Business
Vodafone, UPC Hungary merger to go ahead
The permit is here
The European Commission has now approved Vodafone's acquisition of Liberty Global's German, Hungarian, Romanian and Czech operations. Vodafone will be using the deal to reinforce its position in the landline segments of the four countries, but it is also a priority for the world's second biggest mobile provider to compete with Deutsche Telekom on its home turf in Germany. The deal is expected to be closed by 31 July, 2019, at which point Vodafone Hungary and UPC Hungary can begin their joint operation. The two companies will as separate entities in the meantime, with business and customer service unaffected.The acquisition will make Vodafone the leading convergent provider in Europe with 116.3 million mobile users and 22.1 TV subscribers in addition to a next-generation network that reaches 122 homes and businesses.
How big a company will Vodafone Hungary absorb?
Based on the latest data available, at the end of Q1 UPC Hungary- had 2.193 million subscribers including mobile, with the number of retail and business landline and mobile subscribers growing 17,000 year on year to 872,000 and mobile subscriptions increasing 3.3% to 115,800;
- added 27,100 high-speed internet subscriptions to reach a total of 700,400, and 5,900 new digital and analogue TV subscriptions for a total of 691,200;
- offers service to 1.83 million Hungarian households.
How big are the two together?
The latest annual report of Vodafone Hungary is not yet available, but in the financial year ending on 31 March 2018, the company had net profit of nearly HUF 15 billion on revenue of 172 billion. UPC posted HUF 77 bn revenue, HUF 7 bn operating profit and nearly HUF 11 bn after-tax profit last year. Vodafone employs 1,755 people and UPC has 886 employees.So by simple addition of the latest available figures, we get a company employing 2,600 with annual revenue of HUF 250 bn and profit of HUF 26 bn.
The acquisition will make Vodafone the second integrated telecom provider in Hungary after Magyar Telekom. It will now have a landline leg to stand on in addition to its mobile business, and could end up with a market share of 20 to 25% in all major segments.Major changes in the domestic telecom market
In addition to the deal between Vodafone and UPC, there have been several other major developments in Hungary's telecommunications market recently:Digi and Invitel
Digi announced in July 2017 that it would pay HUF 43 billion for the retail and SME businesses of Invitel. Competition watchdog GVH revoked its approval of the deal last November and fined Digi HUF 90 million, but the acquisition went ahead nonetheless.
Digi becomes mobile provider
Digi announced the launching of its mobile service this May, marking the end of a very long journey. The company bought frequency blocks back in 2014 for an exorbitant price of HUF 10 billion, which indicated that it meant entering the mobile market seriously, but although Digi kept buying frequencies and started building its own nationwide network, it only made the move this spring. At present, a single package is available as a pilot run exclusive to customers who already have landline or satellite service from Digi. Outdoor coverage is adequate in most communities and along major roads, but Digi is only offering the service commercially in locations where indoor coverage is also at an advanced stage.
Telenor has new owner
Telenor agreed to sell its CEE operations to the Czech PPF group éast MArch, with the Czech investor paying EUR 2.8 billion for the Hungarian, Bulgarian, Montenegrin and Serbian units. Telenor Hungary has performed well under the new ownership, increasing its revenue by 7.4% last year to HUF 170.2 bn, its operating profit by21.5% to HUF 34.6 bn and its after-tax profit by 19% to HUF 31.5 bn. According to the latest media reports, the Hungarian government has bought a 25% stake in Telenor.
4iG and T-Systems
4iG announced last week that it will be buying T-Systems, a major player in the Hungarian IT market that is leading in several segments, from its parent company Magyar Telekom. The deal will result in a landslide transformation of the domestic IT market, where 4iG has become a major player overnight. As for the telecom aspect of the deal, MAgyar Telekom will now be able to use the (as yet unknown amount of) cash to buy frequencies, build its network or prop up its market positions, and if the wishes of shareholders come true, even to pay a higher dividend.
5G frequency auction, network development
A major event on the telecom horizon in the coming months will be a frequency auction where domestic mobile providers will be offered frequencies required for building their 5G networks. These frequencies could cost billions of forints in themselves and building the 5G networks will also be costly, so the capital situation of individual market players could determine the speed at which they complete the new network, and this in itself could rearrange the mobile market again.
Cover photo: Federico Gambarini/picture alliance via Getty Images
