French billionaire Xavier Niel has taken a step closer to creating a large telecom holding in Ukraine, which will include the operator lifecell and the home Internet provider Datagroup-Volia. On July 25, the Antimonopoly Committee approved the purchase. The deal may be closed in the near future. Interview with Mykhailo Shelemba, who will head the merged company.
After more than half a year of consideration, the Antimonopoly Committee (AMCU) has allowed French billionaire Xavier Niel to acquire the third operator by the number of subscribers, lifecell, for $525 million. “We will work 24/7 to finally close the deal in the near future,” says Forbes CEO of the fixed Internet provider Datagroup-Volia and head of the future merged company Mykhailo Shelemba.
This is potentially the largest deal of the decade, along with the purchase of Datagroup-Volia, the purchase of which the AMCU gave permission for in March 2024. Niel’s plan is to merge Datagroup-Volya and lifecell into the DVL Telecom holding. The Frenchman will own 85% of the company, another 10% will go to the American-Ukrainian fund Horizon Capital, which was the majority owner of Datagroup-Volya. Shelemba’s share will be 5%.
Niel’s investment company first submitted an application to buy lifecell on December 29, 2023. In mid-January 2024, the committee returned it due to document inconsistencies. The second application was received on January 23 and has been under consideration since then.
Each year after the merger, the holding will invest more than $100 million in the business, says Shelemba. “In general, according to the plan, the amount will increase every year,” he adds.
There is plenty to invest in. An auction for frequencies for mobile operators with a total value of almost UAH 3 billion will be held in the fall. Market players are also obliged to comply with the requirements of the National Center for Operational and Technical Management of Telecommunications Networks (NCT) of July 16, which obliges operators to ensure stability of communication during 10-hour blackouts by February 1, 2025.
How and when will lifecell merge with Datagroup-Volya and what are the first steps of the new holding?
The interview has been shortened and edited for clarity.
The AMCU allowed DVL Telecom to acquire lifecell and other assets of the Turkish Turkcell. What is the significance of this decision after a long delay in considering the application?
This is a standard review period for large transactions. It lasted several months. We are grateful to the AMCU for a truly thorough and professional review of our case. Today, the committee is sending a very powerful signal to the entire international community that the institutions in Ukraine are working, the economy is working, and it is time to invest in Ukraine right now, and not wait for the end of the war. Even in peacetime, this would be a powerful signal.
Xavier Niel is a well-known figure in global business circles, especially in France. That is why everyone is watching this deal with great interest. It is important to take leaps and bounds to make this international investment case a truly cool story.
Why did the AMCU examine the deal so carefully?
This is not the first time I have been through this process. It is normal for the AMCU to ask questions and the parties to answer them. In this deal, the questions were deep and professional.
They went beyond the main task of the AMCU - to find out if there is a risk of monopoly in the market?
I will not comment on the essence of the AMCU's questions, because they were multifaceted. First of all, great attention was paid to studying all the markets in which the parties to the deal operate: mobile communications, fixed lines, etc. The shares of companies in all markets and niches were studied in depth. This is the direct task of the AMCU - to make sure that there is no risk of monopolization, but on the contrary, there will be an invigoration of competition.
The deadline for considering the deal was July 18. Why was there a delay?
In my understanding, we met all the deadlines. We need to look at the specific dates when our responses and clarifications to the AMCU's requests were sent. This is purely a formality.
When can the parties finally complete the deal?
Everyone is interested in closing this transaction as quickly as possible. We have a lot of work ahead of us. We need to launch all processes quickly, so I can't name specific dates. We will work 24/7 to finally close the deal in the near future.
How and when will the merger of lifecell and Datagroup-Volya businesses begin?
It begins on the first day, when all transactions are completed and we legally formalize ownership. By that time, we will be preparing to actually launch the merger process from day one. We are currently operating as two separate entities, but we will prepare everything that can be prepared. We will start by gathering key personnel and discussing a draft development strategy, supplementing it and transforming it into strategic initiatives with specific projects that will be jointly implemented by the teams. This will be the focus of the first two weeks after the legal merger.
What does the draft strategy currently provide?
We are part of the country's critical infrastructure, so we are focused on what the client needs. Focus No. 1 will be to increase the energy resilience of the network. A big plus is that both Datagroup-Volya and lifecell have a good network and can complement each other to increase energy resilience. This will be the first part of technical integration.
Human resources are also important. To install batteries and generators, you need a lot of engineers. In fact, we will have two strong technical divisions.
According to Forbes, the NCU solution will cost 13 billion UAH of investment for three operators. How much will it cost Datagroup-Volya and lifecell?
We are in the process of calculating, but it will definitely be billions of hryvnias. It is not so much a question of the availability of money, but rather the availability of physical resources, the ability to order batteries, generators, and deliver them on time.
In addition to energy resilience, what else does your strategy provide?
We will introduce a package of services that will simultaneously include both fixed Internet and mobile. There will also be a focus on the quality of customer service, simplification of processes and customer journey.
For corporate clients, we plan to launch a service when we can build their own 4G network on demand. Currently, Datagroup provides such a service for building fixed communication channels for business clients. lifecell can provide the same service in mobile communications. This is important for factories, agribusiness or mines, whose production facilities are located in a place where it is necessary to build a dedicated network.
Also useful and important for businesses is the direction of big data, which they can analyze in order to more carefully plan their investments. We have data on customer traffic. This information can help decide where to open new points and how to optimally direct customer traffic to them.
What does Xavier Niel own
The business empire of the French billionaire consists of five domains.
Telecom assets are grouped into three companies. Iliad group owns the operator Free in France, Iliad in Italy and Play in Poland. NJJ Holding includes the Swiss operator Salt, the Irish EIR and the Monegasque Monaco Telecom. Atlas Investissement has 20% in the Luxembourg Millicom and 2.5% in the British Vodafone.
In total, investors are investing $1.5 billion in this project - this includes the amount of the deal and the investment plan for five years. How much do you plan to invest in the business by the end of this year and next?
This is definitely more than $100 million per year. Taking into account the requirements for operators and providers, we will probably have to revise some of the investments, so the amount will be higher. According to the plan, the amount will increase every year.
In June, you signed a memorandum with the EBRD and IFC for a loan of $435 million. Will you receive these funds in one lump sum or in parts, and what will they be used for?
I cannot disclose the details of the agreement due to confidentiality conditions. We will receive these funds after the deal is completed. This is our investment resource for the development of the combined network, the purchase of frequency licenses and equipment necessary for the expansion of fixed and mobile infrastructure.
According to Forbes, you personally need to invest $25.6 million to finance the increase in your own stake in the combined company. Are these calculations correct? And when will you officially take over as the head of the combined company?
I cannot comment on this. The ownership structure has been finalized: 85% will be with Niel, 10% with Horizon Capital, and 5% with me. I will take up my new duties on the day we close the deal. All draft documents are ready. We just need to complete the transactions.
You plan to participate in the auction for frequencies in the fall. The starting price of all lots is almost 3 billion UAH. How much are you willing to invest in order to take them for yourself?
Our competitors would really like to know the answer to this question. In fact, this is the main issue, in addition to operational tasks and investments in energy sustainability, which everyone is currently engaged in. If there is this competition, we will participate in it and, accordingly, fight for frequencies.
This is the main asset of operators, which makes it possible to provide additional capacity to consumers. But frequencies by themselves do not give anything. Additional equipment must also be installed that will allow working in these frequencies. And this amount of investment will be greater than the cost of the frequencies themselves. Currently, lifecell has a very good position in terms of the volume of frequencies per subscriber, but there are never many frequencies.
lifecell is the only operator that reported profit growth according to the results of the first quarter. How do you plan to maintain this trend and increase the subscriber base?
We will focus on supporting growth dynamics. Lifecell's position will be strengthened by the integration of mobile communications with fixed-line, because this is additional value for the client. The assessment will be an increase in the number of clients.
The Forbes article about Xavier Niel is called “The Geek and the Genius of Pricing”, because when entering the market he reduced prices for services. Will lifecell have the same strategy?
This is a very simple and complex question at the same time. The foundation of our strategy is to provide the best service to customers and be as efficient as possible in all our internal processes and costs in order to reduce the price burden on the subscriber.
At the same time, there are a number of objective factors that will affect pricing. I am not yet ready to say how much they will affect. There are questions about increasing taxes, a large amount of additional investments in energy independence.
Sooner or later, the market will transform these costs into the price of the service. We can only influence our internal efficiency, so we will look for creative solutions to provide even greater value to customers at the most affordable price.
