Kcel Raises $525 Million for TeliaSonera in London IPO

TeliaSonera Flexes Haven Muscles in Expansion
TeliaSonera’s third-quarter profit fell 1.2 percent to 4.8 billion kronor ($723 million) on sales of 25.8 billion kronor. Photographer: Casper Hedberg/Bloomberg

TeliaSonera AB will receive $525 million from an initial public offering of its Kazakh wireless unit Kcell, the second share sale in one of the Swedish operator’s emerging-market units within two weeks.

The sale of 50 million shares was priced at $10.50 each, giving Kcell a market value of about $2.1 billion, Stockholm-based TeliaSonera said in a statement today. The price is the lower end of a range of $10.50 to $13 the shares were offered at. The stock will begin trading in London today.

“We received all the hits we could in 2011 because of competition and regulation so we don’t expect any more” downsides, Veysel Aral, chief executive officer of Kcell, said in an interview in Bloomberg’s London office today. Investors in the sale had many questions on the country’s regulatory environment, he said.

TeliaSonera, Sweden’s biggest phone company, is selling stakes in emerging-markets ventures to gain funds, while retaining holdings in them to benefit from growth that’s faster than in its home markets. Another TeliaSonera holding, OAO MegaFon, last month completed a $1.7 billion IPO in London after postponing its sale earlier in the year.

More than $600 million in dividends have been paid out to TeliaSonera since it agreed to buy a remaining 49 percent stake in Kcell for $1.52 billion in December, Aral said.

Entrenched Operators

Kcell, which has 11.6 million subscribers, is the largest operator in Kazakhstan with a subscriber market share of about 48 percent and a revenue market share of 57 percent, he said.

Kazakhstan has three entrenched mobile operators and no space for a new entrant because frequencies have already been allotted, Aral said. “We make sure we don’t miss anything when it comes to developments on frequency spectrum,” he said.

VimpelCom Ltd. and Tele2 AB control the two other larger Kazakh mobile operators, according to the companies’ websites.

The IPO comes at the end of a year in which volumes of the initial share sales in Europe, the Middle East and Africa fell to a third of what they were in 2011, data compiled by Bloomberg show. Companies in the EMEA region raised $12.4 billion in IPOs in 2012, compared with $37.3 billion in the previous year.

TeliaSonera shares slipped 0.7 percent to 44.64 kronor in the Swedish capital at 11:55 a.m.

Tough Market

“In a short period of time, and in a relatively tough stock market, we have managed to successfully complete two IPOs,” TeliaSonera Chief Executive Officer Lars Nyberg said in the statement. “This increases the value of our stakes in both MegaFon and Kcell, which continues to be one of our most valuable subsidiaries and a strategic asset.”

Kcell was offering a dividend yield of about 10 percent to attract investors, people familiar with the matter said on Nov. 30. After this month’s sale, TeliaSonera will control about 61.9 percent of the Kazakh operator.

The sale was managed by Credit Suisse Group AG, UBS AG and Visor Capital. Investors from London, Almaty and the U.S. were dominant among subscribers to the IPO, Aral said.

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