National Tower Company

History

2021

Closing the deal, its price - $970 million

In early December 2021, the final amount of the transaction for the sale of Veon tower assets in Russia became known. 100% of shares of National Tower Company JSC and about 15,400 antenna-mast structures were sold to the Service Telecom group for $957 million, while initially the parties discussed the amount of $970 million.

According to the press service of VimpelCom, the value of the transaction is correlated with the EV/EBITDA multiplier in the amount of 11.7x of the projected EBITDA of National Tower Company JSC after the close of the transaction. Veon received a tranche of $872 million at the close of the transaction. The balance of the payment will be paid for three years. The holding will spend money from the sale of towers to reduce debt.

Veon sold cell towers in Russia to Service Telecom for $957 million

We became the first telecom company in the Russian market that went along the path of alienating the tower infrastructure in favor of professional players in this market, and now we are observing that the whole industry follows our example by preparing similar transactions, "said Alexander Torbakhov, CEO of VimpelCom.

According to him, this will allow the company to concentrate more on providing high-quality services to customers. Torbakhov added that VimpelCom places great expectations on cooperation with Service-Telecom, which, in his opinion, will allow building joint work on completely new principles.

According to RBC, citing experts, the meaning of selling tower infrastructure is in optimizing their use: it makes no sense to "measure" the number of towers for operators after the issue of coverage has been resolved in almost the entire territory of Russia, and after the sale several companies, including competing companies, may appear on the tower. By the end of 2021, only its equipment is usually located on one operator's tower, although operators practice barter or other schemes for mutual placement of base stations. According to AC&M Consulting, the number of tenants per tower (Tenancy ratio, TR) at operator companies is usually in the range of 1.1-1.2. Service Telecom, for example, has a TR of two, and in some regions 2.5-3.5, a company representative said.^[1]

Service Telecom bought the National Tower Company

On September 6, 2021, Veon announced the sale of its tower business in Russia. The telecommunications holding entered into an agreement with Service-Telecom, which agreed to buy a portfolio of antenna-mast facilities for 70.65 billion rubles.

The transaction includes the sale of 100% of the National Tower Company (NBK), which manages a portfolio of about 15.4 thousand mobile network towers in Russia. All the active infrastructure of the mobile network, operated by VimpelCom by September 2021, and most of the towers on the roofs will remain in the company's ownership.

According to the terms of the agreement, VimpelCom and Service Telecom will conclude a long-term agreement on the provision of tower infrastructure services for a period of 8 years. The document provides for the possibility of multiple extensions for an additional 8 years at the discretion of VimpelCom PJSC, as well as the obligation of VimpelCom PJSC to order the construction of an additional 5,000 tower infrastructure facilities according to the build-to-suit model until 2029 inclusive.

Service Telecom acquired the National Tower Company

The deal provides a long-term strategic partnership between VimpelCom and Service Telecom to invest in the deployment and modernization of the network and share the benefits of the potential future consolidation of the tower infrastructure market in Russia, the press release said.

Veon noted that the deal will reduce the debt burden of the corporation, as well as increase investments in the quality of the network and new digital projects, while maintaining even greater financial flexibility.

Entering into a long-term partnership with a strong and experienced partner in Russia, Beeline will retain operational and financial flexibility and at the same time will be able to provide customers with communication services of the highest level based on one of the largest and most technologically advanced mobile networks in the country, "said Veon head Kaan Terzioglu.

It is planned to close the deal in the fourth quarter of 2021. First, it must be approved by the Federal Antimonopoly Service (FAS) of Russia.^[2]

Notes