Tele2 Sells Norwegian Network After Losing Out in Radio Spectrum Auction
Published on: 6th Jul 2014
Tele2 has announced a deal to sell its Norwegian mobile network to TeliaSonera for an enterprise value of SEK 5.1 billion (USD745 million) on a cash and debt free basis.
Tele2 said that the sale is the outcome of a review of its Norwegian business prompted by changes to the structure of the Norwegian market as a result of the license auction in December 2013, where Tele2 failed to secure any additional radio spectrum.
The transaction will increase TeliaSonera's mobile market share in Norway to approximately 40 percent from 23 percent while the mobile subscription base will increase to 2.7 million from 1.6 million.
In order to sweeten the regulators and secure approval for the takeover, TeliaSonera said that it will be accelerating its 4G roll-out to reach 98 percent population coverage already by 2016 instead of 2018.
"I am delighted that we have reached an agreement to acquire Tele2 in Norway. This is a great strategic fit for TeliaSonera and in line with our ambition to strengthen our position in our core markets," says Johan Dennelind, President and CEO.
The acquisition is estimated to incur integration costs of between SEK 250-450 million and investments estimated to SEK 350 million in order to handle the increased traffic.
Thereafter substantial cost savings, estimated to at least SEK 800 million annually should come into effect from 2016.
Mats Granryd, President and CEO of Tele2 said that the "competitive constraints we faced without resources on the multiband frequency required us to evaluate different options for our Norwegian businesses. Whilst we have not been able to complete our originally desired strategy, the proposed deal is good for our customers, shareholders and for Tele2 as a whole."
The Norwegian subsidiary represented about 13% of Tele2's revenues in the last financial quarter.
The transaction is subject to regulatory approval from the Norwegian Competition Authority which is anticipated at the latest first quarter of 2015.