Niel eyes $435 million of funding after completing Ukraine deal

A consortium led by Niel's investment company NJJ Holding that includes US private equity firm Horizon Capital has completed its acquisitions of fixed-line provider Datagroup-Volio and mobile operator Lifecell.

Financial terms were not divulged.

Niel's plan is to combine Datagroup-Volia with Lifecell, resulting in an operator that serves 10 million mobile customers, and has broadband networks that pass 4 million premises.

Before that though, the next priority is to avail itself of hundreds of millions of dollars in financing.

The new company is in the process of securing loans totalling $435 million from a joint financing package courtesy of the European Bank for Reconstruction and Development (EBRD) and the International Finance Corporation (IFC).

The funding was announced at the most recent Ukraine Recovery Conference in Berlin in June. The EBRD has funded the reconstruction and development of several sectors of Ukraine's economy – from infrastructure to financial services and trade. The running total currently stands at €4.5 billion.

NJJ and its partner Horizon, plus Datagroup-Volia and Lifecell, have all approved the financing arrangement, which NJJ said will set in motion "a significant investment programme, including investments in network, licenses, equipment and expansion of fixed and mobile infrastructure."

NJJ initially agreed to acquire Lifecell from Turkcell in January, and followed that up with the Datagroup-Volia deal in April. The consortium has chosen Datagroup-Volia's current CEO Mikhail Shelemba to lead the combined entity.

"Closing this deal now paves the way for the merger of Datagroup-Volia and Lifecell to create a new champion in Ukraine's telecom sector, combining two stellar assets with vast synergy potential," said Shelemba.

"The expansion of the triple-play offering is expected to result in clear, tangible benefits for consumers in terms of convenience, cost and quality of service," he said. "Mutual integration of customer bases, improvements in cost-efficiency and business processes, as well as strengthening of network investment will allow us to offer even more attractive and competitive packages to our subscribers than what could be provided on a standalone basis."

Niel has big plans for his Ukrainian venture; however, just keeping the lights on might prove an achievement in and of itself.

According to a Financial Times report in June, Russia has knocked out or captured more than half of Ukraine's power generation facilities, resulting in the most severe rolling blackouts since the start of its invasion.

Citing local officials, the FT said Ukraine's electricity generation before the start of the war was 55 gigawatts, but bombardments and occupation have caused it to fall to below 20 gigawatts.

Niel seems unfazed though.

"I am pleased to announce the completion of this landmark French investment in Ukraine's telecom sector, which we believe will provide significant and tangible benefits to customers, the market, and to the country," he said.

"The closing of this landmark transaction will serve as a signal to others that Ukraine offers compelling opportunities, and that the time to invest is now."