Danish Telia/Telenor potential post-deal divestments could attract Three, Vodafone, DT and Elisa
TeliaSonera and Telenor will likely have to shed some assets such as frequencies or second brands as a result of the merger of their Danish operations, an industry source and a local sector banker said.
Today, 3 December, the companies announced the merger of their Danish operations into a new joint venture where the parties will own 50% each.
Telia/Telenor will end up with a more than 40% market share in Denmark, the industry source said. Judging by how the European Commission has behaved recently following deals such as Three’s owner Hutchison Whampoa’s acquisitions of Orange Austria in 2012 and O2 Ireland in 2013, the merged entity should have to shed some frequencies and some of their customers, the source said.
In the Telia/Telenor merger, the combined entity will end up with a larger market share than in these other cases, which could mean more significant remedies, the source said. This should be quite simple to arrange via divestments of one or more of Telia’s and Telenor’s second brands, the source said.
Three was pointed out by the industry source as a very likely buyer for these second brands, including Telia’s Call Me and DLG Tele, and Telenor’s CBB and Bibob. The assets could also be attractive to players such as Vodafone, Deutsche Telekom and Elisa looking to gain synergies of scale, according to a sector banker.
Three would be the natural buyer for assets shed by the new entity, the industry source said. Hutchison Whampoa’s Group MD Canning Fok has previously stated that the company wants to take part in consolidation, and buys in Denmark are definitely on the agenda if the price is right, the source said. Three has a 13.5% market share in Denmark, according to the source.
The fourth Danish player, TDC, would be unable to buy the assets since it also has a market share above 40%, the source continued.
On condition of remedies, the local regulation authorities are unlikely to stop the merger as TeliaSonera and Telenor already had a joint network and today’s announcement of the formal merger is only the last step of the overall tie-up, the banker said. TDC might oppose to parts of the deal, but in general it is very beneficial to TDC since it reduces the number of operators, likely leading to prices not falling further, so it is in TDC’s best interest that the deal goes through, the industry source added.
With this deal, sector consolidation in Denmark should be over and done with for the foreseeable future, the source said. It should have marginal consequences for the M&A landscape in the Nordics, since the companies already had a joint network, the source added.
TeliaSonera and Telenor declined to comment.