Consolidation talk is buzzing in Scandinavia, where Hong Kong-based Hutchison is advancing talks with Tele2 over an acquisition of Tele2’s Swedish unit, TMT Finance understands.
Sources said Goldman Sachs is advising Hutchison, and Morgan Stanley has been hired by Tele2 to assess the feasibility of a deal which could value Tele2 Sweden at over US$6.3bn and see Hutchison gain a strong foothold in one of the region’s most important markets.
While Tele2 has been vocal about being a buyer and not a seller in Europe, last year Tele2 owner Kinnevik sold Tele2’s Russian unit to VTB for US$3.55bn and could be persuaded to do the same in Sweden, with the investor keen to ramp up its focus on areas such as e-commerce and other technology centred businesses. Kinnevik holds 48.0% of the votes and 30.4% of the capital in Tele2.
A merger between Li Ka-Shing’s Hutchison 3 Sweden and Tele2 Sweden would see the market shrink from four to three – a theme which could also happen in Germany and Ireland pending regulatory approval – and also see the new entity overtake Telenor into second place, putting more pressure on market leader TeliaSonera. The new entity would boast around 5.5 million subscribers. TeliaSonera has over 6.5 million, while Telenor has around 2.4 million.
Hutchison is said to be especially keen on bolstering its position in existing markets across Western Europe and Scandinavia: approval for Telefonica’s Irish unit is within touching distance and talks are also said to be in progress in Italy concerning Vimpelcom’s Wind Italia business. Meanwhile, sources said Hutchison is also hoping to consolidate its position in Denmark, where third-place TeliaSonera could be persuaded to exit given TDC and Telenor’s dominance.