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French billionaire Xavier Niel has set his sights on Ukraine
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He's in the process of buying two Ukrainian companies
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The objective is to create a new operator with a triple-play offering of mobile, fixed and TV services
French entrepreneur Xavier Niel is known throughout the European telecom industry for his disruptive approach to mobile as well as fixed service markets.
After upending France’s mobile market through the introduction of low-cost plans under the Free brand in 2012, Niel’s Iliad Group turned its attention to Italy and Poland with similar effect, although recent efforts to ramp up Iliad’s business in Italy were thwarted when Vodafone chose Swisscom as the buyer of its Italian assets.
But there is more to Niel’s business interests than Iliad: He also presides over an investment vehicle called NJJ Holding (including NJJ Capital and NJJ Invest) that has invested in telecom operators from eir in Ireland through to Salt Mobile in Switzerland and Monaco Telecom. Overall, Niel has telecom investments in more than 20 countries across the world.
Via his NJJ vehicle, Niel now has another plan up his sleeve: He is in the process of buying two companies in Ukraine in order to create a “national telecom champion” that will better compete with Veon’s Kyivstar and Vodafone Ukraine, now owned by NEQSOL Holding.
While war-torn Ukraine might not currently seem an obvious contender for an enterprise like this, Niel insists that the time to invest in Ukraine is now, “to support the rebuilding of the country and realize its potential.”
According to a statement from NJJ Holding, the proposed transaction “is the first major investment by a new market entrant since the full-fledged invasion, as well as a significant investment in domestic infrastructure in Ukraine.”
Building a ‘national telco champion’
The objective to create a new operator with a triple-play offering of mobile, fixed and TV services is to be achieved in a number of steps, subject to regulatory approval.
One of the first steps took place in December, when Turkish operator Turkcell agreed to sell its Ukrainian assets to NJJ Capital, reportedly for an enterprise value of $525 million. The business includes Lifecell, which is the third-largest mobile operator in Ukraine, as well as digital services provider Global Bilgi and tower company Ukrtower. Regulatory approval of this deal is still pending.
It was then announced in February that NJJ Holding also intends to acquire Datagroup-Volia, a fixed telecom and pay TV provider in Ukraine. This deal received regulatory approval in March.
Datagroup-Volia was formed in 2021 when Datagroup acquired broadband and TV provider Voila. It is currently 96.13% owned by a fund managed by private equity firm Horizon Capital, and 3.87% by Datagroup-Volia CEO Mykhaylo Shelemba. Horizon Capital, a U.S. private-equity firm investing primarily in tech and export-oriented companies in Ukraine, first invested in Datagroup in 2010.
Once the deal with Turkcell has been given the green light and the transaction completed, Datagroup-Volia is to be merged with Lifecell to create a combined entity with almost 10 million mobile subscribers and a fixed network that currently passes over four million residences across Ukraine.
The total value of the transaction, including the purchase price and investment, is expected to be over $1 billion, according to the news site Kyiv Independent. The group plans to launch a significant investment program, with investments in network, licenses, equipment and expansion of fixed and mobile infrastructure in the country.
Shelemba will become CEO of the new group, while Pierre Danon, chair of the supervisory board at Datagroup-Volia, will serve in the same capacity for the merged entity. Post-closing, a fund managed by Horizon Capital and Shelemba will invest in the combined entity to retain a minority position and be the local partner of NJJ in Ukraine.
Lenna Koszarny, founding partner and CEO of Horizon Capital, said the “vision to pursue a triple play, bringing fixed, pay TV and mobile together, was born in 2018 with the first meetings with Volia and Lifecell, and inspired by Xavier Niel.”
“[We] are confident that this transaction will serve as a critical market signal, attracting new investments into Ukraine’s infrastructure and technology sectors and contributing to the country’s ongoing resilience, digitalization and growth,” Koszarny said.