TeliaSonera Halts Sale of Spain’s Yoigo on Low Offers
TeliaSonera will instead continue to develop the Spanish unit, according to a statement today from the Stockholm-based company. Analysts had valued Yoigo, the fourth-biggest mobile operator in Spain, at about 1 billion euros ($1.3 billion).
A failure to find a buyer shows the challenges faced by wireless operators in Spain, a contracting economy where record unemployment and intensifying competition are hurting carriers’ earnings. TeliaSonera began to look for a buyer for Yoigo last year, with Vodafone Group Plc (VOD) also among companies considering bids, people with knowledge of the matter said in September.
“The Spanish telecom market is already too crowded and companies are very cautious on any deal because growth prospects aren’t great,” said Luis Benguerel, an equity trader at Interbrokers in Barcelona. “Additionally, phone operators have learnt the lesson from previous years and they don’t want to overpay for an asset anymore.”
Yoigo has grown in Spain by stealing customers from rivals such as market leader Telefonica SA (TEF) through its cheap offerings for voice and data. The euro region’s fourth-largest economy is trying to recover from a six-year economic slump and a 26 percent unemployment rate.
In January, Yoigo gained 85,340 mobile-phone customers, bringing its market share to 6.55 percent, according to latest data available by telecom regulator CMT. Bigger rivals Telefonica, Vodafone and France Telecom’s Orange Spain lost customers that month.
“Yoigo has great potential for further development, but as its market strategy does not quite match our other operations, we have been prepared to divest it if we were offered a price which fully reflects its future potential,” TeliaSonera Chief Executive Officer Per-Arne Blomquist said in today’s statement. “As this requirement has not been met, we have discontinued the sales process and look forward to continue developing the company.”
Fernando Castro, a spokesman for Orange Spain, confirmed France Telecom had submitted a bid, declining to elaborate on the details. Pepe Romero, a spokesman for Vodafone in Spain, declined to comment.
Masha Lloyd, a spokeswoman for Yoigo in Madrid, declined to comment on which companies had submitted bids. “We are very happy to be able to end this process and now will focus on carrying out our project on our own,” she said.
Yoigo Chief Executive Officer Eduardo Taulet said in February the company seeks to add 500,000 mobile-phone customers this year to reach a total 4.2 million, and to boost revenue by 11 percent and earnings before interest, taxes, depreciation and amortization by 48 percent.
In 2012, Yoigo reported a 12 percent jump in sales to 8.38 billion kronor ($1.3 billion), while Ebitda climbed 49 percent to 627 million kronor.
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