Norway’s Telenor has agreed to buy Bulgaria’s second-largest mobile carrier Globul for 717 million euro on a debt and cash free basis. The deal also includes mobile accessories retailer Germanos Bulgaria, integrated in Globul.
Globul is Telenor’s fourth venture into Central and Eastern Europe. The company also owns telecom operators in Hungary, Serbia and Montenegro.
“Our entrance into the Bulgarian market enhances the potential for cross-border co-operation and increased efficiency that our customers, businesses and the Telenor Group as a whole will benefit from. We also see a potential in expansion of mobile data and internet-based services in the market,” Telenor’s executive vice-president responsible for European markets, Kjell-Morten Johnsen said.
In a conference call on April 29, Johnsen said that the deal fit Telenor’s merger and acquisitions profile. The price paid by the company was 5.8 times the annual earnings before interest, tax, depreciation and amortisation (EBITDA), lower than other major deals in the mobile sector in Europe in the past two years.
Globul was in a similar position as Serbia’s Mobtel when it was acquired by Telenor – an operator in second place, close to the market leader, Johnsen said. “This is a company that will require investment; we will put our concepts in place, but this is a running business with an okay profitability,” he said.
One area where Telenor hoped to make inroads was increasing mobile data usage and smartphone penetration.
Telenor outbid Turk Telecom and Deutsche Telekom in last week’s tender held in Athens, according to reports in Bulgarian media. Globul, a subsidiary of Cosmote, was put for sale by the latter’s parent company, OTE, in June 2012 in an attempt to raise cash needed to repay debt maturing in the next two years.
Last year, Globul posted 378 million euro in revenue and an EBITDA of 135 million euro. The carrier had 4.5 million subscribers, translating into 36 per cent market share.
While Globul’s profit margins were lower than those of other Telenor subsidiaries, Johnsen said, but the operator was confident that it could improve performance in that area, having gone through a similar process with other acquisitions.
“We’ll proceed with these things quite fast, there’s no reason for us to hold back, so when we assume management control, these processes will be put in motion quite quickly,” he said.