Ukraine’s second-largest mobile operator, Vodafone, has bought fixed-line internet provider Vega from Ukraine’s richest businessman, Rinat Akhmetov.
Vodafone now owns a 99.99% stake in Vega, which is part of Akhmetov’s industrial holding company System Capital Management (SCM). The companies did not disclose the value of the acquisition.
In 2019, experts estimated that the company would be sold for $37 million but Vodafone may have paid less because Vega lost $2 million in 2020, in spite of a revenue of about $19 million. Akhmetov bought Vega in 2005 for $20 million.
The purchase was approved on July 19 by Ukraine’s Antimonopoly Committee, which said the purchase will help both companies improve their service quality, expand internet coverage and increase internet speed. The acquisition won’t limit the competition on the market, experts said.
For Vega’s subscribers, little will change — Vega will become Vodafone’s independent subsidiary, said Olga Ustinova, CEO of Vodafone Ukraine in an interview with Forbes. According to her, users will continue to receive Vega’s services at the current rates. New rates will be introduced by the end of the year.
For Vodafone, this is the first step towards entering Ukraine’s fixed-line internet market, valued at $525 million
“It is one of our strategic priorities for the next two years,” according to Ustinova. “Our clients want to receive all services — voice communication, mobile and fixed-line internet and television — from one source, with guaranteed quality.”
In 2019, Azerbaijan-based oil and gas holding NEQSOL signed a binding agreement to buy mobile operator Vodafone Ukraine for $734 million, the company’s first acquisition in Ukraine.
Vodafone’s competitor Kyivstar, the biggest telecom operator in the country, already offers fixed-line internet. According to the company’s financial reports, in 2020, fixed-line internet brought $18 million for Kyivstar, 2% of its total revenue. Lifecell, Ukraine’s third-largest mobile operator, hasn’t yet entered the fixed-line internet market.
For Akhmetov’s SСM, which includes Ukraine’s largest mining and metallurgical holding Metinvest, the energy company DTEK and the media company Media Group Ukraine, telecom is not the top priority.
“Telecom once had potential. It still has, but whether this potential suits our appetite, I’m not sure,” according to the head of SCM, Oleg Popov.
However, SCM still owns Ukraine’s communications giant Ukrtelecom. In the first half of 2021, Ukrtelecom reported a profit of $8 million with a revenue of over $ 100 million.
