News
Acquisition strengthens telco’s B2B credentials; rights issue planned to maintain Tele2’s financial strength.
Tele2 on Tuesday struck a 2.9 billion kronor (€311 million) deal to acquire TDC Sweden, thereby strengthening its position in the B2B market.
TDC Sweden, a unit of Danish incumbent TDC, provides communications and connectivity services to Swedish blue chip companies and public sector customers. In 2015 it generated revenues of SEK3.4 billion and EBITDA of SEK400 million. It employed 810 staff at the end of the first quarter of 2016.
"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 and network services," said Allison Kirkby, CEO of Tele2, in a statement.
Tele2 will fund the acquisition with existing funds and credit facilities. In order to maintain its financial position, the operator will undertake a SEK3 billion rights issue, which it expects to complete by the fourth quarter.
The deal is expected to generate annualised opex and capex synergies of SEK300 million, and a one-off capex saving of SEK200 million. Integration costs and one-off charges are expected to come in at SEK750 million.
"With the sale to Tele2, we have found a good long-term owner who stands to achieve considerable synergies and will therefore be able to invest in further developing the business," said TDC chief executive Pernille Erenbjerg, in a separate statement.
TDC said that all TDC Sweden customers – whether they are based in Sweden, Denmark, Norway, or internationally – will continue to be served under their existing contracts.
"The customers will be in safe hands with Tele2, and through the sale, we have achieved a higher value than we would have been able to gain by a continued ownership of TDC Sweden," Erenbjerg said.
TDC said the deal requires European Commission approval. It is expected to close in the fourth quarter.
