United Group, the leading provider of telecommunications and media services in Southeast Europe, has reached a deal with Hrvatski Telekom and Zagrebacka Banka to acquire a majority stake in the Croatian operator Optima Telekom, which offers a range of fixed internet and pay-TV services.

United Group – which provides telecommunications services in Croatia under the Telemach brand – has signed a sales and purchase agreement to acquire the 17.41% stake held by Hrvatski Telekom and the 36.90% interest owned by Zagrebacka Banka.

The deal is a logical step in United Group’s commitment to providing telecommunications services of the newest generation to Croatian consumers, the group said in a press release on Friday, adding they are spending €130 million on modernising Telemach Croatia’s mobile network to improve quality, expand coverage, and offer a full 5G experience, as well as investing €100 million to build a state-of-the-art fibre optic network on which it is already offering Croatian customers fixed telephony and superfast broadband internet.

Once the deal has been completed, the 125,000 broadband subscribers and 55,000 pay-TV customers served by Optima Telekom will gradually benefit from these investments and new modern services that will bring convergence with mobile and improve both quality and the customer experience, the group said.

Under the terms of the agreement, completion of the deal is contingent on a change in Croatia’s Electronic Media Act, which now prohibits vertical integration between pay TV broadcasters and distributors. The deal is also conditional upon approval by relevant competition authorities.

“This agreement is a step further in our plan to transform Telemach Croatia into a fully converged telecom operation offering the full range of telco services – including TV – on our own infrastructure,” said Telemach Croatia CEO Adrian Jezina.

“The Croatian parliament is expected to review the Electronic Media Act soon and we are confident that the law will be changed soon and aligned with practices in other EU member states, allowing us to complete this deal and add TV to our wider telco offering,” Jezina added.

Optima is listed on Zagreb stock exchange. After obtaining regulatory approvals, United Group will launch a tender offer for Optima’s outstanding stock.

(Operating in Croatia as part of United Group are the telecom operator Telemach Hrvatska, as well as television channels and websites Sport Klub and N1, Nova TV, Doma TV, and Dnevnik.hr.)