TeliaSonera has agreed to sell Ncell, the first of its seven Eurasian assets marked for exit in September, as part of a broader Nordic transparency push.
Malaysia’s Axiata (MYX:6888) is to acquire 80% of Nepal’s number two telco, Ncell, from TeliaSonera (STO:TLSN) and Kazakh investment bank Visor Capital, which holds a 20% stake via SEA Telecom.
TeliaSonera will receive US$1.03bn on a cash and debt free basis for its directly held 60.4% stake.
In a separate but mutually conditional pact, the Swedish incumbent will dissolve its economic interests in the 20% locally-held ownership and receive US$48m from its local partner. The transactions are expected to close during H1 2016.
TeliaSonera was advised by UBS, Deloitte, Davis Polk, Mannheimer Swartling, Control Risks and Kroll.
In a mid-September announcement, TeliaSonera said it wanted to withdraw from Ncell, Ucell in Uzbekistan and Tcell in Tajikistan, and sell its majority stake in Fintur, which owns Azercell in Azerbaijan, Geocell in Georgia, Kcell in Kazakhstan, and Moldcell in Moldova.
TeliaSonera owns 58.55% stake in Fintur, which is co-owned by Turkcell. In late November, Turkcell announced plans to bid for TeliaSonera’s Fintur stake.
Nordic ownership of Eurasian telcos has been under the spotlight, following international corruption allegations in Uzbek telecoms impacting both TeliaSonera and Telenor, which has as a result announced high profile management changes and decided to sell its 33% stake in Vimpelcom.
“In September we announced our ambition to reduce our presence in our seven Eurasian markets and focus on our operations in the Nordics and Baltics, within the strategy of creating the new TeliaSonera. Today, I am very pleased to announce a first step and proof point in this reshaping of TeliaSonera. I am also glad to see Axiata as a new owner. That gives me comfort that our dedicated employees are in good hands when taking Ncell to the next level,” Johan Dennelind, TeliaSonera’s President and CEO, said.
The sale to Axiata corresponds to an EV/EBITDA multiple of 5x based on rolling 12 months, TeliaSonera said.
Ncell had a net cash position of approximately US$284m, after purchase price adjustments, as of 30 September. TeliaSonera will be paid for the cash position at closing in proportion to its economic interest of 80.4%.
Axiata, which has 260 million customers and 25,000 employees, is already present in Malaysia, Indonesia, Sri Lanka, Bangladesh, Cambodia, India, Singapore and Pakistan.
Local ownership resolved, transparency checked
Separately, TeliaSonera is relinquishing its economic interest in the 20% of Ncell currently held by local investor Niraj Shrestha, in accordance with local ownership rules. All arrangements between TeliaSonera and Shrestha, which were entered into in 2012, will lapse in conjunction with closing, TeliaSonera said.
When it dissolves its economic interests in the 20% local ownership, TeliaSonera will receive US$48m from Singapore-registered Sunivera Capital Ventures, while Shrestha will sell his locally held shares to Bhavana Singh Shrestha, Axiata’s chosen local partner.
TeliaSonera said it had conducted extensive due diligence and background checks of all companies and individuals involved in the Nepalese transaction, using both in-house as well as external expertise. It said it had also discussed with Axiata on their commitment, programs and policies on responsible business and corporate governance best practice. TeliaSonera furthermore said it would “actively seek to engage the buyer in the Industry Dialogue on Freedom of Expression and the Telecommunications Integrity Initiative against Corruption”.
“To make a responsible exit is of utmost importance for us. We will continue our good cooperation with the Nepalese government in our engagement of rebuilding Nepal after the earthquake,” said Dennelind.
The entire will result in a positive net cash effect for TeliaSonera, corresponding to approximately SEK7.5bn (US$879m) after provisions, primarily relating to tax. The effect on net income is expected to be minor and still dependent on fluctuations of currencies until closing.
TeliaSonera said it intends to spend the proceeds mainly on debt reduction in line with TeliaSonera’s ambition to keep a solid investment grade credit rating of A- to BBB+, adding that it still planned to distribute a dividend of at least SEK3 per share for the fiscal year 2015.
The deal is subject to approval by Nepal’s Department of Industries and Telecom Authority, Malaysia’s Central Bank and Axiata’s shareholders, respectively. Ncell competes with former monopoly Nepal Telecom.
