“This agreement represents a step forward in our plan to transform Telemach Croatia into a fully convergent telecom company that offers a full range of telecommunications services, including TV, on its own infrastructure,” said Adrian Ježina, CEO of Telemach Croatia, adding that the company expects the Croatian Parliament to soon consider amending the Electronic Media Act, and that they are convinced that “these amendments will follow, as well as alignment with the practices of other EU member states, which will allow us to conclude this transaction and include TV services in our wider telecommunications offer in Croatia.”
Under the terms of the agreement, the conclusion of the transaction depends on amendments to Croatia’s Electronic Media Act, which currently prohibits vertical integration between TV broadcasters and media content operators. The agreement is also subject to the approval of the competition authorities.
The purchase agreement sets the value of 100 percent of Optima Telekom at HRK 639 million, which is five EBITDA, i.e. earnings before interest, taxes, depreciation, and amortization, before one-off items and after leases in 2020.
The total expected cash inflows for HT will be determined by taking into account certain agreed predefined parameters, and the price per share from the contract will be lower than the quarterly weighted average that would be applied by the buyer within the mandatory takeover bid (the weighted average of Optima share price realized on the regulated market in the period between 8 April and 8 July 2021).
The process of selling Optima Telekom shares began on 31 January 2020 with the announcement of a public call for bids and the subsequent selection of the Credit Suisse (Deutschland) Aktiengesellschaft investment bank based in Frankfurt, which led the sales process and was jointly hired by Hrvatski Telekom (HT) and Zagrebačka banka (Zaba).
As noted by United Group, within which Telemach Croatia operates, this agreement is a logical course of action, as United Group is committed to providing Croatian customers with the latest generation telecommunications services. United Group is investing €130 million in the modernization of Telemach Croatia’s mobile network in order to improve quality, expand coverage, and offer customers the full 5G experience. Also, the Group is investing €100 million in the construction of a state-of-the-art fiber-optic network over which it already offers fixed telephony and superfast broadband internet with speeds from 300 Mbps to 2 Gbps.
Once the transaction is complete, 125,000 broadband subscribers and 55,000 Optima Telekom pay-TV users will gradually benefit from these investments and new modern services that will enable convergence with the mobile service and improve the quality and user experience.