TeliaSonera abandons sale of Spain's Yoigo, promises new strategy

TeliaSonera said it will push forward with developing the future potential of its Spanish subsidiary Yoigo after failing to attract high enough offers in a prospective sale. The company was reportedly in negotiations with Vodafone and France Telecom, with unnamed inside sources suggesting that the Swedish telco was hoping its Spanish unit could fetch around €1 billion, according to Reuters.

"Yoigo has great potential for further development," TeliaSonera CEO Per-Arne Blomquist said in a statement. "But as its market strategy does not quite match our other operations, we have been prepared to divest it if we were offered a price which fully reflects its future potential. As this requirement has not been met, we have discontinued the sales process and look forward to continue developing the company."

Alandsbanken analyst Stefan Olsson said he was not surprised TeliaSonera had abandoned the sales process. "Spain is a pretty tough market right now so maybe the timing is simply wrong for getting a price tag that is attractive enough," he told Reuters.

The failure of Yoigo to find a buyer seems to have extinguished hopes of consolidation and given the fiercely competitive Spanish mobile market a chance to recover, Espirito Santo analysts wrote in a note to clients.

"Whilst this news will have no impact on our [TeliaSonera] forecasts which assumed the status quo, it will likely be interpreted negatively for Telefónica, Vodafone and France Telecom," the investment bank said, according to Reuters.

Yoigo, which has grown its share of the Spanish market to 6.55 per cent, reported that sales grew 13 per cent in 2012 to around €1 billion, with operating profits before amortisation and depreciation rocketing 49 per cent to around €750 million, according to Bloomberg.

Yoigo spokeswoman Masha Lloyd, declining to say which company had submitted a bid, albeit that France Telecom confirmed it had made an offer, told Bloomberg: "We are very happy to be able to end this process and now will focus on carrying out our project on our own."

For more:
- see this TeliaSonera release
- see this Reuters article
- see this Bloomberg article

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