VEON has now confirmed that it will sell its Pakistani towers business to a unit of Malaysian telco giant Axiata for US$940 million following an earlier Bloomberg report suggesting the operators were in talks.
The infrastructure branch of Axiata Group Berhad, Edotco, and a Pakistani investment company named Dawood Hercules would jointly pay 98,700,000,000 Pakistani rupees ($940,000,000) for Deodar, the towers segment of VEON subsidiary Jazz, under the cash agreement announced on Wednesday.
The agreement will leave Edotco with a 55% stake in Deodar and Dawood Hercules with the remaining 45%.
It will give them about 13,000 towers and appears to support Axiata’s broader strategy of acquiring more infrastructure assets in Asia before it eventually lists the business.
VEON, by contrast, believes an “asset light” approach will free up resources for investment in services and digital transformation. (See VEON’s Digital Overhaul Much More Than Rebranding.)
The Amsterdam-headquartered operator, which counts Russia as its biggest market and changed its name from VimpelCom earlier this year, has been investing money in software and virtualization technologies in an effort to reclaim some of the services market share it has lost to Internet players.
Deodar was valued in the transaction at a “high single digit multiple” of its yearly earnings (before interest, tax, depreciation, and amortization), according to a statement from VEON.
It also said that Deodar would enter into a 12-year “master services agreement” with Jazz following the sale — which it expects to complete by year end — to ensure its Pakistani business can continue to make use of Deodar’s assets.
The sale’s revenues will be used by VEON to pay for spectrum and pay down Jazz’s debt. The agreement states that it will get PKR69.93 billion ($666 million) when the purchase closes and the remaining amount within a year after that.
VEON owns a 57.7% ownership in Global Telecom Holding (GTH), the holding company for several other VEON businesses in emerging markets, including Djezzy in Algeria, Koryolink in North Korea, and Banglalink in Bangladesh. Through GTH, VEON controls Jazz.
