The transaction parties have agreed that e& will pay EUR 2.15 billion upfront at the closing for the acquisition of the 50% stake, plus one share in PPF Telecom and additional earn-out payments of up to EUR 350 million within three years after the closing if PPF Telecom exceeds certain financial targets. This is subject to a claw back of up to EUR 75 million if such financial targets are not achieved.
The partners will retain current PPF Telecom’s CEO, Balesh Sharma, and ensure continuity of the operations while drawing on the broad expertise of PPF Telecom’s teams in their markets.
PPF Telecom's existing assets in the Czech Republic, including the Czech operator O2 Czech Republic a.s. (“O2 CZ”) and telecommunications infrastructure provider CETIN a.s. (“CETIN Czech”), will be transferred outside the PPF Telecom Group and not be part of the transaction. PPF will retain its 100% indirect share in O2 CZ and its current indirect share in CETIN Czech.
CETIN Group N.V., through which PPF will remain to control CETIN Czech, will transfer all of its non-Czech subsidiaries* to PPF Telecom. e& and PPF aim to maintain PPF Telecom’s current rating level after the transaction closing. PPF aims to maintain CETIN Group’s current rating level, subject to confirmation of the targeted final capital structure.
PPF CEO Jiří Šmejc said on the partnership agreement: "The purchase price of up to EUR 2.5 billion, including contractual earn-out payments, represents one of the largest ever deals for PPF. I am proud of how we have managed to grow the value of this asset since its purchase."
On the prospects of cooperation with e&, Jiří Šmejc added: "I believe that the know-how and experience that PPF has in the region, combined with the global scale of our partner, will enable us to jointly share ambitions for synergies and further growth."
Jiří Šmejc also pointed out that PPF's telco assets in the Czech Republic are excluded from the deal. According to him, it is not only due to the home market's specific position but also due to our plans to create synergies between the companies operating in the Czech Republic.
Hatem Dowidar, Group CEO, e& commented: “As e& continues on its path to be a leading global technology group, our priority remains focused on expanding our customer base and providing them with more digital services, both for consumers and enterprises. This exciting partnership with PPF Group in Bulgaria, Hungary, Serbia, and Slovakia exemplifies our commitment to seeking new opportunities for collaboration and investment opportunities that will further accelerate our expansion.
“By combining PPF Telecom's expertise with our own innovative capabilities, we are poised to establish a major telecommunications presence in Central and Eastern Europe. We aim to realize synergies, optimize procurement efficiencies, and enhance customer offerings, establishing our position as a leading global tech group.”
The transaction sets the foundation for a partnership between PPF and e& that will seek to build a major telecommunications business in central and eastern Europe. PPF and e& aim to realize significant synergies in various areas, including procurement efficiencies, wholesale and roaming arrangements. The partnership allows PPF Telecom to leverage e&’s expertise in other markets for rolling out top digital, IoT & B2B services, enhancing customer offerings and experience while opening cross-continent learning and career development opportunities for employees.
The transaction is expected to close in or before the first quarter of 2024 and is subject to regulatory approvals, the consummation of corporate reorganization, the formation of the optimal and efficient capital structure within the transaction perimeter, certain administrative procedures, and other customary closing conditions. In addition, the transaction will likely be subject to the EU Foreign Subsidies Regulation review.
* a 100% share in CETIN Bulgaria EAD, a 100% share in CETIN d.o.o. Beograd – Novi Beograd, and a 75% share in TMT Hungary Infra B.V.