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Liberty Global to Sell Austrian Ops to T-Mobile

Liberty Global said it has reached an agreement to sell its Austrian operations, UPC Austria, to T-Mobile Austria in a deal valued at $1.9 billion euros ($2.2 billion).

As of Sept. 30 UPC Austria passed about 1.4 million homes and had 654,000 customers, including 513,000 broadband, 450,000 voice and 468,000 video subscribers. The deal comes in at a healthy multiple – about 11 times UPC Austria’s estimated 2017 cash flow

Liberty expects the transaction to close in the second half of 2018.

“This transaction highlights the strategic and financial value of our fiber-rich networks in a rapidly converging world and the significant synergies inherent in fixed-mobile mergers,” Liberty Global CEO Mike Fries said in a statement. “We have operated in Austria for over 20 years and are extremely proud of the market-leading position we’ve built in both digital video and super-fast broadband. Looking forward, we believe the combination of UPC Austria and T-Mobile Austria will provide the national scale necessary to compete with larger companies like A1, and provide residential and business consumers with the highest quality services at the best price. We remain focused on value creation for our shareholders and are pleased with the premium valuation being attributed to one of our smaller operating markets.”

Liberty said the proceeds from the deal will be used for general corporate purposes, including debt reduction, re-investment into the business or share buybacks. Liberty Global has agreed to provide certain transitional services – primarily network and IT functions – for a period of up to four years. The annual charges will depend on the actual level of services required by T-Mobile Austria. Liberty Global will also allow T-Mobile Austria to use the UPC brand for a transitional period of up to three years as part of the transaction.

LionTree Advisors acted as a financial adviser to Liberty Global on the transaction.