Nordic telco Tele2 has sold its Norwegian assets to Sweden-based TeliaSonera for SKr5.1bn (US$744m) after losing out in December’s 4G auction.
The cash deal includes the repayment of around SKr2.3bn (US$336m) in loans and would whittle Norway down to…
Nordic telco Tele2 has sold its Norwegian assets to Sweden-based TeliaSonera for SKr5.1bn (US$744m) after losing out in December’s 4G auction.
The cash deal includes the repayment of around SKr2.3bn (US$336m) in loans and would whittle Norway down to just two established operators, plus new entrant Access Industries which rocked the country’s mobile sector when it beat Tele2 to the spectrum last year.
TeliaSonera said buying Tele2 Norway would boost its market share from 23% to around 40% with 2.7 million subscribers, although that would still be behind Norwegian incumbent Telenor’s roughly 3.2 million customers.
“The greater scale will improve our competitiveness and ability to offer mobile internet services to enterprise customers and consumers in the entire country, including the rural areas where large investments are needed,” said August Baumann, head of TeliaSonera’s Norwegian unit NetCom.
The group also vowed to speed up its 4G rollout to cover 98% of the population by 2016 instead of 2018 to help push the deal through, adding that it expects to close the transaction in Q1 2015 at the latest, if it can get Norwegian Competition Authority approval.
It expects to pay SKr250m-SKr450m (US$37m-US$66m) to integrate the two operators, and invest SKr350m (US$51m) to handle the increased traffic as it targets SKr800m (US$117m) in annual synergies from 2016.
Tele2 hired ABG Sundal Collier Holding in March to review strategic options in Norway after it became the only major player in the country to pick up extra 4G spectrum.
There were also rumours that the group was talking to 4G newcomer Access Industries, which also operates a niche 3G business in rural areas in Sweden and Denmark through the low frequency 450 MHz band.
IHS analyst Peter Boyland said: “By selling up, Tele2 is now conceding it would be unable to compete effectively in the data-driven Norwegian market without the 4G spectrum it failed to secure. Norway recently revealed plans to auction off three blocks of mobile spectrum in the 1800 MHz band in early 2015, but has come too late for Tele2.
“The deal represents a further consolidation of mobile operators in Western Europe, following the recent EU approval of the merger of O2 and E-Plus in Germany, and O2 and 3 in Ireland. However, the Norwegian merger is more problematic, as it would see the market return to a duopoly.”
He said much of the regulator’s decision on whether to clear the deal or what remedies it should propose will be based on how much of a serious player Access Industries is, as it has revealed little about its own launch plans.
Tele2 said it was too early to say how it will use proceeds from its deal with TeliaSonera, but reaffirmed a mid-term objective of delivering a return of capital employed of around 20%, and a progressive dividend policy.
The deal comes a year after Stockholm-listed Tele2 closed the sale of its Russian operations to state-controlled lender VTB Group in a US$3.55bn deal.
Tele2 Norway reported SKr4.1bn (US$598m) in net sales and SKr121m (US$18m) in EBITDA for 2013. It had 1.2 million customers and 432 employees at the end of last year.
TeliaSonera is thought to have hired Handelsbanken for financial advice on the deal.
