Orange takes over Deutsche Telekom’s fixed operations in Romania
French group Orange, the telecom market leader in Romania, will take over Deutsche Telekom’s fixed operations in the country. The transaction targets a 54% stake in Telekom Romania Communications and Deutsche Telekom’s fixed-mobile convergent subscriber base in Romania, Orange announced.
According to the official press release, the French group will pay EUR 268 million to Deutsche Telekom on a debt-free, cash-free basis and subject to customary adjustments at the closing of the transaction.
Telekom Romania Communications and the convergent customer base were valued at little under EUR 500 million. The Romanian state holds the remaining 46% stake in Telekom Romania Communications, which is the former state telecom company Romtelecom.
This transaction represents a major step forward in Orange’s ambitions to become the preferred choice of customers for convergent services in the Romanian market.
“This acquisition is an important step to accelerate our convergence strategy in Europe. Romania is a key market for Orange and a great success story. This transaction confirms our long-term commitment to the Romanian market. We are looking forward to contributing to the development of the telecoms sector through sustained investments in top-performing network infrastructures and innovative services,” said Mari-Noëlle Jégo-Laveissière, Deputy CEO in charge of Orange in Europe.
“This is a significant milestone for the Romanian telecom market that will enhance its attractiveness both in terms of converged telecoms services and high-quality infrastructure while increasing competition. It will provide the opportunity to scale up innovative convergent services, bringing broader benefits and wider choices to the customers and also to the country’s digital economy sustainable development. Orange Romania’s and Telekom Romania Communications’ network complementarity will allow us to bring together not only customers and teams, but also the best of expertise in terms of quality of service and future-proof mobile and fixed networks infrastructure,” added Liudmila Climoc, CEO of Orange Romania.
Deutsche Telekom will keep ownership of Telekom Romania Mobile Communications through its Greek subsidiary OTE.
“The sale of Telekom Romania is a strategic decision in the context of OTE Group’s redefined priorities and growth plans to support the Group’s development and create value for all stakeholders. OTE has committed extensive resources over the years to support Telekom Romania’s performance, while it remains in the market through Telekom Romania Mobile,” said OTE’s Chairman and CEO Michael Tsamaz.
Telekom Romania Communications (TKR) is the country’s second-largest player in fixed telecoms, with revenues of EUR 622 mln reported in 2019. Through its owned network infrastructure, TKR provides fixed voice, broadband, and pay-tv services to 5 million customers, and its approximately 90,000 km fiber network connects some 3 million households. It also offers convergent services to about 881,000 fixed-mobile convergent subscribers, as of June 30, 2020, through an MVNO (mobile virtual network operator) contract with Telekom Romania Mobile. These customers will migrate to Orange Romania’s network following the completion of the transaction.
Orange Romania reported EUR 1.1 bln revenues in 2019 and is the number one mobile operator in Romania. Thanks to this acquisition, Orange will accelerate its convergent operator strategy, which, when combined with TKR’s fixed network, will create a fully infrastructure-based convergent operator across B2C, B2B, and ICT markets.
The closing of the transaction is subject to customary condition precedents, notably antitrust clearance by the European Commission and other relevant authorities, and is expected to be completed within the second half of 2021. Until this approval and the completion of the transaction is obtained, both companies will continue to operate independently.
Orange's takeover of Telekom Romania Communications continues the consolidation trend on the local telecom market. It comes after Vodafone took over fixed communications operator UPC Romania as part of an international deal. Romanian group Digi Communications, the leading fixed communications operator, has also consolidated its position by taking over the operations of its smaller competitor AKTA. Digi has also reportedly been negotiating the takeover of Telekom's mobile operations in Romania.
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