Vodafone sells Hungary business to Vodafone for a hefty price in the midst of major overhaul

Mobile phone giant Vodafone has finalized a deal to sell its Hungarian business for £1.5 billion amid ongoing reform.

The group, which first announced the plans in August, has confirmed a binding agreement to sell Vodafone Hungary to local tech firm 4iG and the Hungarian state for 660 billion Hungarian forints (£1.5 billion), with proceeds from the sale being used to pay down debt.

This comes at a time when Vodafone is looking for a new CEO after the dismissal of its former chairman, Nick Reed, at the end of last year, with reports indicating that the board of directors was not happy with the progress it had made in enhancing the company’s performance and the decline in the share price.

Vodafone has been selling large portions of its business during Mr Read’s tenure of four years. This has allowed Vodafone to concentrate on its core African and European businesses.

However, it is also cutting costs. Last month, the former CEO warned of job losses as well as higher prices for customers. It lowered its full-year earnings guidance range by 3% and posted an interim earnings drop of 3%.

Margherita Valle, Chief Financial Officer has been named interim CEO while the group searches out a permanent replacement.

The Hungarian sale is in line with the government’s plans to create a major domestic telecoms company.

4iG will become the second-largest fixed and mobile operator in Hungary after the acquisition.

Ms. Della Valle stated, “The deal creates a converged operator across mobile and fixed communications” and supports the Hungarian government’s goal of creating an ICT company that is a leader in Hungary.”

“The joint entity will increase competition, and accelerate investment in Hungary’s ongoing digitization,” she said.

The sale is expected be completed by the end of this month.

Press Association