{"id":10437,"date":"2023-10-17T12:33:09","date_gmt":"2023-10-17T10:33:09","guid":{"rendered":"https:\/\/www.direkt36.hu\/?p=10437"},"modified":"2023-10-17T10:26:38","modified_gmt":"2023-10-17T08:26:38","slug":"az-orban-rendszer-csucsvallalatanak-titkai","status":"publish","type":"post","link":"https:\/\/www.direkt36.hu\/en\/az-orban-rendszer-csucsvallalatanak-titkai\/","title":{"rendered":"The secret history of Viktor Orb\u00e1n’s favorite company"},"content":{"rendered":"

<\/p>\n

THE SECRET HISTORY OF VIKTOR ORB\u00c1N\u2019S FAVORITE COMPANY<\/h1>\n

 <\/p>\n

In mid-2021, an unusual meeting took place in the pale yellow building of the Hungarian Embassy in London, located in an elegant district of the British capital, just a fifteen minutes\u2019 walk from Buckingham Palace.<\/p>\n

Hungarian IT company 4iG had been trying for months to acquire Hungarian telecoms company Invitech, but talks stalled. Representatives of Invitech’s owners, an investment fund mainly financed by Chinese state money, asked a much higher price for the company than what 4iG offered. In addition, it was not clear whether the Hungarian company, which at the time was a small player in the Hungarian market and lacked significant experience in telecommunications, would be able to finance the \u20ac290 million (HUF 100 billion) purchase price.<\/p>\n

The meeting at the Hungarian Embassy in London was aimed at breaking the deadlock in the negotiations. Representatives of the investment fund behind Invitech met with Hungary’s most influential man, Prime Minister Viktor Orb\u00e1n. Direkt36 has learned about this meeting, which has been kept secret until now, from two sources with close knowledge of its details.<\/p>\n

According to the sources, the London embassy hosted the meeting because the prime minister was on a visit to the British capital at the time for some other business. Orb\u00e1n visited London on May 28, 2021 to meet with then Prime Minister Boris Johnson. According to diplomatic sources, his official program was unusually light, so he could easily have fit in the confidential Invitech meeting that day.<\/p>\n

Although 4iG is officially a private company, and Orb\u00e1n regularly claims that he does not deal with business matters, sources familiar with the meeting say that the Hungarian prime minister held detailed talks with representatives of Invitech’s owners for more than an hour.<\/p>\n

“Orb\u00e1n could have just dropped in for five minutes. It could have been enough to indicate that the state support for this deal was there, but he stayed for a long time,”<\/p><\/blockquote>\n

one source said, explaining that the prime minister spent a long time persuading the representatives of Invitech’s owners to sell their company to 4iG.<\/p>\n

Direkt36 sent a detailed list of questions to all parties involved in the negotiations \u2013 Orb\u00e1n, 4iG, and the company representing the former owner of Invitech \u2013 more than a week ago, but they have failed to respond despite repeated requests.<\/p>\n

The London meeting did indeed mark a turning point in the negotiations about the takeover of Invitech. According to sources familiar with the process, the negotiations with 4iG then accelerated, resulting in a deal that was finally concluded in September 2021.<\/p>\n

This episode shows that 4iG is a priority for the Hungarian government. There are few companies in Hungary that have received so much state support, official assistance, and direct prime ministerial attention in recent years. The result has been that 4iG, which a few years ago was just a medium-sized Hungarian IT company, has grown in a short space of time to become one of the country’s biggest corporations, with a foothold in several Balkan countries. In addition to telecommunications and IT, 4iG has also entered the defense industry as a partner of German defense giant Rheinmetall and has acquired a stake in an Israeli satellite company, Spacecom.<\/p>\n

Direkt36 spent months investigating why this company is so important to Viktor Orb\u00e1n. Interviews with dozens of sources familiar with 4iG’s activities and confidential documents we obtained reveal that the company is representing a new chapter in the building of the pro-government business empire, a central effort of Orb\u00e1n\u2019s governing since 2010 when he came back to power as prime minister.<\/p>\n

4iG is not just another business sucking up government orders in some market that is essentially dominated by the state, like, for example, construction. 4iG is a company that is expanding rapidly in once competitive industries, but with a very strong tailwind: helped by the backing of the Hungarian state.<\/p>\n

Moreover, as our investigation reveals, the government has secretly helped the company not only by Orb\u00e1n personally negotiating on their behalf but also by providing them with over \u20ac189 million (HUF 70 billion) of state investment through a hidden financial maneuver. This previously undisclosed information also sheds new light on the ownership background of 4iG. Gell\u00e9rt J\u00e1szai, the company’s chairman, claims to be the majority owner of the company partly through a private equity fund, but according to documents obtained by Direkt36, the state contributed most of the money to that fund.<\/p>\n

Help us tell the truth in Hungary, become a supporter!<\/a><\/div>\n

However, 4iG’s links to the government are not only financial. The company’s development is also closely aligned with Viktor Orb\u00e1n’s ambitions for becoming a regional power player. It was a German-Hungarian deal that has allowed 4iG to enter the international defense industry. It has also begun to expand in the Western Balkans, which the Hungarian prime minister sees as a region that he can turn into a Hungarian sphere of influence.<\/p>\n

The history of 4iG is thus also an example of Viktor Orb\u00e1n’s power ambitions. To understand all this, it is worth first understanding the context in which the company began to rise a few years ago.<\/p>\n

I. BUILDING AN EMPIRE<\/h2>\n
\"\"

Orb\u00e1n got interested in telecommunications \u2013 Photo: miniszterelnok.hu<\/p><\/div>\n

In mid-November 2018, stocks of the largest Hungarian telecommunications company, Magyar Telekom, began surging. On November 15, the stock price reached 436 forints, a significant jump from 402 forints just a few days earlier.<\/p>\n

The reason behind this sudden increase was that rumors reached the market that the company had received a takeover bid. As the information appeared to be credible, people started buying the company\u2019s stocks.<\/p>\n

The acquisition plans were also reported in the press. Around that time, Hungarian economic daily Vil\u00e1ggazdas\u00e1g reported that the German telecommunications company Deutsche Telekom had received an offer from someone for its 59.21 percent stake in the Hungarian subsidiary Magyar Telekom. The pro-government newspaper reported that an offer worth \u20ac2 billion was made for the Hungarian company. However, no information was given on who this ambitious bidder was.<\/p>\n

Direkt36 has now learned that Hungarian pro-government actors were behind the purchase attempt. They wanted to acquire Magyar Telekom to gain a commanding position in the Hungarian telecommunications industry, in line with the Orb\u00e1n government\u2019s long-cherished strategic plans.<\/p>\n

The pro-government actors needed financially well-established partners to cover the deal, so they \u201csent and advertised these plans to potential investors in New York and London,\u201d a source familiar with Magyar Telekom\u2019s affairs said regarding the 2018 purchase attempt. However, the plan fell through relatively quickly, as Germany\u2019s Deutsche Telekom did not want to sell its Hungarian subsidiary.<\/p>\n

This was not the first attempt by the Orb\u00e1n government to enter into telecommunications. The issue has been on the agenda since Fidesz came to power in 2010. First, there was an attempt to set up a state-owned mobile network operator called MPVI Mobil, which was supposed to compete with the three mobile carriers already on the market. However, this attempt failed quickly due to legal obstacles as well as professional shortcomings.<\/p>\n

Later, they tried to merge public companies involved in telecommunications into a new holding. This involved the Hungarian state-owned electric utility company MVM (Magyar Villamos M\u0171vek), which has its own electric grid network, and Antenna Hung\u00e1ria, which transmits radio and television broadcasts wirelessly to listeners and viewers.<\/p>\n

\u201cIt is much easier to build another wire network along these grid lines, as there is already an existing infrastructure and know-how,\u201d a telecommunications expert said.<\/p><\/blockquote>\n

In the end, however, this attempt was unsuccessful too because, on one hand, the companies were lagging behind in necessary upgrades and, on the other, MVM\u2019s subsidiary involved in the project had no experience in serving residential customers.<\/p>\n

But the government did not give up. This determination was even stronger because PM Orb\u00e1n and his close circle have always been suspicious of foreign-owned telecommunications companies in Hungary. They really believe that foreign-owned telcos \u201care simply surveilling them and any other Hungarian citizen, that they are collecting and transmitting data on them. They do not believe that these companies are following internal compliance procedures,\u201d a former senior executive of a telecommunications company said. He added that when he tried to allay the fears of Hungarian government officials about this, he was usually told: \u201cyou’re so na\u00efve!\u201d<\/p>\n

According to the source, the logic behind Orb\u00e1n and his inner circle\u2019s thinking is that expansion in the telecommunications sector would also give them the opportunity to collect information on a massive scale. On the other hand, they believe that \u201cif we control the information networks, others cannot use them against us.\u201d<\/p>\n

After a series of previous failures, the Orb\u00e1n government changed its strategy around the 2018 elections. According to a former telecommunications executive, government actors recognized that it was too difficult and costly to build a new telecommunications company from scratch. Therefore, they focused instead on acquiring one from the existing players in the market.<\/p>\n

There was also a change in who would implement the plans. Whereas previously state-owned companies had tried to gain a foothold in the telecommunications sector, this time it was officially private businessmen behind these attempts. In reality, however, these private actors maintained close ties to the government and the Prime Minister personally.<\/p>\n

The first one to try was Viktor Orb\u00e1n\u2019s childhood friend, L\u0151rinc M\u00e9sz\u00e1ros, who by then had become one of the most important players in the pro-government business empire. When it was suggested in early 2018 that Norwegian-owned Telenor might withdraw from the region and sell its Hungarian subsidiary, it was L\u0151rinc M\u00e9sz\u00e1ros\u2019 company Konzum that made a bid for Telenor.<\/p>\n

This deal also brought the emergence of a player who later became a key figure in the government\u2019s expansion into telecommunications. This was Konzum\u2019s head Gell\u00e9rt J\u00e1szai. He told Hungarian business news site Portfolio.hu in January 2018 that one of his group\u2019s \u201cpriority areas for acquisition and development is IT the and telecommunications sector,\u201d and that \u201cTelenor fits into this strategy because of its activities.\u201d<\/p>\n

M\u00e9sz\u00e1ros\u2019 acquisition of Telenor was thwarted by the Czech PPF group, and it was then that pro-government actors tried to acquire Magyar Telekom, a much bigger company, at the end of 2018. J\u00e1szai was also in the background of this takeover bid. According to an acquaintance, J\u00e1szai told him that Telekom could certainly be acquired with the right offer. \u201cGell\u00e9rt told me that one could also go to Deutsche Telekom [and convince them to sell] with money,” the source recalled.<\/p>\n

Although this acquisition ultimately failed too, J\u00e1szai later spearheaded the government\u2019s telecommunications expansion as head of another company called 4iG. Leading 4iG has made him one of the most prominent players in the pro-government business empire \u2013 even though around 2010 his future did not look too bright under the new Fidesz government.<\/p>\n

II. THE BROKER TYPE<\/h2>\n
\"\"

Gell\u00e9rt J\u00e1szai became a key player in the government’s plans \u2013 Photo: 4iG<\/p><\/div>\n

Gell\u00e9rt J\u00e1szai has a reputation of being a professional businessman who negotiates with a dynamic, overwhelming style. However, this skill did not help him with Lajos Simicska, PM Orb\u00e1n\u2019s former ally.<\/p>\n

After the change of government in 2010, J\u00e1szai approached Simicska, the then leader of the economic empire behind the Fidesz party. J\u00e1szai spent years building a real estate development company group called SCD, which by spring 2011 was in serious trouble. The 2008 economic crisis made it increasingly difficult fro them to obtain loans from banks. J\u00e1szai hoped to get help from the state, which is why he negotiated with Simicska, who at that time had a strong influence over the government\u2019s economic decisions.<\/p>\n

According to a source familiar with the details of the meeting, it was also clear from this meeting that J\u00e1szai was a \u201cbroker type\u201d who liked to use business language. For example, he dropped the term \u201cloan-to-value,\u201d which refers to the ratio between the loan taken out and the property or other asset used as collateral.<\/p>\n

However, J\u00e1szai misjudged his negotiating partner. Simicska was notorious for his dislike of modern technology and complicated business language. \u201cLajos liked a transaction to be explained in plain, simple language that could be deduced like an equation,\u201d an old acquaintance explained. Simicska disliked J\u00e1szai\u2019s style so much that he left the meeting.<\/p>\n

\u201cLajos sat there and said \u2018fuck your loan-to-value\u2019 and then got up and left,\u201d a source familiar with the details of the meeting said.<\/p><\/blockquote>\n

After this, it was not surprising that J\u00e1szai did not get support from the state. He also negotiated directly with the then management of the Hungarian Development Bank (MFB), which was under Simicska’s influence, about a loan from the state-owned bank, but they too turned him down, saying that the returns on the large real estate developments planned by SCD at Lake Balaton were not sufficiently calculated.<\/p>\n

J\u00e1szai had started building his company SCD in the early 2000s. That was when he began buying up campsites on the shores of Lake Balaton from the state and municipalities with the aim of building hotels there. \u201cThe goal was to upgrade Balaton from this tent camping world [which dominated the lakeshore],\u201d a source with close knowledge of SCD\u2019s activities said. J\u00e1szai had big ambitions, with over \u20ac400 million worth of developments in mind.<\/p>\n

As SCD expanded, J\u00e1szai also began to build his political connections. He made friends among the then governing Socialists as well as with Fidesz, which was in opposition at the time. According to one of his acquaintances, J\u00e1szai came into contact with Fidesz MPs from constituencies around Lake Balaton and, among others, met with Orb\u00e1n too.<\/p>\n

There were other signs that SCD enjoyed considerable political support. After the purchase of the campsites on Lake Balaton, in 2006, the Hungarian Parliament passed a law benefitting the company. This new legislation, supported by both government and opposition parties, increased the allowable building density in the areas concerned. \u201cPolitics helped SCD to be able to build hotels,\u201d a person familiar with SCD\u2019s affairs said. According to the source, J\u00e1szai was then maneuvering shrewdly for a while, bringing in investors, getting the legislation changed, and involving banks in the transactions.<\/p>\n

But SCD ran into difficulties when the economic crisis hit. Privately owned banks were less willing to finance hotel constructions after the purchase of the campsites, while state-owned financial institutions, then under the influence of Fidesz and Simicska, did not help either. J\u00e1szai was thus forced to announce in August 2011 that he would sell his companies at Balaton and in the tourism industry, which got liquidated shortly afterwards.<\/p>\n

Although he was involved in various transactions with the government, J\u00e1szai only came back into the spotlight when he helped L\u0151rinc M\u00e9sz\u00e1ros, who by then had become a major player in the pro-government business empire, to acquire a substantial real estate fortune. In 2016, J\u00e1szai\u2019s Konzum group acquired the Hunguest Hotels hotel chain from the former Socialist-affiliated businessman Tam\u00e1s Leisztinger, which was subsequently acquired by M\u00e9sz\u00e1ros in several stages. \u201cFor Gell\u00e9rt, this was his entry into the pro-government elite,\u201d said an acquaintance of J\u00e1szai, referring to the fact that the deal was done in a way that satisfied both Leisztinger and the M\u00e9sz\u00e1ros family.<\/p>\n

J\u00e1szai\u2019s position benefitted also from the fallout between Simicska and Orb\u00e1n in 2014-2015. The pro-government business empire, by then centered around L\u0151rinc M\u00e9sz\u00e1ros, needed people with his kind of serious financial experience. \u201cWhen the battle started, L\u0151rinc started promoting J\u00e1szai,\u201d a source close to the government said, referring to the conflict between Orb\u00e1n and Simicska.<\/p>\n

For M\u00e9sz\u00e1ros, who was not familiar with the corporate sector, J\u00e1szai\u2019s help came in handy. \u201cWhen he started working with L\u0151rinc, J\u00e1szai helped him with abandoning doing his bookkeeping on a chequered paper,” a businessman close to the government who knows both M\u00e9sz\u00e1ros and J\u00e1szai said. By comparison, J\u00e1szai spoke English \u2013 M\u00e9sz\u00e1ros did not \u2013, has worked with foreign investors, and was familiar with the international financial world.<\/p>\n

J\u00e1szai thus gradually took on an increasingly important role in the management of the M\u00e9sz\u00e1ros-owned empire, which was centered around the publicly-traded Opus Global company. His strong position was also indicated by the fact that in March 2017, the cover of the then pro-government Figyel\u0151 weekly featured a photo of J\u00e1szai with the caption \u201cL\u0151rinc M\u00e9sz\u00e1ros\u2019 right-hand man.\u201d<\/p>\n

However, J\u00e1szai had more serious ambitions than to be second in command to M\u00e9sz\u00e1ros, a former gas fitter from a small village called Felcs\u00fat. At the end of 2017, he approached an IT company called 4iG, saying he wanted to buy it. This company was one of the few Hungarian-owned IT companies capable of handling projects worth millions of euros, which offered a strong basis for potential further expansion.<\/p>\n

Although J\u00e1szai was still officially a senior official in M\u00e9sz\u00e1ros\u2019 company group at the time, a source familiar with the negotiations said that he did not appear to be \u201crepresenting M\u00e9sz\u00e1ros, he came on his own behalf.” J\u00e1szai first took over the management of 4iG in the summer of 2018, and then, after buying out M\u00e9sz\u00e1ros in the following two years, he officially became the majority owner of the company. Soon, 4iG received government support to become an even bigger player in the Hungarian IT sector.<\/p>\n

III. INTERNAL WAR<\/h2>\n
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Antal Rog\u00e1n with Viktor Orb\u00e1n \u2013 Photo: Orb\u00e1n’s Facebook page<\/p><\/div>\n

In the spring of 2019, Antal Rog\u00e1n, arguably the Prime Minister\u2019s closest confidant and head of the Prime Minister\u2019s Cabinet Office, extended his influence into a new business sector. Under his watch, state IT procurements began to be centralized. In practice, this meant that the Digital Governmental Agency (DGA), an organization under the minister, took over the procurement of IT equipment for all state institutions.<\/p>\n

This was a clear sign that Viktor Orb\u00e1n\u2019s inner circle recognized the significance of IT. Previously, this was not always the case.<\/p>\n

\u201cFor a long time after 2010, IT was regarded as a stepchild within the government,\u201d a former government official said, referring to the fact that IT had been under several different state secretariats in recent years. Orb\u00e1n himself was known to be averse to using smartphones and computers.<\/p>\n

\u201cYou just have to look at the kind of people who move around there and you can see that they are not early adopter digital users,\u201d a senior executive at an IT company that also works on government contracts said regarding the pro-government elite.<\/p><\/blockquote>\n

But the aversion to IT had changed over time. Government actors recognized that there is a huge business opportunity. They saw, for example, that the EU was providing more and more funding for digitalization, which is expected to grow even more in the future. In addition, IT is an excellent platform for shady deals and even corruption based on overpriced contracts. There is no standardized unit price for how much a particular job costs, so it is very difficult to say whether a project was expensive or not. \u201cIt is difficult for an outsider to understand, to assess what is happening, what is the real value of a service on an invoice,\u201d a former head of a telecommunications company explained.<\/p>\n

This was a market where Antal Rog\u00e1n\u2019s office has emerged as a major player. He already had experience in transforming industries where the state had a significant presence. For instance, he organized the previously decentralized public advertising spending under a single agency. Contracts were then distributed by this agency to a few selected companies.<\/p>\n

Rog\u00e1n now did something similar with the IT market. Typically, DGA concluded large contracts, so-called framework agreements, worth several million euros with consortiums of IT companies. 4iG has become a member of several such consortiums. DGA then contracted only consortiums with such framework agreements for subsequent IT procurements. \u201cIn this way, the state wanted to filter the companies participating in IT tenders. They wanted to reduce competition,\u201d the head of an IT company that also works for the state said.<\/p>\n

Rog\u00e1n, acting as the Prime Minister’s right-hand man, however, has hurt the interests of other powerful people in the government by this move that favored 4iG.<\/p>\n

These developments were followed by suspicion especially by the inner circle of Minister of Interior S\u00e1ndor Pint\u00e9r. Pint\u00e9r, a former police officer, has long had a strong influence in a specific area of IT that concerns national security issues, such as election infrastructure, authenticity certifications, and CCTV cameras. One of Pint\u00e9r\u2019s closest allies, his former state secretary L\u00e1szl\u00f3 Tasn\u00e1di, is linked to several IT companies that have also worked on state contracts.<\/p>\n

The interior minister was dissatisfied about losing the oversight of public IT contracts, which led to a conflict between Pint\u00e9r and Rog\u00e1n. “It was a question of authority, which territory belonged to whom,” an acquaintance of Pint\u00e9r said about the confrontation. Even in the 2022 Hungarian election campaign, the sable rattling with Pint\u00e9r kept Rog\u00e1n, who was otherwise playing a key role in managing the election campaign, busy, according to a source who regularly talks to government officials. However, Rog\u00e1n ultimately emerged victorious from the conflict. Rog\u00e1n gained not only the oversight of the intelligence services, which also have strong links to the IT sector and were formerly under the Ministry of Interior, but also, among others, the state-owned company called IdomSoft, which provided the IT background for the elections.<\/p>\n

Pint\u00e9r was not the only minister bothered by the reshuffle in the IT sector. This was also true for Minister for Innovation and Technology L\u00e1szl\u00f3 Palkovics, who was an influential member of the government at the time and responsible for many high-profile portfolios.<\/p>\n

The companies of Palkovics\u2019 friend and former business associate Zolt\u00e1n Fauszt, among others SDA Informatika Ltd., were also important players in state-dominated IT sector at the time. For example, they developed Neptun, the main online administration and communications system for Hungarian higher educational institutions, and they also sold a document management software to the state administration.<\/p>\n

With the growth of 4iG, this situation started to change. \u201cPalkovics\u2019s man and business persona, Zolt\u00e1n Fauszt, was pushed out,\u201d a former government official described the process. For Fauszt, one major blow was when Orb\u00e1n removed him from an influential state body, the National Council for Telecommunications and Information Technology (NHIT), at the end of 2020. NHIT is the government\u2019s advisory body on IT and communications matters, including providing opinions on state IT procurement. According to an IT company executive, the advantage of NHIT membership is that it gives an early signal of what\u2019s going to happen in the public IT sector. According to the source, with Faust kicked out, \u201c[Palkovics\u2019s] access to IT was lost.\u201d<\/p>\n

This was a sensitive issue for Palkovics and contributed to him offering his resignation to the Prime Minister at the end of 2020. \u201cIt was sometime in December, the conversation happened before Christmas,\u201d one source said of the meeting where Palkovics and Orb\u00e1n discussed the topic. While Palkovics remained a member of Orb\u00e1n\u2019s government for two years after the meeting, his position gradually weakened (when contacted, Palkovics said he did not want to comment on the issue).<\/p>\n

Finally, 4iG now had a clear path to dominate the IT sector. In the meantime, however, the company already took serious steps towards conquering another industry.<\/p>\n

IV. TAILWIND<\/h2>\n
\"\"

J\u00e1szai turned his attention to the telecom sector \u2013 Photo: 4iG<\/p><\/div>\n

Around 2019, it became clear that government circles had their eyes on one of the most valuable players in the Hungarian telecoms industry.<\/p>\n

This was Invitech, a company that was less well known to the public but was one of the most important companies in the telecommunications market. It was formerly part of the telecoms company Invitel, but the new owners who took over the company in 2017 spun it off and made it a separate company. Its value was partly because it had a stable customer base of thousands of companies and also owned one of the few backbone networks in the country. This is a network of wires covering the whole country, without which it is almost impossible to build a national telecommunications company.<\/p>\n

Invitech was owned by an investment fund operating in Central Europe, with the Chinese state providing the bulk of the funding, but Hungary was also a minority investor, with around 7 percent, through the Hungarian state-owned Eximbank. These investment funds usually operate by buying up companies with a plan to selling them on a few years later, preferably at a high profit, after some restructuring and development.<\/p>\n

This was also the owners’ aim with Invitech, which could in principle have been of interest to several telecommunications companies operating in Hungary at the time with the aim of expanding, such as Telenor or Vodafone. But instead, it was state-owned MVM, Hungary\u2019s national energy company, that was the first to approach Invitech as a buyer in 2019. According to sources familiar with the telecoms market, this was an odd move, as MVM had a primarily energy portfolio, and they already had their own fibre-optic network. Negotiations had gone no further than a few meetings, but in the meantime, a more serious-looking bidder had come forward.<\/p>\n

This was 4iG, led by Gell\u00e9rt J\u00e1szai. J\u00e1szai did not come alone, but made the bid together with Zsolt S\u00e1recz, the head of Antenna Hung\u00e1ria, a then state-owned telecommunications company, which later became part of 4iG, and Pedro Vargas Santos, the Portuguese head of Alpac Capital, an investment firm that later invested in 4iG. The Portuguese investor’s father is Portuguese right-wing politician M\u00e1rio David, who has been a friend of Viktor Orb\u00e1n for decades. In 2016, Orb\u00e1n officially awarded the Portuguese politician with a state award and David later helped the Hungarian PM as an advisor on European Union affairs.<\/p>\n

Although it was supposed to be a partly private investor’s bid, the offer included state-related arguments, according to documents seen by Direkt36. The bidders specifically referred to the importance they attached to the acquisition of Invitech for reasons of both national security and national economy. They also stressed that the backbone network owned by the company is crucial for Hungary from both a military and intelligence perspective.<\/p>\n

Invitech\u2019s owners were open to the deal, but they had one problem: they considered the offer to be too low. However, 4iG’s position was strengthened by the fact that they clearly had the full support of the Hungarian government. According to sources familiar with the details of the process, foreign minister P\u00e9ter Szijj\u00e1rt\u00f3 also raised the issue in his talks with Chinese government officials and urged the Chinese state investment firm involved in Invitech to support the acquisition initiated by 4iG. “The Chinese apparently did not understand why Hungarian diplomacy was lobbying for a private company\u2019s transaction,” recalled one source, who said the Chinese position was that the investment should be sold at the highest possible price.<\/p>\n

Chinese pressure failed to materialize, and CEE Equity Partners, the investment firm representing Invitech’s owners, continued to negotiate the sale. A key episode in this process was the meeting with Viktor Orb\u00e1n in London in mid-2021. Negotiations then accelerated, and the company was finally sold at the price set by Invitech’s owners, for nearly \u20ac290 million (HUF 100 billion).<\/p>\n

According to a source familiar with details of the negotiations, Invitech’s owners were able to negotiate such a good price because the political environment was favorable to them.<\/p>\n

“At the time, it seemed that the Hungarian opposition might have a chance in the 2022 elections and there was a rush on the part of the Orb\u00e1n government to put as many assets as possible in friendly hands,” the source said.<\/p><\/blockquote>\n

That year, 4iG also made another major acquisition: in March 2021, it announced its intention to buy DIGI, one of the country’s largest providers of landline services \u2013 telephone, internet, and cable TV.<\/p>\n

DIGI was perhaps the most dynamic player in this market sector. Its low prices made them a tough competitor to larger, better-established companies, including Magyar Telekom. Its owner was a Hungarian billionaire from Transylvania, Zolt\u00e1n Tesz\u00e1ri, who had long-term plans in Hungary. According to a source close to Tesz\u00e1ri, the businessman was known to be “in love with the company” and did not want to sell it, especially after spending a considerable amount of money on DIGI’s expansion in Hungary.<\/p>\n

In the end, however, he was persuaded to sell, and the attitude of state regulators played a crucial role, according to a former senior DIGI executive and sources with knowledge of the telecoms market. DIGI has been fined several times by the telecoms authorities and was involved in a lengthy dispute with the Hungarian Competition Authority (GVH), when it tried to buy up Invitel. The authority first granted it a license in 2018, but then withdrew it with a fine and only granted it again almost two years later. The final blow, however, came when the authorities refused to allow DIGI to participate in the spectrum auction announced for 2020, citing a previous irregularity. This blocked the way for DIGI to become a full-fledged player in the mobile operator market and compete with the three existing players, Telekom, Telenor, and Vodafone.<\/p>\n

According to a source close to Tesz\u00e1ri, the owner of DIGI eventually decided to sell DIGI. “He realized that the regulators could strangle the company,” the source said.<\/p>\n

It is difficult to assess how well-founded regulatory actions against DIGI were. Several market players have described the company as a rough-around-the-edges Eastern European business that was pushing the boundaries and not always respecting the rules. However, according to a telecoms market source, the authorities should not necessarily have reacted by making DIGI impossible to operate in Hungary. “The regulator’s job should have been to steer DIGI towards compliance and thus making it a strong competitor in the market,” the source said.<\/p>\n

Meanwhile, it is striking how different the authorities’ approach towards 4iG has been. They usually face absolutely no resistance from regulatory bodies.<\/p>\n

In the case of the Invitech acquisition, for example, 4iG reported the transaction to the GVH on September 14, 2021, as their approval was necessary to finalize the deal. Three days later, the authority announced that there were no grounds to scrutinize the case, thus removing the last obstacle to the acquisition.<\/p>\n

In the case of 4iG\u2019s acquisition of DIGI, GVH did not even have to look at the deal. In December 2021, the Hungarian government issued a decree classifying the acquisition of 4iG as a “merger of national strategic importance in the public interest,” which meant that the competition authority could not have investigated the deal even if it had wanted to.<\/p>\n

It was not only through official and regulatory means that the state helped the rise of 4iG. The company has also benefited from a lot of state resources, for example by becoming one of the largest beneficiaries of the Hungarian National Bank’s so-called Growth Bond Program. Under this program, the central bank bought bonds issued by various companies, making it a creditor of these companies. According to calculations of G7, an independent business publication, 4iG received \u20ac235 million (HUF 84 billion) of state funding through the program. This was “brutal state aid,” a former government official working in the economic field said of what he described as extremely favorable conditions of the central bank’s program.<\/p>\n

However, 4iG received significant state support beyond that. These included an item \u2013 also worth over \u20ac189 million (HUF 70 billion) \u2013 which the company received in secret.<\/p>\n

V. THE SECRET MONEY<\/h2>\n
\"\"

Finance minister Mih\u00e1ly Varga (on the right) \u2013 Photo: Varga’s Facebook-page<\/p><\/div>\n

On 15 December 2021, the Hungarian National Bank published a brief statement announcing that it had granted permission for two investment funds to merge. This did not attract much attention; it was not covered even in the business press at all. But this seemingly boring financial act was in fact an important step in a secret government operation to grant 4iG access to tens of billions of forints of public money.<\/p>\n

According to documents obtained by Direkt36, a private equity fund called iG COM received \u20ac200 million (HUF 72 billion) of public funds at the end of 2021, following decisions by a state investment company, Sz\u00e9chenyi Funds. iG COM then spent almost all the money it received to buy shares in 4iG in a so-called private placement, thus providing the company with extra funds. The investment has a maturity of 20 years, so the public funds can stay in 4iG for up to that period.<\/p>\n

The Sz\u00e9chenyi Funds’ board documents in our possession show that this capital injection was specifically needed to finance the expansions of the telecoms and IT company. In other words, an officially private company received tens of billions of forints of taxpayers’ money to expand its empire.<\/p>\n

iG COM is currently 4iG’s largest shareholder with a stake of nearly 39 percent. 4iG regularly refers to the fund as being J\u00e1szai’s interest, and J\u00e1szai uses this as a basis for claiming to be the majority owner of 4iG, with a 52 percent stake. Yet the bulk of the funding for the iG COM share purchase was provided by the state, thus came from Hungarian taxpayers.<\/p>\n

The documents show that the whole investment process started with a secret government ruling. The government decided that the Telecommunications Sub-Fund, which was under the Sz\u00e9chenyi Fund Management with a capital of \u20ac173 million (HUF 64 billion), would merge with the iG COM private equity fund. The Sz\u00e9chenyi Funds, through another fund it managed, injected a further HUF 8 billion into iG COM, thus creating a total state investment of \u20ac200 million (HUF 72 billion).<\/p>\n

A series of steps were taken to ensure the legality of the investment. As EU rules limit the amount of state aid that can be granted to companies to avoid distortions of competition, the firm managing the investments of Sz\u00e9chenyi Funds and iG COM commissioned a so-called MEIP test. The purpose of this test is to check for prohibited state aid. They look to see whether the investment is one that would be worthwhile for a private investor, i.e. whether a private company would make the same investment decision under the same conditions.<\/p>\n

This test does not have to be made public, nor does it necessarily have to be reported to the European Union.<\/p>\n

“The MEIP test is something that does not have to be submitted to the European Commission, but has to be prepared before the investment, put in the drawer and if there is an investigation, it is the first thing they ask for,” a competition lawyer explained the practice on the MEIP tests to Direkt36.<\/p><\/blockquote>\n

The MEIP test on Sz\u00e9chenyi Fund decisions was carried out by consultancy firm DLA Piper Business Advisory. It is linked to global law firm DLA Piper, whose local branch has won several high-value government contracts in recent years. The advisory firm concluded in the test that “a private market investor would be likely to complete the transaction” and that the transaction therefore meets the “economic analysis requirements of the MEIP test.”<\/p>\n

The firm reached this conclusion based at least partly on its examination of iG COM’s business plan, which included a forecast of the dividends that 4iG was expected to pay over the next 20 years and the stock price in 2041. The document states that \u201cthe business plan is considered to be realistic overall,\u201d although the consultancy firm added that \u201cits robustness and feasibility\u201d had not been assessed. (DLA Piper Business Advisory told Direkt36 that \u201cwe are unable to provide information on this matter due to our confidentiality obligations.\u201d)<\/p>\n

Sz\u00e9chenyi Funds’ own risk management experts were less optimistic about the investment. In their report to the Board of Directors in November 2021, they identified a number of risk factors, most of which they categorized as “low” to “medium,” but one risk they identified as “high” was specifically related to returns. “The very long maturity of the iG COM Private Equity Fund of 20 years (and one extension) increases the risk of the investment,” they wrote in the report, adding that “over the long term, the movement of the stock price is particularly unpredictable.”<\/p>\n

Legal due diligence also found a “high” category of risk in the transaction. This review was carried out by another large law firm, Oppenheim, and revealed a conflict of interest in relation to J\u00e1szai’s role.<\/p>\n

He appeared as an actor at several points in the same transaction. J\u00e1szai is the owner and one of the managers of iKON Investment Fund Management, the company that manages the iG COM capital fund. Fund managers are needed because equity funds are practically a big pile of money lying idle, waiting to be invested somewhere. It is the fund manager who decides what that investment should be.<\/p>\n

What has happened here is that the fund manager iKON, which is owned by J\u00e1szai, has decided to invest the huge amount of money in iG COM into 4iG, which is also at least partly owned and managed by J\u00e1szai.<\/p>\n

“The managers and owner of the Company are involved (as owner or manager, decision maker) in certain companies identified for the proposed investments of the New Fund, which may lead to a potential conflict of interest in the decision situation,” Oppeinheim wrote in its report. This somewhat complicated wording referred to J\u00e1szai being on both sides of the investment deal, which lawyers said raised conflict of interest concerns.<\/p>\n

These concerns did not block the deal. J\u00e1szai’s fund received the investment, and on the afternoon of December 20, 2021, in a video call via Teams, the so-called investment committee of iG COM \u2013 of which J\u00e1szai is a member \u2013 decided to buy the 4iG shares.<\/p>\n

The state-owned Sz\u00e9chenyi Funds was given some insight into the use of the investment it had provided to 4iG. Then CEO of the fund manager, D\u00e9nes Jobb\u00e1gy, was appointed to the supervisory board of 4iG. His colleagues raised concerns with him relatively soon after the transaction, just over six months after it had taken place. In a preparatory paper for the planned board meeting in September 2022, Jobb\u00e1gy’s colleagues wrote of 4iG that “the company’s first half results this year are significantly below the 4iG consolidated financial plan provided to us in the iG COM investment.” In a table, it was shown that the revenue projected for the first half of the year was 31 percent below the target, and the profit after tax was 90 percent below what had been planned.<\/p>\n

The preparatory material also pointed out that the stock price is not where it was in the plan, but they point out 4iG\u2019s enormous debt as the biggest problem. According to the figures they cite, 4iG is about seven times more indebted than its telecom peers. “In other words, 4iG Plc has a much higher level of indebtedness than its direct competitors,” the paper says, adding that meanwhile “the financing of the planned Vodafone acquisition has not yet been secured.”<\/p>\n

As the paper pointed it out, at the time 4iG was already in the midst of preparing its biggest deal ever. This was the takeover of one of Hungary’s largest telecoms companies, Vodafone\u2019s local Hungarian subsidiary.<\/p>\n

VI. THE VODAFONE DEAL<\/h2>\n
\"\"

Orb\u00e1n at a Vodafone event \u2013 Photo: Orb\u00e1n’s Facebook page<\/p><\/div>\n

At the end of August 2022, CEO of Vodafone Hungary Amanda Nelson held a staff meeting for the company\u2019s employees at Vodafone\u2019s Budapest headquarters. With fewer people coming in to work since the COVID-19 pandemic, many only joined the forum online. \u201cIt\u2019s a hard and sad day for all of us,\u201d Nelson began her speech in English, according to one of the people present at the meeting. She then announced that the company would be sold and the buyers are 4iG and the Hungarian state.<\/p>\n

Participants of the meeting were shocked at the announcement. \u201cThe mood was awful, it was like a punch in the gut,\u201d a Vodafone source recalled. Some employees were mainly concerned about the buyer. They asked the CEO several tough questions about this.<\/p>\n

\u201cHow does it fit to Vodafone\u2019s values to sell Vodafone Hungary to the Hungarian state and to a company governed by the gang of the illiberal, corrupt, nepotistic, xenophobic and homophobic Hungarian dictator Viktor Orb\u00e1n?,\u201d one online participant asked.<\/p><\/blockquote>\n

The question referred to Vodafone\u2019s values because the British-owned company has repeatedly stated its commitment to inclusivity and acceptance. According to a former Vodafone employee, a few years ago it was common for the management to turn up at the office in rainbow color outfits during the Pride season. The reason for the outcry expressed in the question was that the new owners of Vodafone represented a completely different set of values (the Hungarian government has introduced several laws aimed at restricting the rights of LGBTQ people). Nelson did not respond to the question in substance, neither at the staff meeting nor at subsequent management meetings.<\/p>\n

Vodafone staff tried to overcome their disappointment with humor. \u201cThe running joke about the sale at the time was that Andi just wanted a new mobile phone, and L\u0151rinc misunderstood her,\u201d a former employee of the company recalled, referring to L\u0151rinc M\u00e9sz\u00e1ros and his wife Andrea V\u00e1rkonyi, although M\u00e9sz\u00e1ros was no longer involved with 4iG.<\/p>\n

With the acquisition of Vodafone Hungary, Viktor Orb\u00e1n\u2019s long cherished dream has come true. 4iG has become one of most important players in the Hungarian telecommunications sector, alongside Magyar Telekom, thanks to previous acquisitions and the acquisition of Vodafone.<\/p>\n

Finally, it has paid off to approach telecommunications players of the Hungarian market with takeover bids. After an unsuccessful attempt to acquire Magyar Telekom, the Hungarian state bought a 25 percent stake in Telenor Hungary at the end of 2019, but was unable to increase its influence in the company. In the meantime, however, Vodafone, headquartered in the UK, was facing financial difficulties internationally hence the sale of its Hungarian subsidiary came up as an option. \u201cThe stock price was very bad at the time and the company was going down,” a source familiar with Vodafone\u2019s affairs said.<\/p>\n

This was how Vodafone and 4iG\u2019s interests met each other. Negotiations on the acquisition were launched at the end of 2021 between Vodafone\u2019s UK parent company and representatives of the Hungarian side. \u201c4iG\u2019s representatives were in London in the fall of 2021 and at that time they indicated their intention to buy,\u201d a source familiar with Vodafone’s affairs said. But things got more serious after Viktor Orb\u00e1n received Vodafone Group CEO Nick Read in his office on February 22, 2022. \u201cThat’s where the story started,\u201d a source familiar with the details of the meeting said.<\/p>\n

Orb\u00e1n was joined at the meeting by head of his Cabinet Office Antal Rog\u00e1n, and M\u00e1rton Nagy, the current Minister of Economic Development, who was then the prime minister\u2019s chief economic advisor. In addition to Nick Read and Amanda Nelson, Vodafone was also represented by Anita Orb\u00e1n (no relation to the PM), then deputy CEO of Vodafone Hungary for corporate relations.<\/p>\n

According to a source familiar with the details of the meeting, the prime minister and the Vodafone CEO touched upon several topics, including the development of the 5G network, spectrum auctions, and the issue of special telecommunications taxes. Afterwards, the prime minister, without mentioning the name of 4iG, said that Vodafone was of great interest and that there would be a Hungarian buyer for the company. In response to the question, Read said that they were open to a business deal. \u201cOrb\u00e1n\u2019s question did not come as a surprise to Nick Read,\u201d the source said, adding that the CEO had traveled to Budapest specifically to \u201chear this request out.\u201d<\/p>\n

Once the intentions were clear, the details were worked out. According to sources familiar with Vodafone\u2019s affairs, they were not negotiated directly by 4iG but by its advisors in consultation with Vodafone\u2019s investment department. This provided the outline for the agreement through which 4iG acquired a 51 percent stake in Vodafone Hungary and the Hungarian state a 49 percent stake. The transaction was worth 1.7 billion euros, for which the buyers received the company\u2019s 3.8 million customers and its professional staff (as Hungarian news site Telex reported, the acquisition was financed by a credit line from the Hungarian Development Bank MFB with a state guarantee, and Chinese state banks also played a role in the financing).<\/p>\n

After the deal was finalised, J\u00e1szai and his lieutenants visited Vodafone in the fall of 2022 to meet the management of the newly acquired company.<\/p>\n

The meeting took place in an awkward atmosphere. \u201cYou could feel the tension right from the start,\u201d one participant said, adding that sharp, suspicious stares of Vodafone employees followed J\u00e1szai\u2019s team while they were going upstairs to the conference room, and this made incoming new bosses visibly uncomfortable.<\/p>\n

The differences were also evident in the different dress codes of the two companies. Vodafone Hungary people were dressed more casually, wearing trousers, T-shirts, even flip-flops and Hawaiian shirts in the office. In contrast, J\u00e1szai and his colleagues arrived for the introductory meeting in three-piece suits and white shirts \u2013 albeit without a tie.<\/p>\n

J\u00e1szai and his entourage have always put a lot of effort into their appearance. They had worked on creating an image of the company that would make it acceptable in the West. The Orb\u00e1n government\u2019s long-standing strong German ties have helped significantly with this goal.<\/p>\n

VII. FOREIGN AMBITIONS<\/h2>\n
\"\"

Orb\u00e1n and Merkel in 2019 \u2013 Photo: Hungarian government<\/p><\/div>\n

When Viktor Orb\u00e1n and Angela Merkel, then German Chancellor, sat down for an official working lunch in Sopron, Western Hungary, on August 19, 2019, with a table set with white tablecloths and floral arrangements, the occasion was to celebrate the 30th anniversary of the pan-European picnic. This was when Hungary opened its border for East Germans who wanted to cross to the West. However, in addition to commemorating the historic event, there was also a concrete issue of major importance on the agenda.<\/p>\n

The Hungarian prime minister later hinted publicly at his press conference that he and Merkel had also discussed military-industrial cooperation between the two countries, but according to several government and pro-government sources, they also discussed this matter in more specific terms.<\/p>\n

In essence, an agreement was reached between Merkel and Orb\u00e1n that Hungary would serve as a base for the German defense industry, similar to how it is playing an outsourcing role for the German car industry. For Merkel, this seemed advantageous then, because at the time (before the outbreak of the war in Ukraine) there was no clear political support for German defense industry development at home.<\/p>\n

“Her aim was to secure the German military industry\u2019s position in Hungary,” a Hungarian government source familiar with the details of the negotiations explained.<\/p><\/blockquote>\n

The agreement was important for Orb\u00e1n because the Hungarian military\u2019s development program was already under way and, according to a source close to the government, the prime minister wanted “not only to buy weapons, but also to sell them.”<\/p>\n

The result of this 2019 deal was the arrival in Hungary of Rheinmetall, the largest German defense company. The first step was taken when it was announced in August 2020 that the German company and the Hungarian state would set up a joint venture for the manufacturing of combat vehicles in Hungary. Later, another joint venture was also set up to produce ammunition.<\/p>\n

However, the German defense giant did not only enter into a joint venture with the Hungarian state. Rheinmetall also invested in 4iG as part of a private placement. By becoming a shareholder of more than 25 percent, it helped the Hungarian company to obtain the fresh capital it needed for further expansion. A year later, Rheinmetall also set up a joint IT company with 4iG to provide digital services to the German defense company’s Hungarian and foreign subsidiaries.<\/p>\n

According to sources close to 4iG, the key to Rheinmetall’s entry is not necessarily the specific joint work, but the international recognition that 4iG could gain. “The involvement of Rheinmetall was a shrewd move,” a source who is still working for 4iG group said. The source added that Rheinmetall, which is more than 130 years old, is listed on Western stock exchanges, so “4iG can show the West that it is a serious company.”<\/p>\n

The international acceptance of 4iG is also important to Viktor Orb\u00e1n. “His goal is to have something that can be taken seriously abroad, that can involve Rheinmetall, or that can do business with the Israelis,” a source with ties to influential government players said, referring to 4iG’s involvement in an Israeli satellite company, Spacecom. The source added that he hears from government officials that Orb\u00e1n considers 4iG “a terribly important thing” and sees it as a “flagship of the NER.\u201d (NER is a common way in Hungary to refer to pro-government business circles).<\/p>\n

This ambition was reflected when, in July 2021, 4iG announced that it would rely on the advice of several internationally recognized figures in the future. An advisory board had been set up, including members such as Nancy Goodman Brinker, former US Ambassador to Hungary, J\u00e1nos Martonyi, former foreign minister of the Orb\u00e1n government, and Borb\u00e1la Czak\u00f3, former Hungarian Ambassador to London. (Goodman has since quit the board.)<\/p>\n

In the same statement, the company also stressed that it was one of the first in the country to obtain the “anti-corruption corporate governance certification”. This comment was ironic in light of the fact that, a month earlier, 4iG’s offices had been raided by tax investigators working to uncover a VAT fraud ring that had allegedly caused billions of forints in damage. According to the investigative material obtained by Direkt36, the tax investigators concluded that 4iG was part of the network, thus one of the “profit-makers” of the alleged crime. According to the tax investigators, between January 2018 and March 2021, 4iG unlawfully deducted a total of more than \u20ac44 million (HUF 162 million). J\u00e1szai took over the management of the company in July 2018, meaning that he had already been in control of 4iG for a significant part of the period concerned.<\/p>\n

The status of 4iG within the pro-government business empire has not yet been shaken by the VAT fraud case. Indeed, the company remains closely linked to the Hungarian prime minister’s international ambitions in other directions.<\/p>\n

Orb\u00e1n has long been active in the Western Balkans, where he has built close alliances with Serbian President Aleksandar Vucic, who shares his autocratic tendencies, Bosnian Serb leaders, and other influential figures in the region. One important element of Orb\u00e1n’s Balkan strategy, according to a source close to the government, is that the previously strong German-Austrian influence in the region has weakened, and Orb\u00e1n is trying to replace it. “Orb\u00e1n is exploiting this weakness and trying to make his mark there,” the source explained, noting that if the Western Balkan countries join the EU, the Hungarian prime minister’s position will be stronger inside the EU.<\/p>\n

Part of this strategy is the “outward investment,” a favorite theme of Orb\u00e1n. “Investment in the Balkans is important to him because Orb\u00e1n sees the Balkans as a region where he can play a leading regional role. The Balkans is where we can be the West,” a source close to Hungarian government officials said.<\/p>\n

Orb\u00e1n considers 4iG’s role in this process so important that, according to one participant, he specifically mentioned the company at this year’s meeting in K\u00f6tcse, the annual gathering of government politicians and pro-government intellectuals, when talking about the \u201coutward investment\u201d process. 4iG is indeed active in this area, having bought telecoms companies in Albania and Montenegro, and at one point was close to buying a large IT company in Serbia too.<\/p>\n

What matters most to the Hungarian public, of course, is what 4iG’s expansion means for consumers in the country. Those familiar with the telecoms market expect mainly negative consequences.<\/p>\n

VIII. THE REAL LOSERS<\/h2>\n
\"\"

4iG changes the market \u2013 Photo: 4iG<\/p><\/div>\n

Mobile phone plans were already extremely expensive in Hungary before 4iG transformed the telecommunications market. This was confirmed by a study commissioned by the European Commission which compared landline and mobile phone tariffs in member states in 2021, taking into account price levels in each country.<\/p>\n

According to the report, Hungary was one of the most expensive countries in the EU to use mobile phones. The study compared different plans. For example, the monthly price of a plan with 5 GB data and 300 calls was the highest in Hungary at the level of \u20ac36.06. The lowest price in the usage basket with 5 GB data and 300 calls was in Romania at \u20ac4.58.<\/p>\n

While using mobile phone services was expensive, landline internet costs were low in 2021. The research looked at the cheapest landline internet in the EU member states. The EU average was \u20ac20.4. The price in Hungary was even lower as the service was available for \u20ac14.09. The study listed DIGI’s various packages as the cheapest in Hungary.<\/p>\n

According to a source formerly working in the telecommunications sector, the Hungarian market was characterized by the cemented position of three mobile operators, which resulted in limited competition. In the landline internet market, however, UPC and DIGI have generated strong competition in recent years.<\/p>\n

“DIGI had an aggressive, offensive strategy. The other companies hated it because of its unrealistically low prices,\u201d the source said.<\/p><\/blockquote>\n

But this situation changed with the expansion of 4iG. Vodafone became the property of 4iG and the Hungarian state, and the Hungarian state also became a minority shareholder in the company, which has since been renamed from Telenor to Yettel. According to the telecommunications industry source, the state\u2019s presence in two different operators is not very favorable to competition. \u201cIf, for example, Yettel is planning a special offer, the state will be informed about it,\u201d the source said, adding that this information could also reach 4iG. In addition, he said, Magyar Telekom is also not interested in escalating the conflict with 4iG because of their own state contracts.<\/p>\n

However, competition in the landline internet market has tightened even more dramatically. Together with Vodafone Hungary, 4iG has also acquired UPC, a company with a substantial fixed landline network, owned by Vodafone. “Where there was only DIGI or UPC before, competition has now essentially disappeared,” said one telecommunication executive.<\/p>\n

Member of opposition party Momentum M\u00e1rton Ily\u00e9s, who was formerly a head of department at the communications authority, quantified the situation. He concluded that the acquisition of UPC and DIGI created a monopoly for 4iG in a total of 117 municipalities.<\/p>\n

For this reason, Ily\u00e9s turned to the Hungarian Competition Authority this summer, asking it not to allow such monopolies to develop in the municipalities. In his report, the opposition politician also referred to the fact that the competition authority had previously restricted the merger of DIGI and Invitel for similar reasons. However, the authority was not impressed by Ily\u00e9s\u2019 argument and rejected it on the grounds that the government had declared the acquisition of DIGI to be of national strategic importance. This means that the transaction cannot be examined by the competition authority.<\/p>\n

In parallel with the decrease in competition, 4iG started to increase the prices of certain services. In spring 2022, 4iG announced a comprehensive price increase, breaking with DIGI\u2019s previous very favorable prices. In the fall of 2022, DIGI announced another price hike, officially explained by inflation and high energy prices. This spring, a third price hike was announced, also referring to high inflation.<\/p>\n

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The Hungarian National Bank also took notice of the price increase of telecommunications services. In its inflation report published in September 2023, the national bank said, without mentioning specific company names, that telecommunications companies had increased their prices significantly this year, citing inflation reasons. As a result, Hungary is one of the EU member states with the biggest increases in service charges. Moreover, the central bank said that the increases were not always justified and in part boosted telecommunications companies\u2019 profits.<\/p>\n

One telecommunications company executive said the price increases would be a useful tool for 4iG in the future. \u201cIt’s not such a big deal to put together all these acquired companies, because if maths doesn\u2019t add up in one of them, they can always increase the prices,” the source said, suggesting that the biggest challenge facing 4iG is to turn the companies it has acquired in recent years into a single organization.<\/p>\n

“The problem with 4iG\u2019s expansion is that the real loser will be the Hungarian customer,\u201d he added.<\/p>\n

Cover picture: Peter Somogyi (szarvas) \/ Telex<\/em><\/p>","protected":false},"excerpt":{"rendered":"

A Direkt36 investigation has revealed that the Hungarian Prime Minister personally got involved in an acquisition of 4iG, a Hungarian telecommunications company that is officially owned by private individuals. The Hungarian government helped in other ways as well, including a secret investment worth of billions.<\/p>\n","protected":false},"author":19,"featured_media":10467,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"longform.php","format":"standard","meta":{"footnotes":""},"categories":[458],"tags":[461,154,259,351],"ppma_author":[522,547,549],"aioseo_notices":[],"fimg_url":["https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/cimlapkep_4ig_original_1.jpg",2250,1500,false],"authors":[{"term_id":522,"user_id":19,"is_guest":0,"slug":"andraspetho","display_name":"Andr\u00e1s Peth\u0151","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Petho-Andras.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Petho-Andras.png"},"author_category":"","user_url":"","last_name":"Peth\u0151","first_name":"Andr\u00e1s","job_title":"","description":"[:hu]Andr\u00e1s a Direkt36 egyik alap\u00edt\u00f3ja, szerkeszt\u0151je \u00e9s \u00fcgyvezet\u0151 igazgat\u00f3ja. Kor\u00e1bban az Origo vezet\u0151 szerkeszt\u0151je volt, miel\u0151tt a port\u00e1l r\u00e9sze lett a korm\u00e1ny propagandag\u00e9pezet\u00e9nek. Andr\u00e1s dolgozott a BBC World Service-n\u00e9l Londonban \u00e9s a Washington Post t\u00e9nyfelt\u00e1r\u00f3 rovat\u00e1n\u00e1l is. R\u00e9szt vett sz\u00e1mos nagy nemzetk\u00f6zi nyomoz\u00f3 projektben, k\u00f6zt\u00fck a Panama-iratok feldolgoz\u00e1s\u00e1ban. K\u00e9tszer is elnyerte a legjobbnak \u00edt\u00e9lt t\u00e9nyfelt\u00e1r\u00f3 cikkek szerz\u0151inek j\u00e1r\u00f3 Soma-d\u00edjat. T\u00f6bbsz\u00f6r tanult \u00f6szt\u00f6nd\u00edjjal az Egyes\u00fclt \u00c1llamokban: 2008-ban a World Press Institute programj\u00e1ban, 2012-13-ban Humphrey-\u00f6szt\u00f6nd\u00edjask\u00e9nt a Marylandi Egyetemen, 2019-20-ban pedig Nieman-\u00f6szt\u00f6nd\u00edjask\u00e9nt a Harvard Egyetemen. Andr\u00e1s t\u00f6bb magyar egyetemen is tan\u00edtott \u00fajs\u00e1g\u00edr\u00f3 kurzusokat.[:en]Andr\u00e1s is a co-founder, editor and executive director of Direkt36. Previously, he was a senior editor for leading Hungarian news site Origo before it had been transformed into the government\u2019s propaganda outlet. He also worked for the BBC World Service in London and was a reporter at the investigative unit of The Washington Post. He has contributed to several international reporting projects, including The Panama Papers. He twice won the Soma Prize, the prestigious annual award dedicated to investigative journalism in Hungary. He was a World Press Institute fellow in 2008, a Humphrey fellow at the University of Maryland in 2012\/13, and a Nieman fellow at Harvard University in 2019\/20. Andr\u00e1s has taught journalism courses at Hungarian universities.[:]"},{"term_id":547,"user_id":25,"is_guest":0,"slug":"pufi","display_name":"Andr\u00e1s Szab\u00f3","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Szabo-Andras.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Szabo-Andras.png"},"author_category":"","user_url":"","last_name":"Szab\u00f3","first_name":"Andr\u00e1s","job_title":"","description":"[:hu]Andr\u00e1s nyolc \u00e9vig dolgozott \u00fajs\u00e1g\u00edr\u00f3k\u00e9nt az Orig\u00f3n\u00e1l, \u00e9s t\u00f6bb \u00e9vet elt\u00f6lt\u00f6tt az Indexn\u00e9l \u00e9s a vs.hu-n\u00e1l is. A Direkt36-n\u00e1l az orosz-magyar kapcsolatokkal, a Fidesz-k\u00f6zeli \u00fczleti k\u00f6r\u00f6k tev\u00e9kenys\u00e9g\u00e9vel, \u00e9s az Orb\u00e1n-korm\u00e1ny d\u00f6nt\u00e9shozatal\u00e1nak folyamataival foglalkozik. 2011-ben G\u0151b\u00f6ly\u00f6s Soma-d\u00edjat, 2010-ben pedig Min\u0151s\u00e9gi \u00fajs\u00e1g\u00edr\u00e1s\u00e9rt d\u00edjat nyert, mindkett\u0151t az\u00e9rt a cikksorozat\u00e1\u00e9rt, amely a Gyurcs\u00e1ny-korm\u00e1ny egyik korrupci\u00f3gyan\u00fas ingatlanelad\u00e1s\u00e1t mutatta be.[:en]Andr\u00e1s worked eight years as a journalist at Origo, a then prestigious online news site, but also spent several years at Index and vs.hu news outlets. At Direkt36 he covers Russian-Hungarian relations, activities of business circles close to Fidesz, and political decision making processes of the Orb\u00e1n government. In 2011 he received the G\u0151b\u00f6ly\u00f6s Soma Award dedicated to investigative journalism in Hungary, and in 2010 he won the Quality Journalism Award, both for a series of articles that focused on a corruption case connected to the former Socialist-led government.[:]"},{"term_id":549,"user_id":23,"is_guest":0,"slug":"szabolcs","display_name":"Szabolcs Panyi","avatar_url":{"url":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Panyi-Szabolcs.png","url2x":"https:\/\/www.direkt36.hu\/wp-content\/uploads\/2023\/10\/Panyi-Szabolcs.png"},"author_category":"","user_url":"","last_name":"Panyi","first_name":"Szabolcs","job_title":"","description":"[:hu]Az ELTE magyar nyelv \u00e9s irodalom szak\u00e1n diplom\u00e1zott. 2013 \u00e9s 2018 k\u00f6z\u00f6tt az Index.hu politika rovat\u00e1nak volt szerkeszt\u0151je \u00e9s \u00fajs\u00e1g\u00edr\u00f3ja. 2017-18-ban Fulbright-\u00f6szt\u00f6nd\u00edjjal az Arizona State University-n tanult oknyomoz\u00f3 \u00fajs\u00e1g\u00edr\u00e1st. 2018 \u0151sz\u00e9n csatlakozott a Direkt36-hoz, ahol f\u0151k\u00e9nt nemzetbiztons\u00e1gi \u00e9s k\u00fclpolitikai vonatkoz\u00e1s\u00fa t\u00f6rt\u00e9neteken dolgozik. Mellette a vars\u00f3i k\u00f6zpont\u00fa VSquare.org visegr\u00e1di r\u00e9gi\u00f3s t\u00e9nyfelt\u00e1r\u00f3 \u00fajs\u00e1g\u00edr\u00f3i platform egyik alap\u00edt\u00f3ja, 2023-t\u00f3l a k\u00f6z\u00e9p-eur\u00f3pai oknyomoz\u00e1sok vezet\u0151je. N\u00e9gyszer nyert Min\u0151s\u00e9gi \u00fajs\u00e1g\u00edr\u00e1s\u00e9rt d\u00edjat \u00e9s szint\u00e9n n\u00e9gyszer Transparency-Soma-d\u00edjat, 2018-ban \u00e9s 2021-ben pedig az Eur\u00f3pai Sajt\u00f3 D\u00edj d\u00f6nt\u0151se volt.[:en]Szabolcs graduated from E\u00f6tv\u00f6s Lor\u00e1nd University where he studied Hungarian language and literature. Between 2013 and 2018, he was an editor and political reporter at Index.hu. At Arizona State University, he studied investigative journalism on a Fulbright Fellowship in 2017-2018. In the fall of 2018, he joined Direkt36, where he mainly works on stories related to national security and foreign policy. Meanwhile, he helped launch VSquare.org, a Warsaw-based cross-border investigative journalism initiative for the Visegr\u00e1d region, where he is currently leading the Central Eastern European investigations. He received the Quality Journalism Award and the Transparency-Soma Award four times each, and he was also shortlisted for the European Press Prize in 2018 and 2021.[:]"}],"tag_names":[{"name":"4iG","slug":"4ig"},{"name":"Gell\u00e9rt J\u00e1szai","slug":"jaszai-gellert"},{"name":"Viktor Orb\u00e1n","slug":"orban-viktor"},{"name":"Vodafone","slug":"vodafone"}],"category_names":[{"name":"Private equity funds","slug":"magantokealapok"}],"_links":{"self":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/10437"}],"collection":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/users\/19"}],"replies":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/comments?post=10437"}],"version-history":[{"count":19,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/10437\/revisions"}],"predecessor-version":[{"id":10571,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/posts\/10437\/revisions\/10571"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/media\/10467"}],"wp:attachment":[{"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/media?parent=10437"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/categories?post=10437"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/tags?post=10437"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/www.direkt36.hu\/en\/wp-json\/wp\/v2\/ppma_author?post=10437"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}