Tele2 agrees $3.3bn acquisition of cable provider Com Hem

Tele2 has agreed a $3.3 billion deal to buy Swedish cable operator Com Hem in the latest in-market consolidation move inside Europe.

The integration will see the combination of Sweden’s second largest mobile operator with the cable provider, giving the combined unit an offering that covers mobile, broadband and TV.

 It will become the second largest operator in both mobile, with a combined 3.9 million customers, and fixed (0.8m customers), and the largest digital TV provider (1.1 million customers), giving a stronger platform to compete with market leader Telia.

Tele2 claimed the deal will generate SKr900 million ($110 million) in synergies over the next five years, with Com Hem boss Anders Nilsson to lead the combined unit as CEO.

“Merging is the best possible next step for both companies as it will enable us to meet the demands of tomorrow and unleash the power for the best possible digital quality of life in Sweden,” said Nilsson. 

“I am proud of the progress we have made during the last few years in improving our products and services leading to increased customer satisfaction, expanding our footprint while delivering on all our financial targets. The transaction will create significant benefits to Swedish individuals, households, businesses and to the shareholders of Tele2 and Com Hem.”

The deal will mark a key consolidation for investment group Kinnevik, which is the largest shareholder in both outfits after buying an 18.5% stake in Com Hem from NorCell last year.

The acquisition is backed by the boards of all three companies, with Kinnevik agreeing not to sell any shares in either firm for up to six months after the completion of the merger, with Kinnevik’s new CEO Georgi Ganev set to become chairman of the combined company.

The deal, which is subject to shareholder approval and will need to be rubber-stamped by regulators, will also see the departure of Tele2’s chief executive Allison Kirkby.

Kirkby said: ““When I began my leadership role at Tele2 I had three overarching objectives: to drive returns through disciplined capital allocation; to focus the group on those markets where we knew we could win; and to become the leading connectivity provider in the Baltic Sea region with a strong emphasis on the consumer. 

“With today’s announcement all of these objectives have now been achieved and I am incredibly proud of the Tele2 team and all we have accomplished over the past four years. I am confident that, at completion, I will hand over a company in very good shape and with Anders Nilsson and the current Tele2 management team leading the organization, it is in great hands to be even more successful going forward.”

The acquisition follows a number of strategic movements from Tele2 in Kazakhstan, Austria and the Netherlands, as well as buying TDC in Sweden. It follows significant consolidation in some European markets over recent years, including the creation of Wind Tre in Italy, and the merger of BT and EE in the UK.

The market has also seen a greater push towards content, with several companies driving quad-play offers (fixed, broadband, wireless and TV), and the likes of AT&T bidding to buy Time Warner for $85 billion.

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