- Saudi Arabia's STC and e& from the United Arab Emirates (UAE) have expressed interest in acquiring all telecoms within the United Group, though deals for individual assets are also likely.
- The American fund Providence has shown interest in the Bulgarian operator.
- A1 Telekom Austria, the owner of A1 Bulgaria, and 4iG, a company closely associated with Hungarian PM Viktor Orbán, are among the bidders for the group's Serbian business.
This summer marked the start of the bidding process for United Group, the leading telecom and media conglomerate in the Balkans, which encompasses Bulgaria's Vivacom and Nova TV. The period for submitting indicative bids for the entire holding or parts of it expired on the last day of July. While no official information about the bidders has been announced, Capital Weekly has conducted a survey among sources close to the process that revealed a rather moderate or even weak interest, predominantly from Arab bidders. Separate parts of the group have attracted interest from investment funds and telecom companies.
A potential deal will be significant-the majority shareholder of the group, the London-based fund BC Partners, is seeking buyers at a valuation of around 8 billion euro for the entire holding, including its debt. A high price is expected from the two Arab bidders, STC from Saudi Arabia and e& from the United Arab Emirates. However, the involvement of any of these state-owned companies could pose a problem for Brussels, which is why they are seeking a European partner. In short, the sale of United Group (UG) is not certain. Clarity on whether there will be new owners of the holding or individual companies, or whether the status quo will be maintained, will emerge in the fall.
The two favorites
The deadline for submitting bids, initially set for July 12, was extended to the end of the month. According to Capital Weekly's sources, indicative bids were submitted for both the entire United Group and parts of it. The telecom companies previously considered frontrunners - STC from Saudi Arabia and e& from the United Arab Emirates - are the only ones likely to afford the amount sought by BC Partners for UG. It is 8 times earnings before interest, taxes, depreciation, and amortization (EBITDA), which reached 988 million euro in 2023.
However, it is highly questionable whether they are willing to pay such a sum, especially for the entire group. According to Capital Weekly's sources, both Arab groups have submitted offers, but only for the telecom assets of United Group, excluding media assets like Nova TV. It is still unclear what their price proposals are, but sources indicate that e&'s offer is slightly higher than STC's. It is also possible that negotiations will lead to an agreement for the sale of individual assets rather than all telecoms under UG's umbrella.
Despite being favorites, the two candidates are surrounded by several uncertainties. The first is the new EU Foreign Subsidies Regulation (FSR), aimed at strengthening control over foreign investment flows into the EU, primarily targeting Russian and Chinese companies, but also affecting investors from the Middle East. The focus is on state aid behind potential buyers of Western assets.
e& has already been scrutinized under this regulation due to its deal to acquire 50% plus one share in Yettel from the Netherlands-based PPF Group, including PPF's assets in Bulgaria. The European Commission is expected to decide by the fall, and it is very likely to impose certain additional requirements on the buyer. According to Capital Weekly's sources, e& is expected to negotiate as a co-bidder with PPF to avoid a new review by Brussels.
Similarly, STC will certainly undergo scrutiny if it emerges victorious in the bidding for UG. STC already has a presence in the region through its infrastructure division Tawal, which last year purchased 4,800 telecommunications towers in Bulgaria, Croatia, and Slovenia from United Group in a 1.22 billion euro deal. The Saudi giant also acquired a 4.9% stake in Spain's Telefonica in 2023. Brussels had no objections to these deals. STC is favored by UG's other major shareholder, founder Dragan Šolak.
Another major issue is e&'s ownership of Yettel. If the Abu Dhabi-based company wins the bidding for United Group, it will have to divest some of its assets to avoid becoming a monopolist in some markets, and therefore it would have to choose between Vivacom and Yettel in Bulgaria.
These challenges could delay the completion of a deal for UG by months, if not a year. BC Partners, however, prefers a quick exit from its investment. United Group declined to comment on the deal.
And the others
Another option is a piecemeal sale, preferred by most potential buyers, according to Capital Weekly's sources. Among other candidates reportedly interested in parts of the Balkan group were Hungary's 4iG, investment funds Apollo, Warburg Pincus, and Apax Partners, as well as European telecoms Orange and Iliad. There is no official information on whether they have expressed interest in acquiring any of the assets. 4iG, linked to Hungarian prime minister Viktor Orbán, is certainly most interested in UG's Serbian business.
According to Capital Weekly's sources, the owner of A1 Bulgaria-A1 Telekom Austria Group-has submitted a preliminary bid for United's businesses in Serbia and Slovenia. The group already operates in both countries under the A1 brand and will need to meet antitrust requirements.
Another candidate previously mentioned as interested is the American fund Providence, which once bid for BTC. Despite initial information that it is interested in Nova TV, sources now indicate that the fund has submitted a preliminary bid for Vivacom. However, the fund does not seem strongly committed to the purchase and may withdraw.
After the submission of indicative offers, BC Partners now needs to choose which bidders will proceed and be granted access to the data room for detailed analysis. Given that competition is not intense, all those with indicative offers will likely gain access. The financial and legal due diligence will take weeks. Final binding offers can be expected in the middle of the autumn. JP Morgan, Morgan Stanley, and UG's owner will then take time to review and select the winner(s). Regulatory reviews will follow. A new owner for Vivacom and Nova TV could emerge next year, or there may be no change at all.
The Group
United Group's business includes telecom and media assets in Bulgaria, Serbia, Croatia, Slovenia, Greece, Bosnia and Herzegovina, and Montenegro. The group's total revenue for 2023 reached 2.79 billion euro. Vivacom is the second-largest business by revenue in the group after Greece's Nova, with 1.27 billion levs (646 million euro).- Saudi Arabia's STC and e& from the United Arab Emirates (UAE) have expressed interest in acquiring all telecoms within the United Group, though deals for individual assets are also likely.
- The American fund Providence has shown interest in the Bulgarian operator.
- A1 Telekom Austria, the owner of A1 Bulgaria, and 4iG, a company closely associated with Hungarian PM Viktor Orbán, are among the bidders for the group's Serbian business.
This summer marked the start of the bidding process for United Group, the leading telecom and media conglomerate in the Balkans, which encompasses Bulgaria's Vivacom and Nova TV. The period for submitting indicative bids for the entire holding or parts of it expired on the last day of July. While no official information about the bidders has been announced, Capital Weekly has conducted a survey among sources close to the process that revealed a rather moderate or even weak interest, predominantly from Arab bidders. Separate parts of the group have attracted interest from investment funds and telecom companies.
