Tele2 looks ahead to new markets after Russian deal, as MTS waits in wings

Fresh from the sale of its Russian business, Tele2 is now looking around for further acquisitions in the European market as it pursues its low-cost model for mobile data services.

According to the Financial Times, the $3.5 billion (€2.7 billion) deal to sell its Russian business to state-controlled bank VTB has left the Nordic operator in a good position: it made a cash investment of $930 million and achieved a cash return of around $4.2 billion.

Mike Parton, chairman of Tele2, told the FT that the company would now use this funding to look at other markets such as the Netherlands, where Tele2 recently acquired a licence to offer LTE services.

The Russian deal proved to be far from straightforward, however. After it seemed that agreement had been reached with VTB at the end of March, Russian operators MTS and Vimpelcom came forward with a competing joint bid.

According to a Bloomberg report, MTS has now abandoned plans to challenge the takeover by VTB of Tele2's Russian unit. Instead, the operator said it will approach VTB after the deal is signed in order to discuss an industry consolidation.

"There is no point in fighting now, the deal is done already," MTS CFO Alexey Kornya said in an interview with Bloomberg. "They are a financial company and not a telecommunications player. VTB will exit from this investment sooner or later."

It has been suggested that VTB would consider selling the Tele2 unit to fixed operator Rostelecom in order to create a company with 36.3 million mobile subscribers, according to fourth-quarter data from Advanced Communications & Media, Bloomberg reported.

MTS, which has been working with VimpelCom on the Tele2 plans, is predictably sceptical about a merger with Rostelecom. "There is no clear intention to give it to Rostelecom," Kornya told Bloomberg. Merging Rostelecom with Tele2 Russia would be "difficult" as Rostelecom has a bureaucratic, state-run structure, while Tele2's structure is Scandinavian, he added.

For more:
- see this FT article (sub. req)
- see this Bloomberg article
- see this separate FT article (sub. req.)

Related Articles:
Tele2's Russian sale provokes bidding war
Report: Tele2 eyes LTE spectrum as Austria preps auction
Russia's MTS boosted in Q4 by subscriber growth, higher data usage
Russia plans 4G tenders in 2011
MTS eyes European partnerships, prepares mobile wallet launch
Rumour Mill: Russia's MTS bids for Telekom Austria

Suggested Articles

Sprint said it will offer discounted service to customers age 55 and above.

Unlimited data plans placed a strain on carrier networks last year, but according to OpenSignal the carriers met the challenge.

Verizon plans to bring 5G to four U.S. cities this year and hopes to have standards-based equipment in place for some of those deployments.