425: Cohen Circle Acquisition Corp. I Announces Business Combination with Kyivstar Group, Aiming for U.S. Listing

Cohen Circle Acquisition Corp. I plans to merge with Kyivstar Group, a leading Ukrainian digital operator, to facilitate its listing on the U.S. stock market.

Summary

• Cohen Circle Acquisition Corp. I has entered into a business combination agreement with Kyivstar Group to bring the Ukrainian digital operator to the U.S. public market.
• The transaction aims to list Kyivstar Group on Nasdaq, potentially making it the only pure-play Ukrainian investment opportunity in the U.S.
• Kyivstar is described as a leading digital operator in Ukraine, offering mobile, fixed broadband, and digital services.
• The company has a resilient financial profile, reporting $515 million in Adjusted EBITDA and a 56% Adjusted EBITDA margin in 2024.
• The deal values Kyivstar at 3.6x its 2024 projected Underlying Adjusted EBITDA.
• The investor presentation highlights Kyivstar's leading market positions, ambitious expansion opportunities in digital services, and a strong balance sheet with $429 million in cash and cash equivalents and no external debt.
• The transaction is subject to shareholder approvals, SEC review, and other customary closing conditions.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the potential for growth in the Ukrainian market, Kyivstar's strong financial performance, and the unique investment opportunity. However, risks associated with the war in Ukraine and regulatory uncertainties temper the overall sentiment.

Positives

• Kyivstar is a leading digital operator in Ukraine with strong market positions in mobile and fixed broadband.
• The company has a resilient financial profile with significant Adjusted EBITDA and a high margin.
• Kyivstar has a strong balance sheet with substantial cash reserves and no external debt.
• The business combination provides a unique investment opportunity in the Ukrainian market.
• Kyivstar is committed to investing US$ 1 billion in Ukraine from 2023-2027.
• Kyivstar is the #1 mobile operator in Ukraine with 23.0 million subscribers and the #1 broadband provider with 1.1 million subscribers.

Negatives

• The business is subject to risks associated with operating in Ukraine, including the ongoing war.
• Kyivstar's performance in 2023 and 2024 was impacted by a cybersecurity attack, resulting in customer appreciation programs that negatively affected revenue and Adjusted EBITDA.
• The company faces challenges related to electricity price increases and potential macroeconomic instability.
• The company lost 3.1m subscribers as of December 2024 vs. February 2022 due to subscriber migration abroad.

Risks

• The ongoing war in Ukraine poses significant risks to Kyivstar's network infrastructure, operations, and financial performance.
• The company faces competition in the telecommunications market and may struggle to retain customers.
• Kyivstar is subject to regulatory and legal risks, including potential tax claims and changes in laws.
• Cyber-attacks and disruptions to equipment and systems could negatively impact the business.
• The company is exposed to foreign currency exchange risks.
• The company may not be able to raise additional capital, or may only be able to raise additional capital at significantly increased costs.

Future Outlook

Kyivstar's medium-term growth strategy focuses on deepening mobile market leadership and expanding digital services, targeting significant organic growth in digital revenues, complemented by acquisitions.

Management Comments

• Kyivstar is committed to invest US$ 1 billion in Ukraine from 2023-2027.

Industry Context

The announcement comes as the telecommunications industry is undergoing significant digital transformation, with companies increasingly focusing on expanding their digital service offerings and leveraging their existing customer base to drive growth.

Comparison to Industry Standards

• The deal values Kyivstar at 3.6x its 2024 projected Underlying Adjusted EBITDA, which is a significant discount to European peers with a median of 6.7x and APAC peers with a median of 6.2x.
• Kyivstar's 2024 EBITDA margin of 56.0% is higher than the average of its global peers (37.2%), European peers (40.2%), APAC peers (46.7%), and MEA peers (48.0%).
• Comparable companies include BT, Deutsche Telekom, KPN, Orange, Vodafone, NTT, SingTel, Telstra, Airtel Africa, MTN, and Safaricom.

Stakeholder Impact

• Shareholders of Cohen Circle Acquisition Corp. I will have the opportunity to invest in a leading Ukrainian digital operator.
• The business combination could provide Kyivstar with access to capital and expertise to support its growth plans.
• The transaction could have a positive impact on the Ukrainian economy by attracting foreign investment.
• The company is committed to investing US$ 1 billion in Ukraine from 2023-2027.

Next Steps

• PubCo intends to file a registration statement on Form F-4 with the SEC, including a preliminary prospectus/proxy statement.
• The Company will solicit proxies from its shareholders for the vote on the Business Combination.
• The parties will seek necessary shareholder approvals and regulatory approvals to close the Business Combination.

Key Dates

Keywords

Kyivstar, Ukraine, Business Combination, Digital Operator, SPAC, Nasdaq, Telecommunications, Investment, Merger, Acquisition