TeliaSonera (STO:TLSN) has begun a process to exit its seven Eurasian markets.
TeliaSonera (STO:TLSN) has begun a process to exit its seven Eurasian markets.
The Swedish telco has faced considerable challenges in the region, and in particular Uzbekistan, where a controversial 3G tender led to the resignation of erstwhile CEO Lars Nyberg in early 2013.
Later that year, TeliaSonera fired its CFO, head of Eurasia and two other employees.
Nyberg’s replacement, Johan Dennelind, has said that TeliaSonera had since made great strides in the region, particularly in corporate governance.
“We now have better and more well-managed companies which we believe others can successfully develop further,” Dennelind said.
The CEO said exiting the region would take time, suggesting the assets could be sold off piecemeal.
“We are conducting this process market by market as each country and operation has its unique situation,” Dennelind said.
Shares in the company rose 3.75% on the back of the news.
TeliaSonera said it had hired advisers for the process but declined to disclose them.
TeliaSonera defines its Eurasian footprint as covering Uzbekistan (Ucell), Azerbaijan (Azercell), Georgia (Geocell), Kazakhstan (Kcell), Moldova (Moldcell), Nepal (Ncell), and Tajikistan (Tcell).
A tricky sell
TeliaSonera’s interests in Azercell, Geocell, Kcell and Moldcell are held indirectly through Fintur, a holdco in which it owns 58.55%. TeliaSonera has been looking to offload these holdings for the last 18 months, although there has not been a sales process, an adviser in the region told TelecomFinance.
The person suggested Turkcell, which owns the other 41.45% of Fintur, could buy TeliaSonera out of the vehicle. TeliaSonera has a 38% direct and indirect holding in Turkcell. TeliaSonera’s stakes in Ncell, Tcell and Ucell are held directly.
IHS analyst Julian Watson suggested it may be easier for TeliaSonera to divest its directly controlled assets.
“Divestment from Azerbaijan, Georgia, Kazakhstan and Moldova will be complicated by the ongoing legal battle for control over Turkcell, in which it holds a 38% stake and is its co-investor in Fintur,” Watson said.
“Russia’s Alfa Group, which is seeking to gain control over Turkcell, may be interested in expanding its presence in the region, although its ownership of a 47.9% stake in VimpelCom, which has an extensive Eurasia presence, may complicate matters.”
Watson listed Russia’s MTS, which lacks a presence in Kazakhstan, and Tele2, which is present in Kazakhstan, as potential buyers.
Refocused priorities
In its Q2 results announcement in July, Dennelind said the quarter had been a challenging one for its Eurasian business, which provided about 20% of the company’s SKr101bn (US$12.2bn) revenue in 2014.
He cited the earthquake in Nepal, competition in Kazakhstan, and corruption allegations around TeliaSonera’s involvement in the privatisation of Azercell.
TeliaSonera wants to focus on developing its operations in Europe. It operates mobile networks in Sweden, Denmark, Estonia, Finland, Latvia, Lithuania, Norway and Spain. It also holds a significant stake in Russia’s MegaFon, along with Turkcell.
“Going forward TeliaSonera will focus on core areas such as connectivity and convergence – while supplementing with new initiatives in areas that complement, and strengthen, the core business,” the company said in a statement.
TeliaSonera has been trying to rationalise its operations in Europe, so far with little success. In Spain, the company announced a new review to examine a sale of its challenger network operator, Yoigo, in summer 2014, but a buyer has yet to come forward. TeliaSonera has said its ownership of Yoigo remains under review.
Elsewhere, TeliaSonera was this month forced to abandon its Danish mobile JV with Telenor following opposition from the European Commission.
Watson said the failure to get approval will mean that TeliaSonera will need to bear the cost of running a separate mobile operation in Denmark.
“TeliaSonera also faces headwinds in the shape of greater competition in the Nordics from an expansionist TDC, which acquired the Norwegian cable operator Get last year,” he added.
