The deal, which is subject to customary debt and working capital adjustments at completion, as well as customary closing conditions including regulatory approvals, is currently expected to close in H1 2022. It represents a multiple of approximately nine times UPC Polska’s estimated 2021 adjusted EBITDA and nearly 20 times its estimated 2021 operating free cash flow.
UPC Polska passed 3.7 million homes and served 1.5 million customers as of the end of Q2 this year. All told, it had a total of 1.3 million broadband, 1.4 million video and over 600,000 telephony subscribers. Meanwhile Iliad Group, which operators under the trade names Free in France and iliad in Italy, currently has over 15 million subscribers to its consumer-focused mobile network operator Play in Poland.
Commenting on the transaction, Liberty Global CEO Mike Fries said it “highlights, yet again, the significant value of fibre -rich HFC networks in Europe, as well as the substantial synergy benefits inherent in fixed-mobile convergence (“FMC”) mergers. We have been operating in Poland for over 20 years and are proud of our contributions to the country’s growing digital economy and the impact that we’ve made in the communities where we operate. I’d like to thank and commend the entire UPC Polska management team, most recently under Robert Redeleanu’s leadership, for their hard work and dedication over the years. UPC Polska, the largest cable television operator and a leading provider of triple play services in Poland, and Play, which covers 99% of the Polish population with its mobile services, together will have the scale from Day 1 to be a powerful force in the Polish market. We are highly supportive of the rationale behind this combination and are excited to watch this converged national champion deliver high-quality connectivity across the Polish market”.
He added: “The cash proceeds, net of debt repayment, from this asset sale of approximately $600 million will boost Liberty Global’s already substantial cash balance, which stood at $4.1 billion as of June 30, 2021. As ever, we remain squarely focused on value creation and are pleased with the premium valuation we received for our Polish business, providing a strong return for Liberty Global shareholders”.
Proceeds from the sale, net of debt repayment at the UPC bank group, are expected to be used for general corporate purposes, which may include reinvestment into our business and support for the company’s multi-year share buyback commitment.
In conjunction with the transaction, Liberty Global has agreed to provide Play with certain transitional services for a period of up to four years. These services principally will be comprised of network and information technology- related functions. Annual charges will depend upon the actual level of services required by Play.
Credit Suisse acted as financial advisor to Liberty Global on the transaction.
Broadband TV News notes that as a result of the transaction, Liberty Global will only have one operation (Slovakia) remaining in Central and Eastern Europe.
It previously sold those in Hungary, the Czech Republic and Romania to Vodafone.