VEON, an emerging markets wireless carrier, today announced an agreement to sell 100% of its National Tower Company (NTC) subsidiary, which operates 15.4k tower assets in Russia, to Service-Telecom, Russia’s third-largest independent tower company, for an enterprise value of $970m (RUB 70.65bn).

VEON’s Russia towers are projected to generate ~$82.9m of EBITDA for 2021E, which implies that Service-Telecom is valuing the infrastructure at an EV/EBITDA multiple of 11.7x. Additionally, the transaction indicates that Service-Telecom is pricing VEON’s 15.4k towers at an Enterprise Value per tower of $63k.

Finally, the transaction will close in Q4 2021.

Master Agreement – VEON, PJSC VimpelCom, Service-Telecom

As part of the National Tower Company (NTC) sale, VEON’s subsidiary in Russia, PJSC VimpelCom, has entered into a long-term master agreement with Service-Telecom for its continued use of the tower infrastructure. Specifically, the initial term of the agreement is 8 years, with multiple 8-year extensions at the discretion of PJSC VimpelCom.

Additionally, by 2029, Service-Telecom will execute a new build-to-suit (BTS) program comprising up to 5.0k sites for VEON in Russia.

Overall, this master agreement allows Service-Telecom to pursue investments in network roll-out and upgrades for VEON. At the same time, both parties have a framework to collaborate on potential future tower infrastructure market consolidation in Russia.

Excluded from Transaction

Importantly, all of PJSC VimpelCom’s active mobile network infrastructure, which it currently operates, as well as the majority of its rooftop towers will not be sold to Service-Telecom. Therefore, VEON will retain its active infrastructure, while Service-Telecom will own the passive infrastructure.

Existing Partnership

VEON’s PJSC VimpelCom is the third-largest wireless carrier in Russia, operating under the Beeline brand. Presently, Service-Telecom provides these local operations with passive infrastructure across various regions in Russia.

Transaction Rationale – VEON

VEON, by divesting its Russia tower assets, is shifting to an asset-light strategy, while crystalizing the value of its tower infrastructure portfolio. Notably, the company trades at an EV/EBITDA multiple of ~3.8x, which is a considerable discount to the EV/EBITDA multiple of 11.7x which it received for its tower infrastructure.

Additionally, the transaction with Service-Telecom enables VEON to use a portion of the proceeds from the tower infrastructure sale to de-lever its balance sheet. Presently, VEON operates under a capital structure with Net Debt / EBITDA of ~2.4x.

Finally, VEON could use certain sale proceeds to invest in aspects of its active network. In turn, this would improve the experience of its end users in Russia.

VEON – Tower Infrastructure in Emerging Markets

Across its emerging markets portfolio, VEON operates 50k+ towers, which cover 680+ million people. Beyond Russia, VEON has sizable tower portfolios in Pakistan (10.2k towers), Ukraine (6.9k towers), and Bangladesh (5.6k towers).

VEON Tower Infrastructure Emerging Markets Map

Notably, in Bangladesh, VEON owns wireless carrier Banglalink which recently began re-assessing the possibility of divesting its tower assets. For more detail on the Bangladesh towers market, including inroads by American Tower and edotco, check-out our Bangladesh TowerCos article.

Adam Simmons covers Towers for Dgtl Infra, including American Tower (NYSE: AMT), Crown Castle (NYSE: CCI), SBA Communications (NASDAQ: SBAC), Cellnex Telecom (BME: CLNX), Vantage Towers (ETR: VTWR), IHS Holding (NYSE: IHS), and many more. Within Towers, Adam focuses on the sub-sectors of ground-based cell towers, rooftop sites, broadcast / radio towers, and 5G. Adam has over 7 years of experience in research and writing for Towers.


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