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Sparks commentary - VEON

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Sparks - VEON

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Veon – reinforcing Uzbekistan position with Perfectum acquisition
Published by Dan Ridsdale
VEON reinforces Uzbekistan position with Perfectum acquisition
VEON’s agreed c $207.0m acquisition of Rubicon Wireless will strengthen Beeline Uzbekistan’s spectrum and network capabilities and illustrates how June’s $1.4bn bond refinancing gives VEON greater to deploy its capital – with reinforcing its competitive positions within existing markets one of the key priorities. Completion is expected by the end of October.
Deal details
VEON will acquire 100% of Rubicon Wireless, which operates under the Perfectum brand in Uzbekistan. The c $207.0m consideration includes c $93.0m of assumed financial debt, implying a cash payment of c $114.0m before adjustments, funded from existing resources. Relevant regulatory approvals have been obtained. Perfectum’s financial performance and quantified synergies have not been disclosed.
Deal rationale
The acquisition appears principally focused on complementary spectrum and network capability. Perfectum brings 115MHz across the 850MHz and 3,800MHz bands, increasing Beeline Uzbekistan’s holdings by c 50%. Additional 850MHz spectrum could strengthen existing 4G coverage, particularly indoors and in rural areas, while 3,800MHz adds capacity for faster 5G and wireless broadband services. Perfectum’s Nokia 5G standalone network could also accelerate Beeline’s wider 5G deployment. Combining these assets with Beeline’s existing infrastructure should help accommodate growing data demand more efficiently. Management expects capex and opex synergies, although the benefits remain unquantified.
Capital flexibility and strategic fit
June’s $1.4bn bond refinancing addressed substantially all VEON’s 2027 maturities through new bonds maturing in 2031 and 2033. Headquarters cash increased from $457.0m at March to $968.0m at June, primarily reflecting the proceeds after the debt tender offer. This provides greater scope for Veon to deploy capital with strengthening the group’s competitive position within its existing footprint identified as one of the key priority areas, as it has done here. We will update our estimates to reflect the acquisition on completion of the deal.
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