Orange has officially announced something that many people have known from rumors for some time, namely the purchase of the majority stake in Telekom Romania Communications, formerly Romtelecom.
- "Orange Romania signed the agreement for the acquisition of the majority package of 54% of the shares of the fixed service operator Telekom Romania Communications
- Telekom Romania Communications is one of the leaders of the local fixed telecom services market, with 54% of the shares owned by OTE and 46% by the Romanian state.
- The transaction includes the 54% shares held by OTE and the subscribers of converged fixed-mobile services.
- The economic value of the company: €497 million, representing 100% of the capital of Telekom Romania Communications and including the converged fixed-mobile customer base. This corresponds to a purchase price for Orange of €268 million, without excess or deficit of net treasury and considering the adjustments that usually take place at the completion of the transaction.
- This transaction represents a major step for Orange in its ambition to become customers' first choice for converged services on the Romanian market and will contribute to increased investment and competition in the telecom sector for the benefit of customers and society as a whole.
Orange Romania announces that it has signed the agreement for the acquisition of the majority package of 54% of the shares of Telekom Romania Communications ("TKR"), in a transaction that will significantly accelerate Orange's strategy to become the first choice of customers for converged services on the local market. Orange will pay a total purchase price of €268 million, without excess or deficit of net cash and considering the adjustments that usually take place at the completion of the transaction, which corresponds to an economic value of the company of €497 million, representing 100% of Telekom's capital Romania Communications and including the convergent customer base.
TKR is the second largest player on the fixed telecommunications services market in Romania, with a turnover of €622 million, reported in 2019. Through the network infrastructure it owns, TKR offers fixed telephony services, internet broadband and television to 5 million customers, while 90.000 km of fiber optic network connects approximately 3 million households. It also offers converged fixed-mobile services for approximately 881.000 customers, as of June 30, 2020, as a result of an MVNO contract with Telekom Romania Mobile. These customers will migrate to the Orange Romania mobile network after the transaction is completed.
Orange Romania reported a turnover of €1,1 billion in 2019 and is the #1 mobile operator in Romania. Thanks to this acquisition, Orange will accelerate its strategy for the development of converged services, which, through the integration of TKR's fixed network, will strengthen its converged communications infrastructure, which will serve the B2C, B2B and IT&C markets.
The resulting entity will aim to become the preferred choice of customers for convergent services on the Romanian market, both for the consumer and for the business segment. The transaction will also generate significant synergies resulting from the combined sale of services to existing customers as well as network optimizations, including economies of scale.
The closing of the transaction is subject to customary conditions precedent, in particular the approval of the transaction by the European Commission and other competent authorities, and is expected to be completed in the second half of 2021. Pending the approval and completion of the transaction, both companies will continue to operate independently.
Mari-Noëlle Jégo-Laveissière, Deputy CEO for Orange in Europe, commented: “This acquisition is an important step to accelerate our convergent strategy in Europe. Romania is a key market for Orange and a remarkable success story. The transaction confirms our long-term commitment to the Romanian market. We aim to contribute to the development of the telecom sector through constant investments in high-performance network infrastructures and innovative services."
Liudmila Climoc, CEO of Orange Romania, comments: "It is an important moment for the Romanian telecommunications market, which will increase its attractiveness both in terms of converged telecom services and high-quality infrastructure, increasing competition at the same time. This transaction will bring new opportunities for the development of convergent services, with more benefits and a wider range of options offered to customers, but also for the sustainable development of the digital economy. The complementarity of the two networks will allow us to bring together not only customers and teams, but also the best expertise in terms of service quality and a fixed and mobile network infrastructure ready for the challenges of the future.''
