Vodafone, which is about to be nationalized, became unprofitable, and it is not clear how the 4iG near NER will generate the hundreds of billions for it

Vodafone; acquisition; 4iG Nyrt; loss; Jászai Gellért;

2022-09-02 06:05:00

This is the second loss-making year for the Hungarian Vodafone.

Vodafone Magyarország Zrt. generated a loss of HUF 7 billion in its business year ending in March 2022, 49 percent of which the Orbán government wants to buy with taxpayers’ money, and a listed company, 4iG Nyrt. near NER, is bidding for the larger half (51 percent). This is now the second loss-making year for the Hungarian Vodafone, in the previous business year the company got away with a loss of 1.4 billion. Vodafone’s ability to generate money is not very impressive, because in the eight years before 2017 it generated a total loss of HUF 14 billion. The company had three good years between 2017 and 2019, when it generated an average profit of HUF 16 billion per year. Last year’s report shows that the company made a loss of seven billion HUF with net annual sales of HUF 289 billion.

According to the plans, the government would like to buy this company with 4iG Nyrt., so that the management rights would go to the NER company. The Vodafone acquisition plan was announced barely a week ago by Minister of Economic Development Márton Nagy and the listed company. Back then, it was said that the government-NER duo would buy the company for 750 billion, since then Jászai Gellért, the chairman of the board of 4iG Nyrt., changed this in an interview with Index, saying that the 750 billion HUF is not a purchase price, but an estimated company value. which, according to his explanation, is further reduced by the company’s hefty debts.

Both Prime Minister Gergely Gulyás and Márton Nagy called the acquisition of the unprofitable company a good opportunity. On Inforádio, the Minister of Economic Development explained the state’s minority ownership role on Wednesday evening by saying that 4iG Nyrt has “adequate management, creativity and preparation”, and therefore, in his opinion, it is justified for the state to be a silent partner. Nagy also indicated that the NER-state joint the acquisition is taking place because the government wants to increase the level of Hungarian ownership in telecommunications.

The third player in the Vodafone takeover, 4iG Nyrt., has also just published its half-year summary report: well, at least the listed company did not become unprofitable, in the first half of the year it achieved a profit of HUF 1.6 billion with sales of HUF 121.8 billion. If the company achieves a similar result in the second half of the year, it means that 4iG Nyrt. would be able to extract the 200 billion, half of which Vodafone would cost, from its own profits in 62 years.

The interview of the head of 4iG Nyrt. did not reveal how the company will raise the hundreds of billions needed to acquire 51 percent of Vodafone. (The long-term liabilities of 4iG Nyrt. exceed HUF 547 billion, on top of which they reported an additional HUF 123 billion in short-term debt.) Regarding the sources, he stated that “we have a vision for the financing model, and primarily in international market financing, loans and bond issuance we are thinking”, that is, in the first round, they did not think of a state, central bank loan, which is good news for taxpayers. According to him, by taking advantage of the synergies, the purchase of Vodafone can pay off for 4iG Nyrt. in 10-12 years.

Source: Népszava by nepszava.hu.

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