As Telia closes in on its Danish sell off, TDC considers its options

Denmark's largest telco, TDC Holding, has hired American investment banking firm LionTree to “help it explore strategic options for the business,” according to Reuters. Although it is far from certain if a transaction will take place.

TDC is also no doubt closely following the fate of its local rival, Telia Denmark, which is in the process of being sold to Danish energy and telecom company Norlys. In April, Sweden-based Telia Company entered into a binding agreement to sell 100% of its Danish assets to Norlys for DKK 6.25 billion ($886 million). An agreement was signed in September and the deal is expected to be completed in the first quarter of 2024.

Through the acquisition, Norlys is set to gain access to 50% of Denmark’s largest mobile network, the TT network owned jointly by Telia and Telenor. Niels Duedahl, CEO of Norlys, said the company has been working hard “for several years” to enter the mobile market and aims to become a “nationwide energy and telecommunications group.”

Diverging paths

TDC's move to hire LionTree marks a possible trend toward consolidation in the Danish telecom market.

Whatever the outcome is of a strategic analysis at TDC, the group has already been through some pretty radical changes in the past five years. In 2018, a consortium led by Australian investor Macquarie acquired the operator and now indirectly owns it via a company called DK Telekommunikation (DKT). Macquarie itself owns a 50% interest.

By the end of 2021, TDC had been split into two independent companies: TDC NET, which operates the 5G and fiber networks; and Nuuday, which sells fixed, mobile and TV services to private customers and businesses under nine brands: YouSee, Telmore, Hiper, eesy, Blockbuster, YouTv, TDC Erhverv, NetDesign and Relatel.

Michel Jumeau was appointed CEO of TDC NET in 2022. In May this year, credit rating agency Fitch wrote that although TDC NET benefits from the company’s entrenched position within the Danish telecom market, high leverage and weak free cash flow constraints are affecting the rating.

As for Nuuday, Jon James, a seasoned telecom executive, was appointed CEO of the service provider in June 2021. Since then, he has become a familiar figure on the event circuit as he explains how the operator is transitioning into a digital services provider despite being encumbered by a “forty-year old mainframe called Columbus” that, for example, doesn’t currently allow it to sell broadband services online.

At TM Forum’s DTW23 – Ignite event in late September, James provided an update on Nuuday’s shift from this legacy IT stack in collaboration with Netcracker. “We really had no option but to jump straight to a cloud-native, full suite solution, rather than incrementing our way out of the 40-year old mainframe,” he said, noting that the first phase of the new solution is to be launched in the next few weeks.

“This is intended to give us the ability to move fast, to get out of IT that isn’t differentiating, focus on the stuff that is, focus on innovation and customer experience. Fingers crossed, we’re still on track,” he said.

“We haven’t delivered a working solution yet,” he added, “but from our point of view, this wasn’t a risky choice. Not doing anything was the risky choice.”

James particularly highlighted how the pace of innovation in the B2B world is accelerating, making this an increasingly exciting segment in which to operate. For example, he pointed to a new product launched by Nuuday called CloudKey, which is designed to help enterprises and the public sector keep better control of sensitive data as they move to the cloud.

“CloudKey is a great example of the kind of innovation we want to focus on, and make our business entirely about those kinds of innovations rather than our history of connectivity,” he said.

The telco of the future, he added, “needs to look much more like a software company and be capable of moving at that speed.”