Telenor agreed to sell its mobile operations across four countries in Central and Eastern Europe (CEE) to investment company PPF Group for €2.8 billion, as the operator continues attempts to transform its business.

The deal comprises Telenor’s units in Hungary, Bulgaria, Montenegro, Serbia and Telenor Common Operation – its network and IT business in the region.

Telenor is the market leader in Montenegro and is the second largest operator in the other three markets by connections, GSMA Intelligence Q4 2017 figures showed. During 2017, the businesses contributed 9 per cent of the company’s total revenue.

PPF Group holds a number of assets across the CEE region, including Bulgarian broadcast company Nova Broadcasting Group and O2 Czech Republic. In a statement, the group’s telecoms chief Ladislav Bartonicek said its latest buy was part of a plan to become a mid-sized European operator.

The deal – which is subject to regulatory approvals – follows an unsolicited approach to Telenor in late January, amid speculation a number of companies were lining up a move for the units. Telenor expects the transaction to complete in Q3.

Most of the agreed price will be paid upfront, with €400 million paid in installments across four years. Telenor intends to use some of the funds for a special shareholder dividend.

Business transformation
Although Telenor maintained the approach for the businesses was unsolicited, the sale fits with its strategy to “simplify its business”, focusing on core assets and digitalisation to cut costs and improve efficiency.

Telenor CEO Sigve Brekke said: “With the sale of our CEE assets, we take an important step in simplifying and focusing Telenor’s portfolio on the regions where we see the strongest potential for value creation. Following this transaction, Telenor’s footprint will consist of integrated fixed and mobile operations in Scandinavia, and strong mobile positions in Asia.”

The company last week announced the sale of a 45 per cent stake in mobile money subsidiary Telenor Microfinance Bank for €150 million.