Hutch to buy remaining stake in Italian JV from VEON

03 July 2018 | James Pearce


VEON has agreed to offload its share in Italian joint venture Wind Tre to partner CK Hutchison in a deal worth $2.87 billion.

Wind Tre was formed in 2016 as a merger between VEON’s (then VimpelCom) Italian operator Wind Telecomunicazioni and Hutch’s 3 Italia, but the property will now become wholly owned by the Hong Kong-based telecoms company.

For CK Hutchison, the acquisition of the rest of Wind Tre gives the company a strong subsidiary in what it calls “an attractive market”. This, the company said, serves as a “key step” in consolidating its telecoms assets, which include operations in Europe and Asia.

Canning Fok, group co-managing director of CK Hutchison, said: “We are delighted to become sole owners of Wind Tre, which gives us the strongest possible platform to drive increased and recurring value for our shareholders.  

“Having pioneered mobile technology and digital leadership in Italy for over 15 years, CK Hutchison looks forward to continuing to invest in Italy’s digital future, benefitting consumers and businesses across the country.”

The deal is subject to regulatory approval from both the EU and Italian regulators, but both companies said they expect to see the sale close in Q3 2018. It took two years for the original merger to be cleared by regulators.

VEON, which is based in Amsterdam, said it will use the majority of the equity earned from selling its 50% holding in Wind Tre to reduce its debt load and its leverage ratio. The deal means VEON has sold the last of its assets in western Europe, leaving it with remaining operations across Europe, Asia and Africa.

VEON said it expects to book a net gain of approximately $1.100 billion on completion of the deal, while around $400 million of the funding will be used to acquire assets in Pakistan and Bangladesh from GTH.

VEON submitted a bid on 2 July that would see it buy Jazz and associated operations in Pakistan and Banglalink in Bangladesh for a gross consideration of $2.5 billion. The transaction is subject to approval of GTH shareholders at a general meeting, along with any regulatory approvals.

“Our goal is to drive greater value for our shareholders through a more focused and optimized portfolio” said Ursula Burns, executive chairman of VEON. “To this end, the company has identified four immediate priorities: simplifying the Group’s structure, increasing our operational focus on emerging markets, strengthening the Group’s balance sheet and supporting the company’s current dividend policy. Today’s transactions are important steps towards this goal.”

“We intend to provide a more comprehensive update on VEON’s strategy in the coming weeks, which will cover, among other things, our ambition to deliver operational excellence across our portfolio, supported by a refocused and expert HQ that provides strategic expertise and direction to our businesses.”