Kaan Terzioğlu's operator reaches a deal to sell off 14,500 mobile towers in Russia to longtime partner Service-Telecom.

Pádraig Belton, Contributor, Light Reading

September 6, 2021

3 Min Read
VEON sells off its Russian towers for $970M

The great global tower spin-off gained a bit more momentum today, as Dutch telco VEON agreed to divest 15,400 mobile towers in Russia for $970 million.

VEON operates primarily in Europe, Asia and Africa, while its wholly owned subsidiary PJSC VimpelCom is a major player in Russia.

Trading there as the Beeline brand, it ranks as the country's third-largest wireless and second-biggest telecom operator.

Service-Telecom, which is buying the masts, has been a longtime partner of PJSC VimpelCom.

It will continue to provide PJSC VimpelCom with mast services under a long-term agreement, for an initial period of eight years, and with extensions of eight years thereafter at PJSC VimpelCom's discretion.

The two companies will also begin a new "build-to-suit" program covering up to 5,000 mast sites by 2029.

The Russian company has secured a 47 billion ruble (US$644 million) loan from Gazprombank JSC to finance the towers deal.

The deal, which sees Service-Telecom buy a 100% share in VEON's National Tower Company, is expected to close in the fourth quarter of 2021 after regulatory approvals.

Masts on the move

For VEON, this is part of a grand scheme to move its 50,000 wireless towers country by country into separate business units over the course of 2021, as CEO Kaan Terzioğlu announced in February.

The deal lets VEON "release the capital to deleverage Veon's balance sheet and invest in critical aspects of active network and digital opportunities while achieving more financial flexibility," Terzioğlu said in a statement today.

VEON's portfolio of towers in nine markets make up one of the industry's largest.

Having established separate pre-wrapped legal entities for its mobile tower businesses in Russia and Pakistan, it is working on doing the same for its towers in Ukraine and Bangladesh.

Meanwhile, in Russia, Beeline saw its total revenue increase by a yearly 6.2% in the three months ending June 30.

It's been investing heavily in 4G coverage to try to stem a fall in its number of Russian mobile customers.

About 4.5 million customers fled the company's books between September 2017 and March 2020, leaving it with around 50 million at the end of this year's first quarter.

Going local

The group bought a majority stake in Russian AdTech company OTM in June, giving VEON a platform for automating and planning Beeline's online ad purchases in the country.

That purchase says a great deal about VEON's new push to localize its offerings to fit its diverse markets.

Terzioğlu, who joined the company last February, has been in a rush to reverse former CEO Jean-Yves Charlier's more one-size-fits-all approach to the company's wide-ranging collection of businesses in emerging markets from Algeria to Uzbekistan.

That cookie-cutter approach came in for criticism when Charlier unveiled an app platform developed in London which was intended for all its different markets.

The risk of decentralizing, though, was that duplicating resources to tailor-fit various national contexts would eat away at the company's profitability.

As a group, VEON saw its revenues rise by 9.2% year-on-year in the second quarter.

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— Pádraig Belton, contributing editor special to Light Reading

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About the Author(s)

Pádraig Belton

Contributor, Light Reading

Contributor, Light Reading

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