The acquisition of UPC Romania by Vodafone Romania, part of a global transaction between Vodafone Group and Liberty Global, is one of the largest deals in Romania in recent years. But it is not the first for these companies, both making significant moves on the Romanian market along the years.
In 1996, a company called MobiFon entered the market, winning one of two GSM licenses. Next year, the Connex brand was launched, alongside the first GSM network. The 135 days between getting the license and launching the network was a record at the time for the development of a telecommunication network. By 2005, when the mobile operator had almost 6.1 million customers, it had launched XNET internet services for landlines, WAP for mobile and the first 3G connection network.
Vodafone Group bought MobiFon company in 2005, but it didn’t change the brand until April 2006 when, with a laser show in the capital, Connex became Vodafone. The color of the logo also changed, from green to red. A few days later, the company introduced the HSDPA – 3G broadband, reaching new speeds for mobile internet connections, and Vodafone Live!, a web portal with more than 10 million users globally.
UPC Romania, a history of acquisitions
In 1992, United International Holdings, the name of Liberty Global back in the day, started investing in Romania by acquiring shares in several local cable companies. UPC Romania was established in 1999 and later development was carried out in the same way, with the purchase of local cable television providers in Bucharest, Botoșani, Cluj-Napoca, Focșani, Ploiești and Sfântu Gheorghe. In early 2005, the firm reached 333,000 subscribers, up from just 15,000 in 2000. In the same year, UPC made the most important acquisition in Romania, buying Astral Telecom for USD 420 million. The deal made UPC one of the top players in the cable television market with 1.3 million customers. At the time, UPC dominated the cable TV market along with RCS&RDS.
One year later, it completed the acquisition of Focus Sat, a satellite TV provider. Among its later transactions was the 2008 absorption of Cablevision Romania, Sebamr and Electron M. Bit Telecom. Focus Sat was the only entity not included in the transaction between UPC and Vodafone.
An EUR 18.4 billion deal
Discussions regarding a deal between Vodafone and Liberty had been on and off since 2015. The deal was announced in 2018 and was approved by the European Commission in July 2019. The move concluded with the sale of operations in Germany, Hungary, Romania and the Czech Republic to Vodafone, which paid EUR 10.8 billion in cash and assumed EUR 7.6 billion in outstanding debt. It was the biggest deal completed by Vodafone since the acquisition of Mannesmann in 2000 for GBP 112 billion.
The operation in the four countries accounted for 28 percent of Liberty’s consolidated operating cash in 2017. The enlarged Vodafone has now around 54 million cable TV and broadband customers across Europe, with a potential footprint of 110 million homes and businesses. Vodafone paid the equivalent of 11.5 times the operating cash flow of Liberty assets in order to strengthen its business in Europe. As of 31 March, 2019, Liberty Global was the world’s largest international TV and broadband company, with operations in ten European countries. This is now down to six, namely the United Kingdom, Ireland, Belgium, Switzerland, Poland and Slovakia, covering a total of 25 million homes (TV, broadband and landlines) and 6 million for mobile services. The company also owns 50 percent of VodafoneZiggo, a joint venture in the Netherlands with 4 million customers subscribing to 10 million landlines and 5 million mobile services.
A big name in Romania
The Romanian market is divided between three companies that have mobile communications, TV services and broadband internet. Orange, Telekom and Digi Communications all have a significant footprint on both sides of the market (mobile and fixed). Now, Vodafone is muscling into the competition, with 9 million customers for mobile communications and 1 million on the TV and broadband internet market.
“The combination of UPC Romania’s operations with those of Vodafone Romania will lead to the creation of an important player with converged services that will increase competition in the telecom market, bringing multiple benefits to both residential and business customers – more value, more choice and more attractive offers. It will also help accelerate the pace of investment in the telecom market,” said Mihnea Rădulescu, Vodafone and UPC Business Unit Director.
“This transformative acquisition is creating a significant partner of converged telecoms services, bringing more value to our customers and creating an improved ascending path for Romania’s digital economy. It also translates into a very good opportunity to challenge the dominant positions of the electronic communications sector. The employees of both UPC and Vodafone have an unmatched premieres history on the local market, even in Europe. I am confident that their combined expertise and proficiency will lead to new firsts and innovation in products that will have Romanian consumers as the most important beneficiaries,” said Murielle Lorilloux, CEO of Vodafone and UPC Romania.
As both leaders said, the acquisition is one of the most significant in the telecom industry in Romania and it promises to bring higher quality communications services to customers after combining Vodafone’s expertise in mobile services with the proficiency of UPC specialists in TV and fixed services.
New executive team
Murielle Lorilloux continues to be the artisan of the fusion, as CEO of both companies, Vodafone and UPC Romania. Mostafa El-Beltagy has the role of Consumer Business Unit Director for Vodafone and UPC.
He joined Vodafone in 2009 and has since held a number of senior management roles, including Head of Customer Value Management, Pricing and Commercial Strategy in Egypt, as well as Head of Prepaid Segment in Vodacom, South Africa. In March 2018, Mostafa El-Beltagy moved to Vodafone Romania as Customer Business Unit Director.
Mihnea Rădulescu, the former CEO of UPC Romania, is now Vodafone and UPC Business Unit Director. Before becoming the CEO of UPC Romania, he has been Vice President for the B2B sector within UPC CEE, coordinating the business divisions in Romania, Hungary, Poland, Czech Republic and Slovakia. Cătălin Buliga is the Technology Director of Vodafone and UPC Romania. He has a 30 years experience in the telecom industry, having worked for Telekom (9 years), Liberty Global (7 years) and Vodafone (14 years). Before becoming Vodafone Technology Director in May 2016, he held the position of Chief Technology Officer for UPC Romania and UPC Hungary. Ioana Mihăilescu, who joined Vodafone in 2012 as Customer Operations Support Director, is now Customer Operations Director. In Vodafone, she also worked as Customer Value Management and Channel Management Director, being promoted to the Vodafone Customer Operations Director role in 2018.
The new Vodafone and UPC Romania Finance Director is Sibaji Biswas. He joined Vodafone India in 2011 and moved to Romania in 2017 as Finance Director. In India, he held various roles across Corporate Finance and Supply Chain Management, while also being part of the core M&A team that successfully completed the Vodafone Idea merger. Melissa Fragiski will be HR & Property Director, after joining the Vodafone team in 2012 in Greece and moving to Romania in September last year for the role of Human Resources Director. At Vodafone, she played a major role in two previous M&As, as well as leading other transformational programs.
Livia Dumitrescu, the Legal & External Affairs Director of Vodafone and UPC Romania, joined Vodafone in February 2019, bringing a rich record of academic and professional achievements. She worked for international organisations and law-firms in London, New York, Thessaloniki and Luxembourg. Livia Dumitrescu has also established the first corporate ombudsman office in Romania, while concurrently occupying several leading roles with OMV Petrom SA, ultimately to become the Corporate Affairs & Compliance Director of the company. Răzvan Bogasiu occupies the role of Senior Manager, Strategy & Wholesale. He joined Vodafone Romania in 2014 as Business Development & Strategy Manager. He is also holding the role of Integration Leader in the Vodafone-UPC Romania transaction, coordinating all integration activities, providing governance and effective tracking of the execution.
The new Executive Management Team is a good representation of the multinational character of the Vodafone Group, which has mobile operations in 25 countries, partners with mobile networks in another 41 and has fixed broadband operations in 19 markets. At the end of the first half of 2019, the company had approximately 640 million customers.
Innovation on the go
Throughout its history on the local market, Vodafone Romania has invested in innovation, being the first to provide GPRS (2001), then 3G (2005) and 4G services (2012). Last year, Vodafone Romania launched the first live NB-IoT (Narrow-band Internet of Things) network in Romania with countrywide coverage, to enable its enterprise customers to develop and implement a wide range of solutions and applications to improve their business processes.
This national premiere comes shortly after a successful NB-IoT test realised by Vodafone Romania and OMV Petrom on equipment located in the proximity of producing wells, in isolated areas where there is no internet access or GSM coverage.
The NarrowBand-IoT technology offers great power efficiency, so devices connected through NB-IoT can run for ten years on a single battery charge, while its low bandwidth requirements mean that most use cases require just a few bytes of data to be transmitted daily by these devices.
“We have upgraded our countrywide network to enable NarrowBand-IoT services as a normal step in a world where businesses are embracing large-scale IoT projects. The NB-IoT technology is unlocking a new wave of applications that are part of the 5G era and have not previously benefited from connectivity due to barriers such as power, cost and propagation,” said Cătalin Buliga, Technology Director.
NB-IoT has the potential to transform business models across a wide range of industries due to its very specific characteristics, which make it ideal for connecting thousands, or even potentially millions, of devices in the field. It provides strong coverage over large areas, even when devices are underground or deep within buildings. It operates on a licensed spectrum, which means applications using NB-IoT technology will benefit from the same level of security and reliability used in mobile networks today.
Vodafone Group has been actively deploying NB-IoT technology in Spain, Ireland, the Netherlands, the Czech Republic, Turkey, Italy, Australia, South Africa and Germany.
5G already on the market
Vodafone Romania has switched on the first sites in its SupernetTM 5G network, ready to enable Romanians to access the outstanding capabilities of this latest technology. “We are thrilled that our SupernetTM 5G network is now live in Bucharest’s busy areas and will expand to other major cities in Romania by the end of 2019. Vodafone is proud to pioneer this new and exciting journey for mobile communications services, where technology and innovation will enable the best digital experience for Romanians,” commented Cătălin Buliga.
The operator also launched the first monthly subscriptions for 5G connection, after expanding 5G coverage to Cluj-Napoca and Mamaia. “We are very proud to be amongst a handful of operators globally and the first in Romania to have launched 5G services and commercial offer. This speaks to our commitment to being at the forefront of innovation not only locally, but also globally, and making sure that Romanian users get the opportunity to experience leading technologies. We are committed to continuing our mission and long-term investments in state of the art technologies in order to support and develop the digital Romanian society in the era of speed,” said Mostafa El-Beltagy.
Future on the rise
Apart from the integration of the two companies and their teams, Vodafone is looking into expanding 5G, as the licensing process for the spectrum is just weeks away. This will include many investments made by the Romanian operator and will lead to the expansion of IoT services. At the same time, it will bring more combined offers of fixed and mobile services from Vodafone. “For Vodafone Romania, this is a major step towards becoming a consolidated, convergent operator, which will be able to offer best in class fixed, mobile communications, internet and TV services. I would like to say a big ‘thank you!’ to my wonderful team, who put passion and purpose into everything they do,” said Murielle Lorilloux.