Vodafone’s decision to sell its operation in Hungary is not as surprising as it may at first appear.
However, it is still a major development and could raise a question mark as to the future of its other assets across Central and Eastern Europe, particularly those in the Czech Republic and Romania.
Although Vodafone has not had the best of times in Hungary in recent years – in 2016 the country’s Competition Authority (GVH) launched an investigation into its marketing campaigns and fined the company €3.5 million, a figure that the Supreme Court (Curia) recently ordered to be reviewed – it appeared to have turned a corner three years ago by acquiring Liberty Global’s UPC in the country.
Although this made its position in the Hungarian electronic communications market considerably stronger, it found itself operating against the backdrop of a government whose aim was to increase the level of Hungarian ownership in sectors of strategic national importance. Enter 4iG, a Budapest-based IT systems integrator which over the last two years has undertaken several key acquisitions, including Digi’s media and telecom operations in Hungary.
Once the sale of Vodafone Hungary is concluded at the end of this year, 4iG will become the company’s majority (51%) owner, with the Hungarian State’s Corvinus holding the remaining 49%. And significantly, the transaction will create, after Magyar Telekom, the country’s second largest telecom operator.
Although Vodafone’s strategy is currently one of consolidation, it remains to be seen if it would also be willing to sell its operations in the Czech Republic and Romania. There have certainly been no indications of this, and indeed two months ago Achilleas Kanaris, the CEO of Vodafone Romania, denied there were plans to sell the company, with the focus being instead to redesign the business model.
What is clear, however, is that Vodafone is under pressure from investors to pursue M&As and these will almost certainly happen in a number of markets.
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