Telenor said an LTE roaming agreement covering Norway it signed with Tele2 in April still stands, despite the latter agreeing to sell its local business to rival TeliaSonera.
Tele2 on Monday agreed to sell Tele2 Norway for an enterprise value of SEK 5.1 billion (€548 million/$743.8 million), despite previously appearing to secure the future of the business through a national 2G, 3G and LTE roaming deal with rival Telenor.
"This situation does not mean that the roaming deal with Telenor is cancelled," a spokesperson for Telenor told FierceWireless:Europe. "The deal we agreed upon with Tele2 came into force on July 1 and has a duration of 18 months, but with an option for earlier termination. We will have to await Tele2's further actions in this matter."
Neither Tele2 nor TeliaSonera had responded to requests for comments about the Telenor roaming deal by the time of publication.
IHS analyst Peter Boyland said: "By selling up, Tele2 is now conceding it would be unable to compete effectively in the data-driven Norwegian market without the 4G spectrum it failed to secure. Norway recently revealed plans to auction off three blocks of mobile spectrum in the 1,800 MHz band in early 2015, but has come too late for Tele2."
Tele2 said the transaction follows a strategic review of its Norwegian business prompted by its failure to acquire an LTE licence and additional 3G spectrum during Norway's spectrum auction in December 2013.
Bengt Nordstrom, CEO of Nordic consultancy Northstream, said the sale "is the predictable result of a pretty miserable and failed spectrum licensing process, which has resulted in pretty dramatic consolidation. Norway now essentially has two strong operators, plus a very small outfit with lots of spectrum, little infrastructure and few customers."
Mats Granryd, president and CEO of Tele2, explained the competitive constraints the company faced without resources on the multiband frequency required it to evaluate different options for its 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. This is an attractive transaction at a good valuation and it enhances our opportunities to challenge and take new steps on other markets," said Granryd.
Tele2 added that the divestment delivers an attractive value for Tele2 and will generate a capital gain of around 2 billion kronor upon closing.
TeliaSonera operates under the NetCom and Chess brand names in Norway. The operator said the transaction will increase its mobile market share in Norway to about 40 per cent from 23 per cent, while the mobile subscription base will increase to 2.7 million from 1.6 million. Integration costs are estimated at SEK 250 million-450 million, with SEK 350 million of investments required in order to handle increased traffic. It estimates that the deal will produce cost synergies of at least SEK 800 million annually from 2016.
The acquisition is subject to approval from the Norwegian Competition Authorities, and both Tele2 and TeliaSonera said they expect the deal to be finalised in the first quarter of 2015 at the latest.
However, Boyland said the Norwegian merger is more problematic than recent deals in the European Union, as it would see the market return to a duopoly.
"TeliaSonera has attempted to gain regulatory approval by committing itself to achieving 98 per cent population coverage for 4G by 2016--two years ahead of its obligations--but this may not be enough to sway the regulator to accept such a concentrated market," he said.
The deal in Norway represents a further consolidation of mobile operators in Western Europe, following the recent European Union approval of the merger of O2 and E-Plus in Germany, and O2 and 3 in Ireland.
For more:
- see this Tele2 release
- see this TeliaSonera release
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