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United Group to invest 600 mln euro in Bulgaria over three years

Author United Group
United Group to invest 600 mln euro in Bulgaria over three years

March 30 (SeeNews) - Netherlands-based United Group, the leading multi-play telecoms and media provider in Southeast Europe, plans to allocate 600 million euro ($651 million) to strengthening its business in Bulgaria, the group’s CEO Victoriya Boklag said.

“We will continue to invest in the coverage and capacity of Bulgaria’s mobile and optical networks and in high-quality products based on the latest technologies such as the 5G high-speed home internet that we launched only a week ago,” Boklag said in an interview for Capital weekly.

In Bulgaria, United Group owns telco Vivacom and TV, online and radio company Nova Broadcasting Group.

“We are also investing in high-quality, versatile content focused on video and unlimited use, following the global trend in customer demand. We will continue to follow global trends and develop a convergence between our telecom and media businesses. We will also keep our digitalisation strategy strong and running,” she added.

United Group has built the largest 5G network in the country, giving access to high-speed connectivity to nearly 80% of the Bulgarian population, the official noted. “We also started to rollout of 10GIGA optical network at a time when people needed it the most – during the COVID-19 pandemic. Currently, our 10GIGA optical network reaches nearly half a million households while the total number of homes that have access to next generation connectivity is more than 1.4 million, and the buildout continues.”

Two years ago, United Group launched its proprietary TV platform EON and six months ago, it offered to the Bulgarian users new mobile unlimited plans with unlimited calls, megabytes and text for all tariffs and price points - a novelty for Bulgaria.

Boklag also recalled the investments in Nova Broadcasting Group’s new building, the first independent complex for new generation electronic media, built specifically for TV and radio production. On an area of nearly 17,000 sq m, the complex houses state-of-the-art TV and radio studios and newsrooms.

In 2022, United Group’s revenues in Bulgaria grew by almost 9%, outpacing the markets. Vivacom has become the market leader in the pay TV and internet markets, Boklag said, adding that the Nova bundle of channels is a TV viewership leader.

“For the past three years, our business has grown threefold. We have increased our scale and profitability, mainly by entering new markets and launching new products,” the CEO said. As a result of organic growth and M&A activities United Group’s total revenues soared from 742 million euro in 2019 to over 2.5 billion euro in 2022. Operating profit climbed from 316 million euro in 2019 to more than 1 billion euro in 2022.

Despite the rapid pace of the group’s expansion to new markets in the past few years, it remains focused on the implementation of its new strategies in Bulgaria, Croatia and Greece, she said. Among other initiatives, United Group is building 10G networks in these countries, as well as improving the quality and coverage of the mobile networks.

Going forward, the group will continue to innovate and create new products at United Cloud, its own innovation centre, which is currently establishing a branch in Bulgaria. “We are also putting major efforts in IT to improve and optimise customer experience at every touchpoint with the use of digital tools and new technologies,” Boklag said.

“With content being one of the cornerstones of our strategy, we continue to put strong focus on local productions and new forms of content appealing to younger generations. We also intend to keep on experimenting with new ways of monetizing locally produced content,” she stressed.

Sustainability too will remain a top priority for the group.

“Our ambition is to be a market leader in sustainability in the telecommunications and media industry for generations to come. Both sectors have impact on climate change, therefore, we have set a goal to make the Group carbon-neutral by 2040.”


“A company with track record like ours, with over 150 successful acquisitions in various countries across the region in just 20 years, is always open to new opportunities to expand its business,” Boklag said. “We continue to look for further opportunities to grow our business.”

In the past three years, United Group acquired Vivacom and Nova in Bulgaria, Tele2 and Optima Telekom in Croatia, Nova and Wind in Greece, as well as 20 more small and medium-sized companies in the region.

After taking over the acquired companies, United Group together with the local management carefully crafts the new strategic and investment plans for each target and initiates their execution, Boklag explained.

“In Bulgaria, for example, in less than three years, we have invested almost 1.8 billion euro in acquisitions and new investment programs, which makes us one of the largest investors in the country. In Greece, we have recently started with the implementation of a 2 billion euro large-scale project over the next five years, aimed at improving Greece’s telecommunication infrastructure and driving the country’s digital transformation.”

Since it acquired Vivacom in 2020, United Group has completed two acquisitions of small Bulgarian operators – Net 1 in Sofia and N3 in Plovdiv – with a cumulative market share in pay TV and broadband of less than 4%. Currently, United Group is awaiting the competition regulator’s approval for the acquisition of Networx by Vivacom. There are still more than 200 small players in Bulgaria, but scale has proven to be of crucial importance in the telecom sector in order for the operators to be able to implement new products and technologies and, in Boklag’s view, further consolidation of the market should be expected.

Earlier this month, the group dismissed as ungrounded a request by telco Yettel Bulgaria, part of Czech investment group PPF, to the competition authority to combine probes into two potential deals for assets of local pay-TV and broadband services provider Bulsatcom, one of which involving United Group. Commenting on the transactions, Boklag said they do not affect competition in the country’s pay TV and fixed broadband markets.

“United Group granted a loan to Mr. Spas Roussev to acquire Bulsatcom. Bulsatcom subsequently agreed to sell part of its fixed network to Vivacom subject to a lease-back arrangement. These transactions do not affect competition in the country’s pay TV and fixed broadband markets,” the official explained. “Bulsatcom and Vivacom continue to compete fiercely for subscribers. These two companies do not exercise any influence on each other’s commercial strategies.”

In the telecom industry it is common for operators to use each other’s infrastructure. For example, A1 frequently uses Vivacom’s ducts to roll out its fixed network, she went on to say. Mobile network operators often use each other’s towers. Regulators encourage infrastructure sharing.

United Group is majority owned by BC Partners, an alternative investment manager focused on private equity, credit, and real estate, with deep networks across Europe and North America. Currently BC Partners has over 124 investments across 18 countries in four sectors with total enterprise value of over 161 billion euro.

United Group chairman and founder Dragan Solak, together with the management, owns a minority stake, as does the European Bank for Reconstruction and Development.

The group’s M&A activities have been primarily financed through the bond markets, while investment programmes have been funded by internal cash flows and working capital facilities.


“We are very mindful of maintaining debt within the market standards and permitted limits while the newly acquired entities deliver strong results across all geographies,” Boklag said. “In the absence of new acquisitions, and therefore no additional debt, we will naturally reduce the debt burden through profitability and cash flow growth.”

In addition to deleveraging through growth and based on the model of big telecom operators around the world, United Group has launched a process to spin off and monetise its mobile towers, being one of the few European telecom companies that still control almost 100% of their mobile and fixed networks.

“By monetising the towers, we are planning to reduce United Group’s debt and minimize the short-term and mid-term risks of refinancing. The ownership over active equipment, as well as design and quality of the service, will remain in our ownership and under our full control,” Boklag said.

In January, Moody’s affirmed the group’s B2 corporate credit rating, changing the perspective from stable to negative. While the change in outlook was driven mainly by the current economic environment, the rating affirmation considers “the company’s solid operating momentum and growth opportunities, improved scale and scope of operations over the past few years, and its strategic shift to focus on cash flow generation, liquidity and deleveraging” as stated in Moody’s release.

“Our earliest debt maturity is in more than a year, in June 2024. Under normal market conditions, the maturities due in 2024 and 2025 could easily be refinanced on the bond market,” Boklag said. “Considering the current market situation amid the war in Ukraine, we have taken a more conservative approach. Therefore, our decision to launch a process to spin off and monetise our mobile towers following the example of other big telecom companies in Europe and globally turned out to be a good strategic decision.”


In Boklag’s view, the synergies between local media and telco operations could be a key growth driver in the future.

“Media and pay TV are among the most transformative industries at the moment. Besides traditional local and global media companies, the fight for “eyeballs” is now joined by all the social networks and D2C OTT players like Netflix, Disney, etc. Both subscription and advertising models are being challenged and reinvented,” she said. “In this environment, having the strength of the local content production capabilities, relationships with the local advertisers and powerful subscription business is key for the future success of both local media and telco operations.”

Moreover, telco and media companies together put up a stronger fight against the pirates and illegal distribution of content, which harms everyone in the system – creators, artists, producers, and content providers, she added.

United Media has an independent editorial board, which is based in Luxembourg, responsible for its compliance with the highest media standards and tasked with verifying the unbiased and ethical work of journalists. The board reviews the editorial process, when necessary, and takes care of public complaints procedures.

“Freedom of speech and independence are values that our company has upheld since its establishment,” Boklag also said. “All members of the board are well- respected representatives of emblematic media such as BBC and RTL. They are fully independent and are not employed in any of our media assets.”

($=0.9223 euro)