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Veon sells Russian tower assets to Service-Telecom for $970m

Kaan Terzioglu - Veon 16.9.jpg

Veon has reached agreement to sell its mobile network towers in Russia to Service-Telecom for a total of ₽70.65 billion ($970 million).

Service-Telecom is an existing long-term partner to PJSC VimpelCom, which operates in Russia under the Beeline brand, a Veon subsidiary. Service-Telecom provides the company with passive infrastructure across various regions in Russia.

The transaction includes the sale of 100% of National Tower Company (NTC), a subsidiary of Veon, which operates a portfolio of approximately 15,400 mobile network towers in Russia. All of the active mobile network infrastructure currently operated by PJSC VimpelCom and the majority of the rooftop towers will remain with the company, underscoring Veon's focus on active portfolio management.

"Today's transaction is a major step forward in realising the value of VEON's infrastructure portfolio for our shareholders. By entering into a long-term partnership with a strong, experienced counterparty in Russia, Beeline will enjoy the operational and financial flexibility to serve its customers with market-leading services through one of the nation's largest and most technologically-advanced mobile networks," said Kaan Terzioglu (pictured), chief executive officer at Veon.

"Moreover, this transaction allows to 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."

Under the terms of the deal, PJSC VimpelCom and Service-Telecom have formed a long-term master agreement for the provision of tower infrastructure services for an initial period of 8 years. The agreement can be extended in 8-year intervals at the discretion of PJSC VimpelCom. In addition, both parties will enter into a new build-to-suit program made up of 5,000 sites by 2029.

Through the transaction Veon will be able to further invest in network expansions and technology upgrades, while Beeline benefits from strict service commitments and protections to support strategic initiatives and improve the quality of mobile services for its customers.

"The agreement reached with VEON is a key achievement for Service-Telecom on its way to becoming a leading telecommunication infrastructure operator in Russia," said Nikolay Berdin, CEO at Service-Telecom.

"With PJSC VimpelCom as our partner, we expect to drive sustainable long-term growth in Russia while constructing the infrastructure backbone of the digital economy and helping to enhance mobile broadband connectivity for consumers."

Subject to customary regulatory approvals, the transaction is  due to close in Q4 of 2021.