e& shores up Serbia operation with €1.5 billion deale& shores up Serbia operation with €1.5 billion deal

The purchase itself is being undertaken by e& PPF Telecom, which has operations in Bulgaria, Hungary, Slovakia and of course Serbia. Established via's last year's tie-up between e& and PPF, it's a standalone unit in which e& holds a controlling stake.

Under the agreement with SBB parent United Group, e& PPF will take full control of the operations and customer base of SBB, but will hive off its direct-to-home (DTH) satellite business and sell that to Serbian incumbent Telekom Srbija. United will also retain ownership of its media assets, including its news and entertainment channels – respectively called N1 and Nova S – which will continue to be broadcast by SBB.

In terms of the financials, e& PPF will fork over €825 million in cash raised via external debt. The transactions represent an enterprise value of around €1.5 billion.

When the dust settles, e& PPF will be left with the cable TV and broadband businesses. These will be added to its own operation, which provides fixed, mobile and TV services under the Yettel brand.

"This deal will allow us to complement the existing services that we offer to our Yettel customers in Serbia, and a wider suite of offerings to SBB subscribers. Also, I am confident that Yettel and SBB customers will benefit from the greater synergies this transaction will bring," said Balesh Sharma, CEO of e& PPF Telecom. "SBB is a well-respected brand in Serbia and renowned for its high-quality services and an excellent employee base. I am excited to welcome the new team to our group and look forward to seeing how our complementary businesses, management and teams will drive even higher quality service for Serbian customers."

"This transaction is the first acquisition by the recently established e& PPF Telecom and is an example of the strategic partnership between PPF and e& already creating value," he added.

Indeed, it's also in line with e&'s ambitions regarding European expansion, diversifying revenue streams via increased exposure to stable currencies, and generally accelerating growth at e& PPF.

Rumours that e& had an eye on United Group first surfaced last May, and although the former tried to play down the speculation, it didn't do a particularly convincing job of it, and now we know why.

As for United Group, it said the sale is part of its plan to exit non-EU telco markets, noting that in January it agreed a non-binding deal to offload its operations in Bosnia and Herzegovina, and Montenegro to Bosnia-based BH Telekom.

"Our group was built on the foundation of SBB almost 24years ago and grew into the largest telco and media company in our region. Since its inception, United Group has expanded rapidly across Southeastern Europe through successful completion of over 100 M&A transactions and has significantly strengthened its EU positioning since its first EU foray into the Slovenian market in 2009. Our expansion into fully converged and affluent EU markets of Greece, Bulgaria and Croatia has further solidified this position," said United Group CEO Victoriya Boklag.

"Today's divestments are in line with our strategy to sharpen our focus on the markets where we can provide the full spectrum of mobile and fixed telecommunication services to our customers, which will enable us to realise the greatest potential for growth and value creation. By streamlining our operations and refocusing on EU markets, we are enhancing our efficiency and positioning United Group for long-term success."

Meanwhile, with e& gaining a solid foothold in Europe via its partnership with Vodafone and the formation of e& PPF Telecom, all eyes are on where the acquisitive operator might head to next.