UK’s Vodafone to Sell Hungarian Business in $1.8B Deal

Vodafone Group PLC is set to sell Vodafone Hungary as part of a deal that would help it simplify its extensive operations and ease its debt burden.

The British telecommunications group announced on Monday that it had entered an Ft715-billion ($1.8 billion) non-binding agreement to sell 100% of its stake in the Hungarian business to Budapest-based 4iG Public Ltd. Co. and Hungarian state holding firm Corvinus Zrt.

Vodafone’s IT and business support unit VOIS was not included in the deal, which is set to merge Vodafone Hungary and 4iG to establish the country’s second-largest mobile and fixed operator. 4iG will be the majority stakeholder with 51%, while state-run Corvinus will hold a 49% stake.

Vodafone chief executive Nick said, “the combined entity will increase competition and have greater access to investment to further the digitalization of Hungary.”

The merger is expected to create a company that would strongly rival Deutsche Telekom AG’s Hungarian subsidiary Magyar Telekom Nyrt. The companies aim to seal the deal by the end of this year.

Streamlining the Business

Vodafone’s move to sell Vodafone Hungary aligns with Hungarian Prime Minister Viktor Orbán’s growing influence in the telecommunications, media, banking, energy, and aviation sectors.

Economic Development Minister Márton Nagy stated that the government would label the assets as strategically important, exempting the acquisition from regulatory scrutiny.

Vodafone Hungary is one of the London-listed company’s smaller businesses, but the sale showed the group’s efforts to streamline its global operations. Vodafone has also sold its units in New Zealand, Malta, and Qatar.

Additionally, its mobile masts have been spun off into another infrastructure business, while its assets in Africa have been consolidated into its Vodacom Group Ltd. arm.

Read is also looking to consolidate Vodafone into important markets such as the UK, Italy, and Portugal. With nearly 30 years of efforts spent on the global expansion that rode the worldwide spread of wireless services, Vodafone has been reducing its reach and focusing on key European and African markets.

Regulation, intense competition, demand for constant network investments, and a decline in revenue from services like messaging have resulted in fewer shareholder returns in the telecom sector.