Bucharest listed Digi Communications announced on July 21 that its Hungarian subsidiary, Digi Tavkozlesi es Szolgaltato, has signed an agreement to acquire Hungarian broadband and telephone provider Invitel Tavkozlesi Zrt for €140mn.

This is Digi’s first acquisition after the IPO carried out on the Bucharest Stock Exchange in May. The planned transaction, once completed, will consolidate Digi’s position on the Hungarian telecommunications market, allowing it to expand its customer base.

Digi Communicationms is a leading provider of telecommunication services in Romania and Hungary offering cable and DTH television services, fixed internet and data and fixed-line telephony.

Invitel Tavkozlesi Zrt is part of the Invitel Group and is one of the key operators on the Hungarian telecommunications market with over 20 years’ experience. It offers an extensive portfolio of services to residential and small business customers, including a variety of multimedia and entertainment services such as interactive, digital and HD television, fast internet offerings and fixed telephony services across its regional networks and is positioned as second-largest incumbent fixed line telecommunications and broadband internet services provider in the residential and small business customers segment in Hungary.

Digi Tavkozlesi es Szolgaltato will acquire Invitel Tavkozlesi Zrt from Ilford Holding Kft and Invitel Technocom Tavkozlesi Kft, controlled by China Central and Eastern Europe Investment Co-operation Fund SCS SICAV-SIF, which is managed by Luxembourg Investment Solutions. The planned transaction does not include Invitech Solutions, the Invitel Group’s B2B and wholesale unit.

Last year, Invitel Tavkozlesi Zrt had revenues of HUF26bn (€85)and EBITDA of HUF7.1bn on a pro-forma basis (it went through a demerger in mid 2016).

The transaction is pending approval from the Hungarian competition authority and is subject to the execution of reciprocal services and cooperation agreements between Digi HU and Invitel Tavkozlesi on the one hand and Invitech Solutions on the other. This will allow the successful integration of the acquired company in Digi, development of the respective businesses of both Digi HU and the sellers in Hungary, as well as implementation of synergistic operational processes at the parties’ level, the statement said.

The transaction is currently expected to complete by March 14, 2018.

The revenues reported by Digi increased by 13% y/y to €227mn and the net profit increased by 21.5% y/y to €15.8mn in Q1, the company announced in a note sent to the Bucharest bourse in May. The company’s revenues in Hungary increased by 14% to €37.5mn amid a robust 18.6% y/y rise of the revenues generated by the cable TV operations to €11.5mn.

The 21.7% IPO of Digi Communications was completed at the price of RON40 (€8.78). ,/ The telecom company was hit by a corruption scandal while it was carrying out its IPO as Romania's National Anticorruption Directorate (DNA) started a criminal investigation into the CEO of the company's Romanian subsidiary RCS&RDS.