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Tele2 Completes Sale of Russian Subsidiary in Just One Week

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With unusual speed, Tele2 says that it has already completed the USD2.4 billion sale of its Russian subsidiary to the Russian financial group, VTB.

Only announced last week, the deal comprises a cash transaction comprising USD2.4 billion in equity value and USD1.15 billion in net debt, equivalent to an EBITDA multiple of 4.9 based on 2012 financial results.

Mike Parton, Chairman of Tele2, commented: "This is an excellent result for Tele2 shareholders. Our cash investment in this business was SEK 6 billion and this has generated a cash return of over SEK 27 billion including the transaction, much of which has been returned to our shareholders."

Tele2 intends to distribute around USD1.9 billion of the proceeds to shareholders as redemption of shares

The deal proved slightly controversial as rival networks, MTS and VimpelCom stepped in with an immediate offer of a higher bid for the company. Neither company explained though how they would structure the deal, nor whether the company would continue to operate independently, or be broken up for its assets.

The unusual speed that this transaction has been completed may also raise eyebrows amongst commentators.

If VTB were to sell the mobile network within the next twelve months, then Tele2 would receive half the cash profits.

Tele2 said that it will carry on investing in its core markets: Sweden, the Netherlands, Norway and Kazakhstan."

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Tags: tele2  Russia