Russian network and internet services provider VEON Ltd. (NASDAQ: VEON), said it reached an agreement to sell its tower portfolio in Russia to Service-Telecom for an estimated US$970 million. Service-Telecom is a partner to PJSC VimpelCom, which operates in Russia under the Beeline brand, and currently provides the company with passive infrastructure across various regions in Russia. The purchase price for the transaction corresponds to an EV/EBITDA multiple of 11.7x.
With over 50,000 towers across nine dynamic markets, VEON is one of Russia’s largest towercos. The transaction involves the sale of 100 percent of National Tower Company, 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. Under the terms of the deal, PJSC VimpelCom and Service-Telecom have entered into a long term master agreement regarding the provision of tower infrastructure services for an initial period of eight years, and multiple extensions of eight years at the discretion of PJSC VimpelCom. Both parties will additionally enter into a new build-to-suit program comprising up to 5,000 sites by 2029.
Commenting on the deal, VEON CEO Kaan Terzioğlu called the transaction, “a major step forward in realizing 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. 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.”
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