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Tele2 Announces Deal to Buy TDC Sweden

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Sweden's Tele2 has announced that it is buying TDC's local subsidiary for SEK 2.9 billion (USD352 million), in a deal that it said would make it a stronger player in the strategically important B2B segment in its home market.

TDC Sweden had 809 full time employees at the end of 2015.

Tele2 said that the combined operations will be well positioned to capture growth trends in the industry such as from data growth, managed services and migration to cloud platforms.

Tele2 estimates annualized run rate OPEX and CAPEX synergies to amount to approximately SEK 300 million, with additional one-off capex synergies estimated to amount to SEK 200 million. Positive effects of cross-selling are also expected. Preliminary estimates for the integration costs and other one-off costs required to achieve synergies amount to approximately SEK 750 million.

Allison Kirkby, President and CEO of Tele2 AB, comments: "This deal is a unique opportunity for Tele2 to build scale and expand its range of services in the B2B market, it is hugely complementary to our existing Swedish business, and it allows us to meet the global trend of large B2B customers demanding a wider range of communication & network services."

Tele2 said that it can finance the purchase from existing funds, but will be seeking to raise SEK 3 billion from shareholders. The largest shareholder in Tele2, Kinnevik (representing 30% of the total number of shares and 47.6% of the votes), has committed to subscribe for its pro rata share of the Rights Issue

The Transaction is subject to regulatory approval by the relevant competition authorities. Closing is expected by the fourth quarter 2016.

Separately, TDC said the sale would generate a capital gain of about US$122 million and completed a review of its business that was announced in January.

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Tags: tele2  tdc  Sweden