The combination of its two Lithuanian businesses will create a converged operator in line with TeliaSonera’s broader strategy.
TeliaSonera (STO:TLSN) is to combine its two Lithuanian businesses, mobile carrier Omnitel and fixed-line operator Teo (VSE: TEO1L).
Under the plan, Teo will pay €220m (US$247m) to absorb Omnitel, which TeliaSonera said equated to an EV/EBITDA multiple of 7.8x based on the target’s full-year 2014 results.
The Stockholm-based parent said it expects the reorganisation to generate €10m (US$11m) in annual synergies and, taking into account the envisaged synergies, the EV/EBITDA multiple would fall to 5.7x.
KPMG provided a fairness opinion to Teo’s board.
Former state-owned incumbent Teo will use undisclosed external financing to buy 100% of Omnitel from TeliaSonera, which will continue to own 88.15% of Teo.
Robert Andersson (pictured), TeliaSonera’s head of Europe and chair of Teo’s board, said: “The combination of Teo and Omnitel will create a leading, fully converged telecom operator and strengthen the market position through clear synergies and enhanced customer proposition.”
TeliaSonera has indicated that it will focus on convergence, and on its core European businesses. In September, it disclosed plans to sell its so-called ‘Eurasian’ operations.
Elsewhere in the Baltics, TeliaSonera would also like to expand its presence in Latvia. That country’s privatisation agency has asked TeliaSonera, which owns minority stakes in triple-play operator Lattelecom and LMT, to present a strategic proposal for their development.
TeliaSonera has previously stated an interest in taking fuller ownership of the two state-controlled telcos.