Telekom Srbija joins the Balkan bandwagon
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Telekom Srbija joins the Balkan bandwagon


State-owned telecom group completes 1,800 tower deal in three markets

As we settle into the new year, we see another tower sale has taken place in the Balkans. In a much-awaited development, which TowerXchange has been following, UK-based digital infrastructure investor Actis has announced it has purchased Telekom Srbija’s towers in Serbia, Bosnia and Herzegovina and Montenegro.

Actis, alongside the International Finance Corporation (IFC) and other private and institutional investors have invested equity in an investment vehicle that is established and managed by Actis. The investment vehicle will own 100% of the new towerco.

With regulatory approvals now completed, the deal sees the first independent towerco headquartered in the Western Balkans.

What is the deal about?

Serbia towers.png

In late 2022 Telekom Srbija began a tower sale process covering sites owned in Serbia, Bosnia and Herzegovina and Montenegro. 995 of the assets are in Serbia, 725 are in Bosnia and Herzegovina and 107 are in Montenegro.

The value of the transaction has not been disclosed. The IFC has provided an equity investment totalling EUR52.5mn (USD$56.6mn) alongside equity from other investors, while Actis has raised acquisition debt from commercial lenders on top of providing equity. Actis manages the vehicle with the other entities involved having investment rights, consent and shareholding rights. As the investment vehicle is based in Luxembourg and the deal itself covers several other countries, the completion of the regulatory approval process has been in several stages.

Telekom Srbija and its subsidiaries will be the towerco's anchor tenants under long-term master service agreements (MSAs). Telekom Srbija has also committed to lease additional towers from the towercos under a build-to-suit program which will be implemented over the next four to six years, depending on the jurisdiction.  

The new company will facilitate infrastructure sharing between mobile network operators in the region and will contribute to the roll-out of 5G  when it starts. 5G is till yet to launch in Serbia following several delays, the country is expected to hold a 5G spectrum auction in 2024.

The towers in the three countries will be managed by one towerco which will be headquartered in Serbia.

This is not the first investment of Actis in CEE; “this investment strengthens Actis’ strategic decision to expand its strategy into the CEE region following on investments made in 2022 in the energy sector in Romania and Bulgaria” Jaroslava Korpanec, Partner and Head of Central and Eastern Europe at Actis commented in a statement published by Actis.

The Telekom Srbija towers deal follows in the footsteps of other multi-country present MNOs who have carved out and sold their towers earlier.

One example is United Group who sold 4,800 of their sites in Bulgaria, Croatia and Slovenia to Saudi stc owned TAWAL for EUR1.2bn which values each of the towers at approximately EUR254,000. If we consider a similar valuation for the Telekom Srbija towers, that would value the transaction at approximately EUR457mn. However, lease rates and MSAs have not been published. A higher capitalise raise by Telekom Srbija would increase the valuation and lease payments, and vice versa.

Despite increased interest rates and slowing down M&A activity, the deal still shows growth opportunities in the CEE region with appetite from MNOs and investors from different continents. TowerXchange understands Middle East-headquartered investors have taken part at the earlier stages of the auction process prior to Actis being selected as the preferred bidder.

Including sites owned by A1 Telekom’s EuroTeleSites, towercos are now active in 10 of the 17 markets in the CEE region, and towerco penetration in the region now stands at 38% (versus 70.4% for Europe as whole).

Who is Telekom Srbija

Telekom Srbija is 58% owned by the Republic of Serbia and operates as the mts MNO in the Republic of Serbia and as MTEL in Bosnia and Herzegovina and Montenegro.

Telekom Srbija’s biggest market is Serbia where at present tower ownership looks like shown on the chart:

Since 2010, the Serbian government has made several attempts to sell a majority stake in Telekom Srbija but the offers it received (among them being from Telekom Austria Group) have fallen short of its expectations.

The company has embarked on a major expansion since 2018 and now holds 53% of the cable market and approximately 46 % of the mobile market in Serbia.

In December 2023 Telekom Srbija said it has established a subsidiary in Turkey, MTEL Turkey, to offer TV services to the Serbian diaspora in the country.

But debts have also grown to EUR 2.7bn at end-2022 and the company has started to look for ways to improve its financial statements.

In addition to Actis and the IFC, the European Bank for Reconstruction and Development (EBRD) is among the institutional investors in the consortium. The Western Balkans is a priority region for the EBRD, where the Bank remains the largest institutional investor having invested EUR17bn to date.

What next?

TowerXchange Meetup Europe which takes place on 23-24 April in Central Hall Westminster, London will address Developing a towerco model for CEE.

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