Tele2 looks to expand European operations

08 April 2013 | Kavit Majithia


Tele2 has said it will look to increased opportunities in European telecoms after divesting its Russian business to state-owned bank VTB.

Completed at the end of last week, the deal, worth approximately $3.5 billion, was finalised despite some objections from rival operators in Russia who put in countering bids for the subsidiary.

Operators MTS and VimpelCom announced intentions to offer a higher bid of up to $4.25 billion and trump VTB’s offer, while investment company A1 also declared it would offer up to $4 billion to complete a deal.

However, Mike Parton, chairman at Tele2 told the Financial Times that VTB’s offer was the best deal for the company’s shareholders.

Parton said the company had identified it had to exit Russia for approximately 18 months, but rivals had failed to make an offer in the initial period.

There have been suggestions that Tele2 Russia’s sale to a state owned banks suggested an element of influence from the government, but Parton rejected the claim, dismissing the idea that the Kremlin had any influence.

Tele2 did not win any 4G services in Russia because it operates as a region, not a fully national company. However the company is now reportedly seeking ways to use its 2G network for 4G. As a result of the deal with VTB, it reportedly has been given a cash investment of $930 million.

If VTB now sells the business, Tele2 would be entitled to half the proceeds, but Parton further doubted that scenario would develop.