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Vodafone purchases TIW's remaining assets

16 Mar 2005

Vodafone has agreed a deal with Canadian holding company TeleSystem International Wireless (TIW) to acquire 79% of Romanian operator MobiFon – taking its total ownership to 99% – and 100% of Oskar Mobil in the Czech Republic. The British cellco will pay USD3.5 billion (GBP1.8 billion) for the two stakes, with the money being drawn from its cash reserves. It will also assume approximately USD0.9 billion (GBP0.5 billion) of net debt.

After being outbid by Cingular Wireless for AT&T Wireless in 2004, Vodafone switched its attention away from the US and stated that it was seeking investment opportunities in Central and Eastern Europe. It has existing mobile subsidiaries in Germany, Hungary and Greece, along with ‘Partner Network Agreements’ with operators in Croatia, Austria and Slovenia. The expansion to Romania and the Czech Republic gives the Newbury-based group a strong presence in countries with a combined population of 32 million. Both operators already possess 3G licences, although neither has yet launched next generation services.

MobiFon claimed 4.91 million customers at the end of 2004 (up 42% in twelve months), giving it a 48% share of the Romanian market. Its only serious competitor, Orange Romania, had 4.94 million users at the same date. Both operators agreed to pay USD35 million for a 3G licence in November 2004 and in January 2005 MobiFon announced a W-CDMA network implementation agreement with Ericsson, as well as outlining its hopes of launching 3G before arch rival Orange. Although no date has been set, it is highly likely that MobiFon will deploy the Vodafone 3G Live! suite of services.

Although Oskar Mobil is only the third largest cellco by subscribers in the Czech Republic, with 1.83 million customers and a 17% market share, it does have a higher average revenue per user than any of its rivals (USD25) and annual revenue in 2004 that climbed 35% year-on-year to USD552 million. Oskar originally refused to bid for a 3G licence in 2001, claiming they were overpriced, but in February 2005 it secured a 20-year concession for less than the cost in 2001.

Although there has been no official announcement, it is likely that Vodafone will continue its expansion into new markets. Last year it was linked with a move for Mobile TeleSystems (MTS) – the largest operator in Russia by subscribers – though nothing came of it at the time. The deal is the final chapter in TIW’s history; it said yesterday that it will liquidate.

Czech Republic, Romania, United Kingdom, Vodafone Czech Republic, Vodafone Group, Vodafone Romania
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