Vodafone Ukraine, the second largest mobile operator in Ukraine, has announced that it has acquired a 90.6% stake in the authorized capital of Frinet LLC, which provides fixed-line Internet access services under the O3 brand, for UAH 746 million.
“The corresponding payment of UAH 746 million was made on the day of the Share Purchase Agreement. The transaction has been completed and registered in accordance with the current legislation,” the company said in its interim consolidated financial report published on its website on Tuesday.
The acquisition of Freenet LLC is part of the group’s strategy to develop converged services and tariffs.
The company also announced the payment of UAH 1.8 billion of outstanding debt to Telco Solutions and Investments LLC on August 9.
In addition, the company announced the payment of semi-annual interest to Eurobond holders in August in the amount of $12.4 million (UAH 453.3 million).
The text of the financial report emphasizes that as of June 30, 2023, Vodafone Ukraine was in compliance with all debt covenants. At the same time, the company remains concerned about the moratorium on cross-border currency payments, which may cause difficulties with the repayment of $400 million of Eurobonds in February 2025. In this regard, the company’s management is considering several options in case the moratorium remains in force, including refinancing with financial institutions, negotiations on changing the terms of the bonds with the Eurobond holders, and the introduction of additional measures to manage and control outflows to maximize debt repayment costs.
Earlier, VF Ukraine (Vodafone Ukraine) announced the completion of the acquisition of Frinet LLC, a national broadband Internet access operator providing services in Kyiv, Dnipropetrovs’k, Zhytomyr, Zaporizhzhya, Ivano-Frankivsk, Lviv, Kyiv, Rivne, Khmelnytsky and Chernihiv regions with 163 thousand subscribers.
The company has been operating in the market since 2008 and builds its networks using FTTx and GPON technology with 10 and 40 gigabit fiber optic trunks and modern managed equipment from leading manufacturers, which allows it to provide subscribers with Internet access channels with speeds up to 1 Gbps.
“Vodafone Ukraine provides 3G and 4G high-speed Internet and fixed-line services, mobile communications, and develops the Internet of Things (IoT), technologies and solutions for Smart City, big data analysis, financial and technological services, and cloud services. Since 2019, the company has been part of the NEQSOL Holding group of companies owned by businessman Nasib Hasanov.
NEQSOL Holding operates in the oil and gas, telecommunications, construction, and other high-tech sectors in the UK, USA, Turkey, Azerbaijan, Kazakhstan, UAE, and Bangladesh. The group entered the telecommunications industry in the early 2000s.
PJSC “VF Ukraine” (TM “Vodafone Ukraine”), the second largest mobile operator in Ukraine, in January-June 2023 increased net profit by 3.4 times compared to the same period last year – up to UAH 2.266 billion, the press service of the mobile operator reported.
According to the interim consolidated financial report of the company, its revenue increased by 4.9% to UAH 10.404 billion, and operating profit – by 45.1% to UAH 3.712 billion.
It is indicated that the company’s OIBDA increased by 3% year-on-year to UAH 5.934 bln. OIBDA margin slightly decreased by 1 p.p. to 57%.
The company clarified that the jump in net profit was due to a decrease in foreign exchange losses due to the fixation of the dollar to hryvnia exchange rate by the National Bank since July last year.
In addition, in the first half of 2023, Vodafone Ukraine’s losses from the war decreased by 8.2 times – to UAH 116 million.
Subscriber base in the second quarter of 2023 remained stable – 15.2 million customers. “Decrease by 8% compared to the second quarter of last year due to a decrease in the number of mobile users due to active hostilities, inaccessibility of mobile networks in temporarily occupied territories and in the war zone, mass migration”, – explained in the press release.
It is specified that more than 2 million subscribers of “Vodafone Ukraine” remain abroad and continue to use the services of the company. At the same time, revenue from roaming services decreased by 6.5% – to UAH 446 mln, while the total revenue from mobile services increased by 12.3% – to UAH 8.1 bln.
The company’s ARPU increased in the second quarter to 108.4 UAH per month from 104 UAH in the first quarter due to an increase in mobile Internet penetration and usage volumes.
“Vodafone Ukraine” increased capital investments by 75% – up to UAH 2.231 billion, directing them to the renewal of destroyed infrastructure, operational repairs of the network and preparation for work in conditions of possible power shortages in the winter period.
In particular, 9.5 thousand base stations of the company were equipped with new batteries of a new type, which are less sensitive to voltage fluctuations in the network and frequent power outages, as well as have 2.5-3 times higher charging speed.
To ensure emergency power supply, the company has additionally equipped 1.12 thousand nodal technical objects with backup power supply by means of stationary generator sets and prepared 522 mobile generators, a reserve of diesel fuel and gasoline has been created for their operation. It is indicated that the company’s specialists are testing new solutions at a number of facilities using alternative energy sources, in particular, solar power plants and microturbine generators.
The text of the financial report emphasizes that as of June 30, 2023, Vodafone Ukraine was in compliance with all debt covenants. At the same time, the company remains concerned about the moratorium on cross-border currency settlements, which may cause future difficulties with the redemption in February 2025 Eurobonds for $ 400 million. In this regard, the company’s management is considering several options in case the moratorium continues to operate: in particular, refinancing at the expense of financial institutions, negotiating changes in the terms of bonds with holders of Eurobonds, the introduction of additional measures to manage and control cash outflows to maximize the company’s ability to meet its debt covenants.
“Vodafone Ukraine” provides 3G and 4G high-speed internet and fixed-line services, mobile communications and develops the Internet of Things (IoT), technologies and solutions for Smart City, big data analytics, financial and technological services, cloud services. Since 2019, the company is part of NEQSOL Holding group of companies of businessman Nasib Hasanov.
NEQSOL Holding’s activities cover oil and gas, telecommunications, construction and other high-tech sectors in the UK, USA, Turkey, Azerbaijan, Kazakhstan, UAE, Bangladesh. The Group entered the telecommunications industry in the early 2000s.
The Antimonopoly Committee (AMCU) allowed mobile operator “Vodafone Ukraine” to acquire a stake in the share capital of LLC “Freinet”, the document was issued on Thursday, according to the AMCU website.
“On May 25, 2023, the Antimonopoly Committee made a decision allowing VF Ukraine PJSC to acquire a stake in the authorized capital of Frinet LLC, which provides the buyer with control over the said facility,” the AMCU said in a statement.
It is noted that the concentration occurs in the provision of fixed Internet access services in Ukraine. At the same time, it is specified that members of the concentration provide fixed Internet access services in Ukraine both to individuals and legal entities within the boundaries of many settlements in Ukraine.
AMCU noted that the share of the buyer’s group on the respective regional markets is insignificant. Thus, as a result of concentration the aggregate share of participants in the regional markets of fixed Internet access services to individuals and legal entities within the respective geographical boundaries will not exceed 15-21%. That is, the claimed concentration will not lead to monopolization or significant limitation of competition in the commodity markets of Ukraine, said the AMCU, justifying the issuance of the permit.
Freinet” company provides high-speed Internet services in Kiev, where the customer base of provider has more than 160 thousand active subscribers. In addition to the capital region the company operates in the Kiev region and nine other regions, including Dnipropetrovsk, Zhitomir, Ivano-Frankovsk and Lvov regions.
The Vodafone Ukraine group includes the National Telecom Operator Vega, which offers integrated solutions in fixed telephony, broadband Internet access and data transmission. The company is present in 22 regions of Ukraine. It provides Internet services by GPON technology in Kiev, Odessa, Dnepr, Lviv, Kharkiv. Operational management of Vega telecommunications group is implemented by PJSC “Farlep-Invest”.
As reported, “Vodafone Ukraine” in 2022 reduced net income by 2% – to 19.8 billion UAH, with a net profit of 1.1 billion UAH.
At the end of 2019, NEQSOL Holding through OOO Telco Solutions and Investments, controlled by Bakcell closed the deal to purchase its telecommunications business in Ukraine from MTS PJSC with financing from J.P. Morgan and RBI. The price amounted to $734 million.
NEQSOL Holding has more than 25 years of experience in various industries and countries. Its operations cover oil and gas, telecommunications, construction and other high-tech areas in the UK, USA, Turkey, Azerbaijan, Kazakhstan, UAE and the Netherlands. The Group entered the telecommunications industry in the early 2000s. Its member companies provide mobile communication services, international transit and wholesale Internet sales, leased line services, data center services, etc.
Businessman Nasib Hasanov is the official founder and 100% owner of NEQSOL Holding, including Nobel Oil Services (UK) Limited, Nobel Oil E&P (UK) Limited (trade name Nobel Upstream), Bakcell LLC and Norm OJSC.
Mobile operator Vodafone Ukraine, part of NEQSOL Holding (Azerbaijan), has completed regular interest payments on its $12.4 million Eurobonds.
“Despite difficult operational and financial conditions related to the war, the company continues to service its debt in full,” the operator said in a press release Wednesday.
According to the release, the principal amount of the Eurobond debt is now $400 million, as the company has already repurchased and redeemed $100 million in bonds ahead of schedule.
As reported, in early February 2020, Vodafone Ukraine placed five-year $500 million Eurobonds at 6.2%. The 144A/Reg S issue was marketed to international investors in Europe and the US. The coupon on the eurobonds is paid semi-annually.
Capital investments of Vodafone Ukraine in 2022 amounted to about $100 million, not less than before the full-scale Russian invasion, NEQSOL Holding Ukraine regional director Volodymyr Lavrenchuk told the Interfax-Ukraine news agency.
“As a responsible investor in 2022, NEQSOL Holding supported the strategy of capital investments made by Vodafone Ukraine Group in the most difficult conditions at the level of last year. These are investments to provide communications for millions of Ukrainians and data transmission systems for various production and service sectors”, – said Lavrenchuk.
Investments were mainly used to maintain network stability and restore communications in the de-occupied territories, as well as to buy new equipment and improve the company’s coverage, the press service of Vodafone Ukraine specified.
“If during peacetime emergency works accounted for no more than 2% of all works, since the beginning of the full-scale Russian invasion they have taken up more than 95% of the time. Only for 9 months of 2022 more than 1 thousand repairs to restore damaged networks were carried out,” – noted in Vodafone Ukraine.
Since the beginning of the Russian invasion in Kyiv, Sumy, Chernihiv, Kharkiv, Zaporizhzhia, Donetsk, Mykolaiv and Kherson regions more than 500 Vodafone Ukraine base stations were damaged (of those that were able to survey). Operation of 577 base stations has been resumed, the company said.
According to the company, since March, Vodafone Ukraine has restored communications in more than 550 settlements, in particular in 123 towns and villages of Kherson region in the past week. Also 2.56 thousand kilometers of fiber-optic cable was renewed, the total length of unrecoverable and re-laid optics was 37 kilometers.
“Blackouts were an additional challenge. All equipment, except fiber optic, requires power supply and its absence is critical for network operation,” Vodafone Ukraine said, stressing that in order to ensure communication despite long blackouts they provide base stations with backup batteries, as well as use alternative power sources from diesel generators to solar panels.
Vodafone Ukraine in 2022 also invested in expanding coverage in the western part of the country, where most Ukrainians have moved since the war began. Since the beginning of the year, 150 base stations have been installed and a number of existing ones upgraded. In order to expand the 4G coverage 3.8 thousand base stations were installed, 250 new sites were built and 1.5 thousand 3G base stations were modernized.
Also the company continues to provide free services to Ukrainians, in particular in roaming, which has already been used by 14 million Ukrainians, the press service said.
The mobile operator “Vodafone Ukraine”, which is part of NEQSOL Holding (Azerbaijan), in January-June 2022 reached a revenue figure of UAH 9.916 billion, which is 3% more than in the same period of 2021 (9 .64 billion UAH) .
According to the operator’s financial report, its net profit for the specified period amounted to UAH 663 million (UAH 2.1 billion for the same period last year).
OIBDA exceeded UAH 5.76 billion. OIBDA margin increased by 2.1 p.p. up to 58.1%.
As emphasized in the message of the operator, emergency work on the network and its restoration, assistance to the country and customers, and mass migration of customers abroad have significantly affected the dynamics of key financial indicators.
The growth of part of the financial indicators in the first half of 2022 was achieved due to the successful results of the first two months of the year.
The operator’s capital investments in the first half of the year amounted to UAH 1.276 billion, which is 14% less compared to the same period last year.
“As of today, all elements of the core network are operating normally, Vodafone Ukraine has taken all the necessary steps to quickly switch to a backup scenario. The Vodafone Ukraine team is actively working to restore damage: about 87% of the network is working and this figure is growing “All critical elements of the technical and IT infrastructure have already been diversified. The approximate amount of asset losses is about UAH 806 million,” the company stressed.
Mass migration due to the war also significantly affected the size of the subscriber base – as of the end of July, the operator’s subscriber base amounted to 16.6 million customers, of which 1.76 million were forced to stay outside the country.
In addition, as of the end of July 2022, the company connected free services in the amount of UAH 270 million for 13 million customers in Ukraine. And abroad – in the amount of UAH 596 million for 1.5 million subscribers in 32 countries.
The operator also purchased 10 ambulances for the amount of UAH 23 million.
The volume of humanitarian and direct financial assistance of the company to the country is currently estimated at UAH 250 million.
In 2019, NEQSOL Holding, through Telco Solutions and Investments LLC, controlled by Bakcell, signed an agreement with MTS PJSC on the purchase of its telecommunications business in Ukraine. The deal for the purchase of Vodafone Ukraine was closed at the end of December 2019 with funding from J.P. Morgan and RBI, the price was $734 million, including a deferred payment of about $84 million.
The NEQSOL Holding group of companies, according to the release, has more than 25 years of experience in various industries and countries. Its activities cover oil and gas, telecommunications, construction and other high-tech industries in the UK, USA, Turkey, Azerbaijan, Kazakhstan, UAE, Bangladesh. The group entered the telecommunications industry in the early 2000s. The companies included in it provide mobile communication services, international transit and wholesale Internet sales, leased line services, data center services, etc.
Businessman Nasib Hasanov is the official founder and 100% owner of the NEQSOL Holding group, including Nobel Oil Services (UK) Limited, Nobel Oil E&P (UK) Limited (trade name Nobel Upstream), Bakcell LLC and Norm OJSC.
