Orange is acquiring the 54% stake in Telekom Romania Communications (TKR) owned by OTE: the rest is owned by the Romanian State.
TKR is the country's second largest fixed operator, but has a fixed-mobile subscriber base. The total value of the enterprise is €497 million, based on 100% of TKR and the convergent customer base.
Orange will pay €268 million for its controlling share, on a debt-free, cash-free basis and subject to "customary adjustments" at closing of the transaction.
Orange said in a statement that the transaction represents a major step forward in its ambitions to become the preferred choice of customers for convergent services in the Romanian market and will increase investment and competition in the Romanian telecommunications sector to the benefit of consumers and society at large.
Orange Romania announces that it signed a deal to acquire a controlling 54% stake in Telekom Romania Communications (“TKR”), in a transaction that will significantly accelerate Orange’s strategy to become the preferred choice of customers for convergent services in the Romanian market. Orange will pay a total of €268m, on a debt-free, cash-free basis and subject to customary adjustments at closing, corresponding to a total enterprise value of €497m, based on 100% of Telekom Romania Communications and the convergent customer base.
In 2019, TKR had revenues of €622 million. Through its owned network infrastructure, it provides fixed voice, broadband and pay-tv services to 5 million customers and its owns about 90,000 km of fibre that connects some 3 million households.
It also provides convergent services to approximately 881,000 fixed-mobile convergent subscribers, as at 30 June 2020 through an MVNO contract with Telekom Romania Mobile. These customers will migrate to Orange Romania’s network, after the transaction is completed.
Orange Romania reported €1.1 billion revenues in 2019 and is the biggest mobile operator in Romania. The acquisition will enable Orange to 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 aim of the future combined entity is to become the preferred choice of customers for convergent services in the Romanian market both for consumer and business segments.
Orange claims the transaction will generate "significant" synergies deriving mainly from the cross-selling of services to existing customers, as well as the optimisation of the network including economies of scale and scope.
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.
Mari-Noëlle Jégo-Laveissière, Deputy CEO, in charge of Orange in Europe, commented, “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 contribute to the development of the telecoms sector through sustained investments in top performing network infrastructures and innovative services.”
Read our Q&A with Orange Romania' CTO, Emmanual Chautard.