Xavier Niel to buy Ukraine’s Volia and Lifecell in major investment

Xavier Niel (@Joel Saget/AFP; Source: Groupe Iliad)

Iliad Telecom owner Xavier Niel’s NJJ Holding investment firm is to acquire Datagroup-Volia, Ukraine’s leading fixed telecom and pay TV provider.

Niel’s company has already secured regulatory approval for the deal.

The investment in war-torn Ukraine represents a huge leap of faith and expression of confidence in the country’s future on the part of the French telecom tycoon, following his major international expansion drive with investments in a number of countries including neighbouring Poland. Volia is 96.13% owned by a fund managed by US private equity firm Horizon Capital, led by Lenna Koszarny, and 3.87% by Datagroup-Volia CEO Mykhaylo Shelemba.

The consortium led by NJJ intends to merge Datagroup-Volia with Lifecell, the country’s number three mobile operator, said to be Ukraine’s fastest growing mobile player. This merger would take place after regulatory approvals are obtained, resulting in 100% ownership of the assets.

Niel’s group plans to follow up by investing significantly in network, licenses, equipment and the expansion of  fixed and mobile infrastructure in the country to accelerate future growth.

Post-closing of the deal a fund managed by Horizon Capital and Shelemba will invest in the combined entity, retaining a minority position and will be the local partner of NJJ in Ukraine.

The combined Ukrainian converged multi-play operator will be led by Shelemba, current Datagroup CEO, as Group CEO. Pierre Danon, chair of the Supervisory Board, Datagroup-Volia, will also be chair of the merged company.

Niel’s outfit has characterized first major investment by a new market entrant in Ukraine since the Russian invasion.

Koszarny’s Horizon Capital invests primarily in fast-growing tech companies in Ukraine and Moldova via dedicated funds, The partners said they intend to create a national telecom champion, with the highest growth profile among peers in Ukraine.

The combined company will provide mobile connectivity to nearly 10 million Ukrainians, while its fixed network will cover more than four million residences across Ukraine. The company will provide a triple play offer, bundling mobile, fixed connectivity and pay TV.

Niel said: “I am pleased that we have achieved this major milestone with the regulatory approval for the acquisition of Datagroup-Volia, a significant step towards the creation of a national Ukrainian telecom champion, providing Ukrainians with safe, secure and reliable telecom services. Ukraine is home to an impressive tech sector with innovation in artificial intelligence, a high degree of digitalization and technological affinity. We are confident that our landmark transaction will serve as a signal to others that the time to invest in Ukraine is now, to support the rebuilding of the country and realize its potential. We look forward to working in the country and we are confident that our global telecoms activities, dedicated team and sector expertise, from France to Poland, from Italy to Sweden and the Baltics, will bring value to all stakeholders, including employees and customers, and to Ukraine as we work together to further develop the telecom offering, tech, artificial intelligence and other strategic areas of cooperation.”

Historic meeting

Koszarny, who took majority control of Datagroup-Volia, hailed Mykhaylo’s leadership, and said Volia had increased revenues 3.8 times and EBITDA 4.8 times in dollar terms over five years, “underpinning our confidence to raise our ownership to over 96%, and together with Mykhaylo Shelemba, fully control Datagroup’s destiny”.

He said his team had been working towards the current deal for some time, following “a historic meeting with Xavier Niel and his team in Paris in December 2021”.

Shelemba said the merger would create “two stellar assets with vast synergy potential” and paid tribute to “the bravery of Ukraine’s courageous defenders, protecting the country at this pivotal time, and the over 5,000 talented and dedicated management team and employees of Datagroup-Volia and Lifecell, who have demonstrated the utmost resilience and commitment to continuing to deliver high-quality services to Ukrainians every day, despite challenging circumstances”.