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DIGI wins permission for Invitel retail/SME takeover agreed last July

11 May 2018

Hungary’s antimonopoly authority Gazdasagi Versenyhivatal (GVH) has approved cableco DIGI’s acquisition of fixed network operator Invitel Group’s consumer and SME operations, on condition that it divests certain network sections. Back in July 2017 DIGI agreed to purchase Invitel Tavkozlesi (Invitel) for HUF43 billion (USD162 million), leaving sister division Invitech Solutions to continue as a standalone company focused on services for large companies, public institutions and wholesale customers. The proposal was formally presented to GVH at the end of August, and the comptroller published its approval and final conditions yesterday (10 May 2018).

On its website GVH states that its investigation found that the merger would result in a significant reduction in competition in 16 of 34 Hungarian municipalities where DIGI/Invitel fixed networks overlap, and therefore DIGI has agreed to sell the Invitel networks (including infrastructure and existing subscriber contracts) in these 16 areas within six months of the closure of the transaction. Romanian-owned DIGI is obliged to maintain the economic viability and competitiveness of all network sections in the meantime, whilst refraining from proactively migrating Invitel users to DIGI networks in the 16 zones specified for sale, and GVH has appointed a monitoring commissioner to ensure compliance. In addition, DIGI must withdraw from fixed network leasing agreements with third-party operators in 25 towns/cities.

At the time of the deal last July, the parties signed a long-term cooperation agreement that will see Invitech Solutions provide network and IT services to DIGI for a minimum annual value of HUF2.8 billion for at least ten years, while DIGI will also supply network services to Invitech Solutions over a similar period of time, averaging HUF500 million a year. Invitel Group’s private equity parent China-CEE Fund said it remained committed to the Hungarian market and supports Invitech Solutions’ development plans in the corporate IT and telecoms infrastructure markets.

Hungary, DIGI (Hungary), Digi Communications, Invitech, Invitel (part of DIGI)

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