TeliaSonera's Eurasia exit opens M&A opportunities for others

Analysts welcomed TeliaSonera's plan to ultimately exit the Eurasian market, with some noting that the move will open up opportunities for other companies to snap up investments in the region.

The Sweden-based company said this week that is has initiated a process to reduce its presence in Eurasia and "over time fully leave" the region. It currently has investments in Nepal, Kazakhstan, Uzbekistan, Azerbaijan, Georgia, Moldova and Tajikistan. The operator said it would focus on Europe and Sweden in future.

CEO Johan Dennelind said the divestment process would be a complex task that would take time to complete.

"We are conducting this process market by market as each country and operation has its unique situation, but the ambition is to eventually leave the entire region," he said.

Jefferies International analysts described the news as positive, noting that it "promises an end to board and management distraction, and a reduction of uncertainty over operating outlook and fair valuation of far-flung operations."

Indeed, as Jefferies pointed out, the fall-out of alleged transgressions relating to deals in Eurasia, particularly in Uzbekistan, has created significant upheaval at TeliaSonera, including senior management and board personnel changes.

"At the same time operating momentum has weakened, possibly also as the attempt to run a 'squeaky clean' ship in the region may have been perceived as a weakness by some competitors tied into less demanding governance standards than TeliaSonera," the analysts added.

However, Jefferies added that the "realisable value" of the Eurasian assets is rather uncertain at this time because no deal has as yet been announced. Reuters reported that Dennelind said the combined assets have a book value of about SEK20 billion (€2 billion/$2.4 billion).

Julian Watson, director of the telecoms operator team at research and analyst company IHS, noted that TeliaSonera's Eurasian divestment plans opens opportunities for groups including MegaFon, Mobile TeleSystems (MTS), Tele2, Turkcell and VimpelCom to expand their geographical footprint in Caucasus, Central Asia and Nepal.

However, Watson also noted that the mobile assets in Azerbaijan, Georgia, Kazakhstan and Moldova are co-owned through TeliaSonera's stakes in Fintur Holdings and Turkcell. The Swedish operator owns 38 per cent stake of Turkcell and 58.55 per cent of Fintur, while Turkcell owns 41.45 per cent of Fintur. Divestments here will be "complicated by the ongoing legal battle for control over Turkcell," Watson said.

TeliaSonera directly owns the assets in Nepal (60.4 per cent), Tajikistan (60 per cent) and Uzbekistan (94 per cent).

Turkcell is already reported to have expressed interest in buying TeliaSonera assets in Eurasia. According to Hurriyet Daily News, the Turkish mobile operator said it has started the process to appoint a strategic and financial adviser to advise on it acquiring the remaining stake in Fintur Holding.

For more:
- see the TeliaSonera release
- see this article from Hurriyet Daily News
- see this Reuters article

Related articles:
TeliaSonera reshuffles management, CTO to leave this week
TeliaSonera's Q4 operating profit to take €234M hit
Tele2 CEO denies Kazakhstan corruption claims
TeliaSonera ordered to provide financial cover for Uzbekistan investigation
TeliaSonera second operator to face Dutch probe into Uzbekistan business

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