Industry watchers doubt that Nordic telco Tele2 will announce significant acquisitions anytime soon following the US$3.55bn sale of its Russian business, despite a report suggesting it would look at buys in Europe.
In an article referring to Tele2…
Industry watchers doubt that Nordic telco Tele2 will announce significant acquisitions anytime soon following the US$3.55bn sale of its Russian business, despite a report suggesting it would look at buys in Europe.
In an article referring to Tele2 chairman Mike Parton, the Financial Times suggested that the company was now set to make acquisitions in Europe, in markets where it could focus on value data services.
Speaking in a conference call following the disposal of Tele2 Russia to VTB last week, Tele2 CFO Lars-Arne Nilsson said the company was “always looking into possibilities in countries close”, going on to reference Eastern Europe and former Soviet republics.
However, Scandinavian sources thought it unlikely that the company would now go on a spending spree, pointing out that Tele2 would be distributing most of the proceeds to its investors.
One analyst said that after returning cash to shareholders the company was unlikely to be over-capitalised, and that as they had growth projects already – such as its businesses in the Netherlands and Kazakhstan – the company would be in “no rush” to buy anything.
“They will always say they are open to possibilities, but I don’t think we’ll see this,” a TMT banker said.
He said there were not a lot of obvious potential targets out there for the company to look at, and the fact that Tele2 was giving a large amount of the proceeds from the Russian sale to stockholders reflected this.
One possible target mentioned by the banker was Finnish operator DNA, reported to be up for sale last month, although he suggested that a private equity firm might outmuscle Tele2 if the operator was interested.
A second analyst felt that Finland was too-mature a market for Tele2 to consider and that it would likely look at less developed countries. However the analyst doubted that the company would make any near-term acquisitions at all.
He said that the telco had significant challenges in the Netherlands and Kazakhstan and that they would be the operator’s focus, and that the Russian sale had brought down its leverage and meant it was in the middle of its gearing range.
In early March Tele2 announced changes to its management team to strengthen management in its core markets and “ensure maintained attention to the smaller growth assets”. These core markets included Sweden, the Netherlands and Norway, where it appointed dedicated regional CEOs.
