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Regulatory/Politics

Orbán govt may tap loan for Vodafone Hungary stake – report

Hungary will probably tap loan markets to fund its side of a deal, struck in partnership with local IT player 4iG, to purchase Vodafone Hungary.

Prime Minister Viktor Orban's chief of staff Gergely Gulyas appeared to admit as much when fielding questions from local reporters.

When asked if the deal would be funded by a loan, Gulyas, as reported by Reuters, said "your assumption is not far from the reality." He added that financing details will be provided once the deal is signed.

The proposed transaction gives Vodafone Hungary an enterprise value of $1.8 billion.
 (Source: l_martinez/Alamy Stock Photo)
The proposed transaction gives Vodafone Hungary an enterprise value of $1.8 billion.
(Source: l_martinez/Alamy Stock Photo)

Under the terms of the non-binding agreement, which is currently undergoing due diligence, Corvinus (representing the Hungarian state) needs to stump up a shade over 350 billion Hungarian forints (US$850 million) to secure its 49% stake.

Budapest-based 4iG, which relies heavily on state contracts, is in line for the remaining 51%. The transaction, if all goes to plan, will be done and dusted before the year is out.

According to 4iG CEO Gellért Jászai, a lot is riding on getting the deal through, offering as it does an opportunity for Hungary to acquire a bigger slice of its domestic telecoms market in which Magyar Telekom, majority owned by Germany's Deutsche Telekom, is leader.

"The acquisition of Vodafone Hungary will be the most significant domestic telco transaction in the last thirty years, of a similar extent to the privatization of Matáv after the regime change," Jászai said in a statement.

"The acquisition will create a predominantly Hungarian-owned group of infocommunications companies and a clear number two operator in the Hungarian market."

Some more numbers

The proposed transaction gives Vodafone Hungary an enterprise value of HUF715 billion ($1.8 billion), which represents a multiple of 9.1x in relation to the operator's adjusted earnings before interest, taxes, depreciation and amortization after leases (EBITDAal) for fiscal year 21-22 (ended March 31).


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Vodafone Hungary's annual net revenue through FY21-22 was HUF278 billion ($669 million), while adjusted EBITDA exceeded HUF93 billion ($22 million). The company has more than 3,000 employees.

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— Ken Wieland, contributing editor, special to Light Reading

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