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O2 Czech Republic steps up plan to spin off fixed, mobile infrastructure into new unit

7 Jan 2015

Czech incumbent O2 Czech Republic has reportedly decided to hive off its fixed and mobile infrastructure operations into a new independent unit that will then be able to act as a wholesaler for other service providers in the local market. The decision was announced earlier this week via a regulatory filing in which it confirmed it was taking ‘formal steps leading to such separation’. Meanwhile, in another corporate development, the firm appointed chief executive officer Tomas Budnik as chairman, replacing Luis Malvido who left the company on 31 December 2014, as part of changes arising from the firm’s takeover by billionaire Petr Kellner’s PPF group early last year.

In August 2014 rumours emerged that PPF was considering plans to split O2 Czech Republic into two parts. Under the plan, revealed at the time by business daily Hospodarske Noviny, PPF said it would hive off the telco’s fixed line and infrastructure business into one entity, while setting up a separate business covering its mobile and other services. PPF declined to comment on the rumour, with O2 spokesman Martin Zabka saying: ‘Nothing has been decided. At the moment it is speculation in the market.’ However, TeleGeography notes that a move to break up O2 Czech Republic could free it from regulatory oversight, which applies to its monopoly in the fixed line market.

According to TeleGeography’s GlobalComms Database, in October 2013 Spain’s Telefonica agreed to sell a 65.9% stake in O2 Czech to Czech-owned, Netherlands-registered investment firm PPF Group. Under the deal, which also included 100% of Telefonica O2’s operations in Slovakia, the total cash consideration for the operation was EUR2.467 billion (USD3.404 billion), with EUR2.063 billion in cash payable upon completion of the transaction and a deferred payment of EUR404 million over a period of four years. Telefonica also received an additional payment of EUR260 million in November 2013 for the dividend declared. The European Commission (EC) approved the purchase in mid-January 2014, and the transaction closed at the end of that month. On 19 May 2014 shareholders of Telefonica Czech Republic approved a plan to change the company’s name to ‘O2 Czech Republic’ as of 21 June 2014, following the change in ownership. O2 Czech Republic is the largest integrated telecommunications provider in the Czech market, currently providing close to eight million mobile and fixed accesses to consumers and business users.

Czech Republic, O2 Czech Republic (incl. CETIN), Telefonica

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