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By Bart H. Meijer and Jennifer Hughes
AMSTERDAM/HONG KONG July 3 (Reuters) - Mobile telecommunications company Veon on Tuesday said it will sell its stake in Italian operator Wind Tre to partner CK Hutchison for 2.45 billion euros ($2.85 billion), in an effort to significantly reduce its debt level.
The company also said it had made an offer to Global Telecom Holding (GTH) to acquire the parts of its businesses in Pakistan and Bangladesh it doesn’t already own for approximately $400 million.
The sale of its Wind Tre stake is a painful but necessary move by Veon, which has been making losses, cutting jobs and struggling under debt for years. It has been run by Chairwoman Ursula Burns since former CEO Jean-Yves Charlier stepped down in March. In April, Veon warned its business in Russia, its largest market, was slowing.
Tuesday’s deal is focused on priorities including “simplifying the group’s structure, increasing our operational focus on emerging markets, strengthening the group’s balance sheet,” Burns said in a statement.
Veon owns a 57.7 percent stake in GTH and already consolidates its “Jazz” operations in Pakistan and “Bangalink” in Bangladesh.
For Hutchison, the purchase consolidates its ownership of one of Italy’s top three mobile providers, a lucrative property, although it has posted losses recently.
Frank Sixt, group finance director of CK Hutchison, said the deal was important for the group in “a million small ways” as well as for the profitability it will bring.
“With next-generation services it will become increasingly important to offer them across a scaled footprint – it will all have to be based on compatible systems and when you have only 50 percent of a venture, that may not work,” he said.
In February, Veon said Wind Tre’s revenue slumped 11 percent to 1.6 billion euros in the fourth quarter, driven by an 8.1 percent decline in mobile service revenue, as competition saw its customer base fall 5.8 percent to 29.5 million.
Completion of the transaction is expected to occur in the third or fourth quarter of 2018, the companies said. ($1 = 0.8599 euros) (Bart Meijer and Toby Sterling reported from Amsterdam. Anne Marie Roantree and Donnny Kwok reported from Hong Kong. Hughes reported from Sydney. Editing by Christopher Cushing and Sunil Nair)