The newly formed entity will also become the market leader in online television services in Sweden

Swedish telco Tele2 Group is to merge with Com Hem, creating the second largest telecommunications company in Sweden, according to a company announcement.

The merger will combine Sweden’s fastest national fixed network with a comprehensive mobile network, creating a single unified operator. The newly formed entity will boast 3.9 million mobile customers and 800,000 broadband customers.

"The combination of Tele2 and Com Hem is a natural next step for both companies and will create a leading integrated connectivity provider in the Swedish telecommunications market by combining an award-winning mobile network with the fastest national fixed network and the widest range of content in the market. Therefore, [the newly formed entity] will be well equipped to meet the evolving customer needs for seamless connectivity and digital services," Tele2 Group’s CEO, Allison Kirkby, told Total Telecom on Wednesday morning.

The merger will help Tele2 Group and Com Hem improve their digital offerings in Sweden.

"Digitalisation affects nearly every aspect of society and the Merger will further contribute to a better digital quality of life for Swedish individuals, households and businesses through a full range of complementary and ubiquitous high-quality connectivity and digital services," Kirby added.

The newly formed entity will also become the market leader in Sweden for online TV services, with 1.1 million subscribers.

Com Hem’s shareholders will receive SEK 37.02 per share (£3.35) plus 1.0374x B shares in Tele2. Com Hem’s shareholders will jointly own 26.9% of the newly valued entity, a stake valued at SEK 6.6 billion (£596 million). The remaining 73.1% of the shares will be held by Tele2 Group’s existing shareholders.

The companies expect the merger to create total annual opex, capex and revenue synergies of around SEK 900 million (£81.3 million) to be achieved within five years of the merger. 

Upon completion of the deal, Alison Kirby will step down as CEO of Tele2 Group, with Anders Nilsson, who is currently serving as CEO of Com Hem, becoming CEO of the newly formed entity.