VEON and Summit Complete USD 100m Deal for Bangladesh Towers Portfolio
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Insights
The divestiture of Banglalink's tower portfolio to Summit Towers Limited represents a strategic shift for VEON Ltd. towards an asset-light model. By offloading physical infrastructure, VEON can reallocate capital towards its core digital services. This move is reflective of a broader industry trend where telecom operators are looking to shed capital-intensive assets to focus on service delivery and innovation.
From a financial perspective, the transaction's immediate effect is the injection of approximately USD 100 million into VEON's accounts, which could be used to deleverage the company's balance sheet or reinvest in digital ventures. The long-term service agreement with Summit Towers ensures operational continuity without the direct burden of tower maintenance, which can be capital and resource-intensive. This strategic divestiture aligns with VEON's transformation into a more nimble entity, potentially improving its market competitiveness and shareholder value.
The sale of part of Banglalink's tower portfolio for BDT 11 billion is a significant liquidity event for VEON Ltd. It is expected to have a positive impact on the company's financial health by providing funds to meet financial obligations and possibly reduce debt levels. The deal's structure, with a 12-year initial service agreement, ensures a predictable revenue stream from tower infrastructure services, which is beneficial for long-term financial planning.
Investors should note the potential for increased operational efficiency and cost savings as a result of this transaction. By transitioning to an asset-light model, VEON may achieve lower capital expenditures and operating costs, which could translate to improved margins and profitability. However, it's important to monitor how these savings are realized over time and how they impact the company's overall financial performance.
The sale of Banglalink's towers to Summit Towers Limited is a substantial move in the Bangladesh telecommunications market, likely to consolidate Summit Communications Group's position as a leading infrastructure provider in the region. With an expanded portfolio of 4,500 towers and an extensive fiber optic network, Summit is poised to become a key player in the country's digital infrastructure landscape.
For VEON and Banglalink, the deal allows for a sharper focus on expanding digital services like Toffee and MyBL, which are critical for customer retention and growth in a market that is increasingly driven by digital content consumption and mobile internet services. This strategic pivot could enhance their competitive edge in Bangladesh, where demand for digital services is rapidly growing.
Amsterdam and Dhaka, 31 January 2024: VEON Ltd. (NASDAQ: VEON, Euronext Amsterdam: VEON), a global digital operator that provides converged connectivity and online services, announces that, further to the announcement dated 15 November 2023, and the legal transfer of towers in December 2023 following the receipt of all regulatory approvals, its wholly owned subsidiary Banglalink has completed the sale of part of its tower portfolio in Bangladesh to Summit Towers Limited for a consideration of approximately BDT 11 billion (c. USD 100 million).
With this transaction, Summit Towers Limited, a subsidiary of Summit Communications Group, the largest Telecommunications Infrastructure Company in Bangladesh, took ownership of 2,012 Banglalink towers. Under the terms of the Master Tower Agreement between the parties, Banglalink secures the provision of tower infrastructure services for an initial period of 12 years, with potential extensions.
“This sale marks an important milestone for us, as we continue to successfully execute our strategy to transform VEON into an asset-light digital operator. This is a first and an important step in crystalizing the value of our infrastructure assets in Bangladesh, enabling Banglalink to focus on delivering value as a digital operator that offers its customers locally relevant digital services,” said Kaan Terzioglu, Group CEO of VEON.
“Over the past year and a half, we have successfully doubled our network capacity and extended coverage nationwide, prioritizing widespread 4G accessibility for all. This strategic expansion has significantly enhanced the quality of services offered to the people of Bangladesh. Our collaboration with Summit Towers allows us to take the next step in the efficient management of infrastructure resources in line with our asset-light strategy. This will enable us to focus more on our services and digital innovation such as Toffee and MyBL,” said Erik Aas, CEO of Banglalink.
“We are delighted to have successfully finalized the deal within the mutually agreed timeline. Acquiring the ownership of the towers in this deal adds to our portfolio of 4,500 towers in the Bangladesh market. This, coupled with a fiber optic network spanning over 55,000 km and the upcoming submarine cable, will position Summit Communications Group as the country's primary end-to-end digital infrastructure provider, fulfilling a dream set over a decade ago," said Muhammad Farid Khan, Chairman of Summit Communications Limited and Summit Towers Limited.
The proceeds from the deal will primarily be used to fulfill Banglalink’s financial commitments and generate cost efficiencies, freeing up resources for the company’s digital expansion. In line with VEON Group’s asset-light strategy, VEON and Banglalink will continue to evaluate and pursue collaborative opportunities related to Banglalink's remaining tower portfolio.
Nomura International Plc, Allen Overy LLP and Dr. Kamal Hossain & Associates were the financial and legal advisors to Banglalink on this deal. Additionally, KPMG Bangladesh provided support in conducting due diligence and tax assessments.
About Banglalink
With a customer base exceeding 40 million users, Banglalink serves Bangladesh with innovative products and services. Having successfully transformed itself into a nationwide digital operator, Banglalink is recognized globally for its high-quality 4G connectivity and cutting-edge digital services, further contributing to the goal of bridging the digital divide for all.
About Summit Communications Group
Summit Communications Group (SComm Group) is a group of companies headquartered in Bangladesh operating and maintaining 53,000km fiber optic network, 4500 towers and serving
About VEON
VEON is a digital operator that provides converged connectivity and digital services to nearly 160 million customers. Operating across six countries that are home to more than
Disclaimer
This release contains “forward-looking statements,” as the phrase is defined in Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended. Forward-looking statements are not historical facts, and include statements relating to, among other things, VEON’s strategy and divestment plans. Forward-looking statements are inherently subject to risks and uncertainties, many of which VEON cannot predict with accuracy and some of which VEON might not anticipate. The forward-looking statements contained in this release speak only as of the date of this release. VEON does not undertake to publicly update, except as required by U.S. federal securities laws, any forward-looking statement to reflect events or circumstances after such dates or to reflect the occurrence of unanticipated events.
Contact
VEON
Hande Asik
Group Director of Communications
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Julian Tanner
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FAQ
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