Tele2 announced it will seek to close an SEK2.9 billion (€299 million/$334 million) acquisition of TDC Sweden by the end of October, after the European Commission (EC) gave the green light to the takeover.
Acquiring its rival will beef up Tele2’s capabilities in the business-to-business sector in Sweden, while also providing a welcome boost to the operator’s balance sheet. In a statement announcing the EC’s decision, Tele2 explained that TDC Sweden provides end-to-end communication services to a number of public sector and blue chip companies in the country, and has a solid track record in terms of profitability.
TDC Sweden delivered net sales of SEK3.4 billion and EBITDA of SEK0.4 billion in 2015, Tele2 stated.
Allison Kirkby, president and CEO of Tele2, said the company is pleased to have received the go-ahead from the EC. “This acquisition is consistent with our strategy to be champions of customer value for both consumers and businesses, allowing us to serve our large B2B customers with a stronger and wider range of communication and network services,” she said.
The acquisition will also “unlock significant value for both our customers and our shareholders,” Kirkby added.
Samuel Skott, CEO of Tele2 Sweden, said the deal leaves the combined company well placed to be “a challenger” in the Swedish market, “offering a more comprehensive product portfolio.”
The EC stated that it cleared the deal after concluding it did not raise any concerns regarding competition in the Swedish mobile market “in particular because the companies’ activities are largely complementary.”
TDC Sweden, the EC noted, offers a mix of mobile and fixed communications services almost “exclusively to business customers in Sweden.” The commission added that the combined company “would have a market share above 20 per cent only for retail mobile communications.”
While that could pose competition concerns, the commission was satisfied that “TDC Sweden has a limited presence on this market and that several alternative providers would remain available after the transaction.”
Tele2 reiterated that it would conduct a rights issue to existing shareholders to cover the cost of the acquisition, and that the deal will not rely on equity financing because it has sufficient funds and credit facilities in place.