Digi Communications’ decision to exit the Hungarian market should come as no surprise.
Although a leading provider of electronic communications services, its Romanian subsidiary RCS&RDS has just entered into an agreement to sell its Hungarian assets Digi Hungary, Invitel and 1 TV to the local IT and ICT company 4 iG. The reason for doing so, after a presence of 23 years in the country, is to a large degree linked to Digi’s failure to secure a lucrative 5G licence.
Indeed, it was prohibited by the regulator NMHH from participating in an auction in which 15-year licences were awarded to its main rivals Magyar Telekom, Telenor Hungary and Vodafone Hungary in March 2020. Despite vigorously protesting the outcome, it failed in a legal action late last year, with the Hungarian Metropolitan Court ruling that NMHH had acted within the law. A final appeal to Hungary’s Supreme Court (Curia) was subsequently dismissed in February this year.
Prior to the 5G auction, Digi also encountered difficulties in acquiring Hungary’s leading alternative telco Invitel. Having initially announced the deal in July 2017, it waited 10 months for regulatory approval before then seeing it blocked by the competition authority (GVH) due to a misleading disclosure. Following a court case, GVH again approved the deal in March 20.
Digi ended last year with more than 1 million subscribers and over 2.5 million RGUs in Hungary, its services including and cable and satellite TV. It clearly sees the country as an important market but feels it has little choice but stage an exit.
For 4 iG, on the other hand, the acquisition of RCS&RDS’s Hungarian assets offers an opportunity to further strengthen its position in the electronic communications sector. Earlier this year it reached a preliminary agreement to buy a 75% stake Hungaro DigiTel (HDT), a leading satellite telecom company, from the Hungarian national transmission company Antenna Hungária and Portuguese Telecommunication Investments.
For more information about Chris Dziadul, please visit https://www.chrisdziadul.com
