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Veon wants to jazz up direct presence in Pakistan and Bangladesh
Posted on Wednesday, 04 July 2018 09:14
Veon is using money raised from the sale of its half of Wind Tre of Italy to joint venture partner CK Hutchison Holdings to partially fund a possible acquisition of assets in Pakistan and Bangladesh from Global Telecom (GTH).
The proposal comes three months after the Dutch telecommunications juggernaut withdrew a mandatory tender offer for the remaining 42.3 per cent not already held in the Egyptian Exchange-listed mobile network operator.
However, Veon is still keen to sharpen its focus on emerging markets by acquiring GTH’s assets, which are already fully consolidated in its own accounts, for a total USD 2.55 billion.
These mobile networks operate in Pakistan under the brand Jazz, and in Bangladesh as Banglalink.
Veon intends to pay by discharging and taking on debt, including bonds, worth USD 1.60 billion and satisfying the balance in cash and deferred consideration totalling USD 950.00 million.
As the group already owns 57.7 per cent of GTH, and already consolidates its obligations, the total of net cash outflow and the postponed acquisition cost is expected to be roughly USD 400.00 million.
This would result in only a minor impact of 0.1x on the group’s pro-forma net leverage ratio.
GTH entered Bangladesh in September 2004 via the purchase of Sheba Telecom for USD 60.00 million, following which it rebranded and launched services as Banglalink in February 2005.
The local business, now officially known as Banglalink Digital Communications, generated service revenue of USD 125.10 million in the first quarter of 2018, representing 19.0 per cent of the group’s total USD 667.50 million.
Its mobile earnings before interest, tax, depreciation and amortisation (EBITDA) fell to USD 44.00 million (Q1 2017: USD 69.40 million), or 15.0 per cent of the overall USD 301.50 million recorded for the period.
Bangalink’s results were affected by costs related to network expansion following the purchase of 4G/LTE licence and intense market competition.
Jazz has about 55.00 million subscribers, according to its website, and generated mobile EBITDA of USD 166.60 million on service revenue of USD 340.90 million in Q1 2018.
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