United Group to take majority stake in Croatia’s Optima Telecom

South-eastern European service provider United Group has struck an agreement with Deutsche Telekom-owned Croatian telco Hrvatski Telekom and Zagrebacka Banka to acquire a majority stake in Optima Telekom, which offers fixed internet and pay TV services in the country.

United Group – which operates in Croatia under the Telemach brand – has signed a sales and purchase agreement to acquire the 17.41% stake held by Hrvatski Telekom and the 36.90% interest owned by Zagrebacka Banka. Optima Telecom provides services to 125,000 broadband subscribers and 55,000 pay TV customers.

Under the terms of the agreement, completion is contingent on a change in Croatia’s Electronic Media Act, which currently prohibits vertical integration between pay TV broadcasters and distributors. The deal is also conditional upon approval by relevant competition authorities.

Optima is listed on Zagreb stock exchange. After obtaining regulatory approvals, United Group will launch a tender offer for Optima’s outstanding stock.

United Group entered the Croatian market last year after acquiring Tele2’s business in the country.

T-Hrvatski Telekom’s acquisition of its stake in the then bankrupt Optima was approved by the competition watchdog for a limited four-year period in 2014, which was subsequently extended in 2017. The telco had an agreement with Zagrebačka Banka whereby the pair would jointly sell the latter’s shares.

United Group said it is spending €130 million on modernising Telemach Croatia’s mobile network to improve quality, expand coverage and offer 5G. It is also investing €100 million to build a fibre network on which it is already offering fixed telephony and broadband internet with speeds from 300 Mbps to 2 Gbps.

United Group is active in eight countries across the region and has approximately 11 million users.

“This agreement is a step further in our plan to transform Telemach Croatia into a fully converged telecom operation offering the full range of telco services – including TV – on our own infrastructure,” said Telemach Croatia CEO Adrian Ježina.

“The Croatian parliament is expected to review the Electronic Media Act soon and we are confident that the law will be changed soon and aligned with practices in other EU member states, allowing us to complete this deal and add TV to our wider telco offering.”