of this year, and is subject to confirmatory due diligence, finalising binding transaction documentation and obtaining necessary regulatory approvals.

The acquisition will reshape the Hungarian telecoms market. In addition to fixed voice, internet, pay-TV and digital terrestrial broadcasting, 4iG will also become a major player in mobile telecoms after completion of the transaction. Through its joint acquisition with the Hungarian state, the info-communications group can accelerate its integration processes in all segments of the industry and, due to its technologies, has the potential to play a key role in the digital transformation of the Hungarian economy.

The transaction creates potential for further growth through cross-selling opportunities, full fixed-to-mobile convergence and scale, resulting in major B2B and B2C revenue synergies. Additional sizeable long-term shareholder value is set to be created from in-market cost and capex saving synergies due to infrastructure consolidation. The net present value of the combined revenue, cost and capex saving synergies is estimated to be more than HUF150bn.

“The acquisition of Vodafone Hungary will be the most significant domestic telco transaction in the last thirty years, of a similar extent to the privatisation of Matáv after the regime change,” said Gellért Jászai, CEO of 4iG. “The acquisition will create a predominantly Hungarian-owned group of info-communications companies and a clear number two operator in the Hungarian market. Following the successful completion of the acquisition, our group will have one of the largest digital infrastructures in Hungary, which, due to its prominent role, will become a significant player in Hungarian telecommunications for many decades to come.”

Vodafone Hungary is the second largest player in the Hungarian market in absolute terms of share of subscriptions, serving more than 3.8m residential and business (3.0m mobile and 0.8m fixed) subscribers, and with 5.0m (3.0m mobile, 0.7m TV, 0.7m broadband and 0.6m fixed voice) revenue generating units (RGU) as of July 2022.

In total, the combined group created by the acquisition would have five million customers and have 7.6 million RGUs as of July 2022. Vodafone Hungary’s digital infrastructure could place 4iG among the most advanced operators in the Hungarian fixed voice and internet, cable TV, and mobile markets.

Vodafone Hungary was the first company in Hungary to offer 5G services to its subscribers, and the company’s mobile service are continuously expanding nationwide with hundreds of base stations in Budapest and the Balaton region.

In the 2021-22 financial year, Vodafone Hungary’s annual net revenue was HUF278bn and its adjusted EBITDA exceeded HUF93bn. The company has more than 3000 employees.

Budapest-based 4iG is Hungary’s leading IT systems integrator with interests in the Hungarian and regional telecommunications markets. The company has been active in the market for IT technologies for more than 27 years. The group employs 6200 people in Hungary and the western Balkans. 4iG is a broad-spectrum provider with interests in IT, telecommunications, satellite telecommunications and telecoms infrastructure development.