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Vodafone buys Connex in Romania's biggest deal for 15 years

Vodafone, the world's largest mobile telephone company, has bought mobile telephone operator MobiFon-Connex in the biggest deal Romania has seen for 15 years.

The total transaction will be worth 3.5bn dollars (2.6bn euros) and also includes the takeover of Czech operator Oskar Mobil from Canadian Telesystem International Wireless Group, the majority shareholder in the two operators. At the same time, the British operator will take on 950 million dollars of net debts.

The deal was made on Monday night, with Connex employees receiving e-mail notification of the news from Ted Lattimore, the company's president and COO.

Officials from the two companies did not give any details as to the value of the two operators in the deal individually. However, analysts believe most of the money was paid for MobiFon, which has a market value of 2-3bn dollars (1.5-2.3bn euros).

Vodafone already owned 20.1% in MobiFon before the deal, but has now acquired a further 79% in the company. The remaining 0.9% is owned by vice-premier George Copos through Dargate Ltd (Cyprus). Copos originally had nearly 2% in the company when it was established back in 1996.

"I am delighted that MobiFon and Oskar, both fast growing mobile operators, will become part of Vodafone," announced Arun Sarin, the chief executive of Vodafone. "These acquisitions will create value for our shareholders and will be good for our customers. They are also consistent with our stated strategy of increasing investment in Central and Eastern Europe," he added.

When contacted by Ziarul Financiar, Vodafone officials declined to provide any further details of the strategy for Romania. "First we need to wait until the deal is completed, which will happen in the third quarter of the year," said Ben Padovan, Vodafone's spokesman.

Will Vodafone replace the Connex brand with its own? "It is too soon to be talking about something like that," Padovan said. "What we can say for sure is that the Romanian operator will benefit from added value from our group, which has a strong international presence." 

To conclude the deal with TIW, Vodafone employed the services of the largest Swiss investment bank, UBS, Padovan said, though he did not reveal the names of the law firms involved in the negotiations.

"Talks on the transaction are still underway between shareholders and we cannot say anything more," Lidia Solomon, Connex's spokesperson, told Ziarul Financiar. The mobile telephone operator collected $686.3m (553.5m euros) in service revenues last year, an increase of 29.6% on the previous year, and had an operating income of 226 million dollars (182 million euros), 32.4% more than in 2003. The company had 4.91 million customers at the end of last year, while the mobile penetration rate still remains at about 50%.

Connex's main competitor is Orange. Orange is a branch of the powerful company France Telecom. Their other competitors - Zapp and Cosmorom - are lagging far behind Connex and Orange, which account for most of the market.

"We have no comment on the takeover of Connex by Vodafone," said Amalia Fodor, Orange Romania's spokesperson. Vodafone, a giant of the international telecoms industry in its own right, has repeatedly announced its interest in expanding its operations in Eastern Europe, where it already owns 100% in Vodafone Hungary and 20% in Polkomtel (Poland). mihai.musatoiu@zf.ro


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