Vodafone enters binding terms on sale of Hungary business

Vodafone said it had entered into binding terms in relation to the sale of its Hungary unit to local IT company 4iG and state-owned Corvinus for €1.8bn.

The deal, which won't include Vodafone's shared services business VOIS, is expected to create Hungary's second biggest mobile network operator. Proceeds from the sale are intended to be used for deleveraging, Vodafone said on Monday.

It comes as Vodafone searches for a new chief executive after Nick Read was ousted at the end of last year, as criticism mounted over the telecom giant's performance and stumbling share price.

Vodafone has been selling off parts of the business to focus on its core European and African operations. It is also undergoing a cost-cutting programme, with Read last month warning over job losses and price hikes for customers as it trimmed its profit guidance range for the full-year and posted a 3% drop in interim earnings.

"Shares in Vodafone have been in long-term decline, shedding more than 60% over a five-year period and around 30% over the past six months. A difficult macroeconomic backdrop of rising costs and weakening performances across Europe meant the telecoms giant was forced to cut its full-year earnings forecast in November," said Interactive Investor head of investment Victoria Scholar.

"To offset the inflationary pressures from rising energy bills, Vodafone has been increasing prices in most of its markets. It has also been facing uncertainty in the C-suite after former CEO Nick Read stepped down, replaced on an interim basis by Margherita Della Valle. The company is currently on the hunt for Read’s successor with former EE chief executive Olaf Swantee understood to be the frontrunner.”

Reporting by Frank Prenesti at Sharecast.com