Viktor Orban Ally’s Tiny Tech Firm Seals Deutsche Telekom Deal

(Bloomberg) -- A tiny company linked to Prime Minister Viktor Orban’s closest business ally agreed to take over a much bigger unit of Deutsche Telekom AG’s local subsidiary in Hungary, in the most high-profile acquisition to date for the premier’s circle of business partners..4iG, partly owned by Lorinc Meszaros, a former gas fitter from Orban’s home village, signed the deal to acquire T-Systems, the information technology services arm of Magyar Telekom Nyrt., according to a statement on Tuesday. The price wasn’t disclosed and the deal is subject to a full due diligence and regulatory approval. The parties expect to finalize the transaction this year..The acquisition is one the largest so far by firms run by close allies of the country’s leader, who’ve benefited from European Union funds and government contracts to expand into almost every industry. Meszaros, who’s famously credited “God, luck and Viktor Orban” for his change of fortune, has snapped up interests ranging from construction, real estate and tourism to food, agriculture and banking, leaving surging profits and share prices in his wake.."The acquisition of T-Systems Hungary is one of the most important milestones in our plan to meet our growth targets,” 4iG Chairman and Chief Executive Officer Gellert Jaszai said in an emailed statement..Shares Jump.4iG jumped 7.5% after the announcement, boosting its return this year to 270%, best on the Budapest Stock Exchange. The shares took off after Meszaros’s Opus Global Nyrt. bought a stake last year, helping it to a 671% increase in 2018. Konzum, another Meszaros business now merged into Opus, produced the world’s biggest gains two years ago as the businessman took control..Magyar Telekom stock rose as much as 3.7%, the most in almost eight months, before paring gains to trade up 2% at 425 forint. Proceeds from the sale may help Magyar Telekom boost its dividend or cut its indebtedness, KBC Equitas analyst Norbert Cinkotai said in a research note. Magyar Telekom shares may eventually rise as high as 450 forint, he said..The acquisition unveiled Tuesday is an unlikely union, at least on paper. 4iG employed just 373 at the end of last year and had an annual revenue of $48 million; T-Systems had sales almost 10 times that and employed 1,600. But 4iG, in which until recently Meszaros had a majority stake, has long said it wanted to break into the telecommunications industry..Telekom Partnership.Under the deal announced Tuesday, 4iG agreed with T-Systems parent Magyar Telekom on a long-term partnership, which will allow the buyer to continue to sell the Deutsche Telekom unit’s services to large companies as well as the public sector. 4iG will also be allowed to use the T-Systems brand name for another three years..The deal doesn’t include T-Systems’s small- and medium-sized company services, which will be separated before the acquisition..Hungarian opposition parties have repeatedly alleged that Meszaros’s business interests are a front for Orban, something the premier has denied. Meszaros has become Hungary’s richest businessman in just a few years, according to an annual list published by Forbes, which ranked him as one of the country’s two dollar-billionaires..Just in the past month, 4iG has sealed contracts with the Budapest transportation network, the main state IT service provider as well as a unit of the state-owned Hungarian electricity company MVM Zrt. The ownership of 4iG was recently overhauled with Jaszai gaining majority ownership and Meszaros retaining a minority stake..To contact the reporter on this story: Veronika Gulyas in Budapest at vgulyas@bloomberg.net.To contact the editors responsible for this story: Zoltan Simon at zsimon@bloomberg.net, Andras Gergely.©2019 Bloomberg L.P.

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Viktor Orban Ally’s Tiny Tech Firm Seals Deutsche Telekom Deal

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