Tele2 Considers Norway Asset Sale a Year After Russia Exit

Tele2 AB, the company controlled by Sweden’s Stenbeck family, said it’s considering a sale of its Norwegian phone business after failing to win new wireless spectrum in that country.

Tele2 hired ABG Sundal Collier Holding ASA to evaluate strategic options in Norway -- including a potential exit -- where it trails TeliaSonera AB and Telenor ASA, it said in a statement today. Barry Zeitoune, an analyst at Berenberg in London, values the assets at 4 billion kronor ($620 million).

Other options being considered include a partnership and keeping the business in Norway, Tele2 said. Bloomberg News reported the discussions yesterday.

Ukrainian-born billionaire Len Blavatnik’s Access Industries Holdings Inc. won spectrum for Norway’s new fourth-generation network in an auction in December. Tele2 Chief Executive Officer Mats Granryd, who said he’s “not satisfied” with the outcome, said last month Stockholm-based Tele2 would continue its operations in Norway with existing frequencies.

Tele2 shares rose as much as 2.1 percent to 79.7 kronor, and were down 0.5 percent at 11:27 a.m. in Stockholm, valuing the company at 35.2 billion kronor.

Russia Exit

A year ago, Tele2 agreed to sell its Russian unit to lender VTB Group for about $2.4 billion. Tele2’s exit from Russia after 12 years followed the carrier’s failure to win a wireless license to run faster services in the country, leaving it with an outdated network.

Norway accounted for 13 percent of Tele2’s 7.57 billion kronor of sales last quarter, behind its Netherlands business and Sweden. Tele’s home market made up 42 percent of its revenue. Sales in Norway fell 12 percent last quarter to 983 million kronor as Tele2 lost 3,000 mobile customers, leaving it with 1.12 million users.

The Stenbeck family, which controls Tele2 through Investment AB Kinnevik, has been investing more in online companies such as fashion retailer Zalando AG and e-commerce incubator Rocket Internet GmbH. After the sale of Tele2’s Russian carrier and Tele2’s forecast reduction last year, Kinnevik Chairman Cristina Stenbeck may be warming to the idea of divesting one of her family’s largest holdings.

Hutchison Interest

Hutchison Whampoa Ltd., owned by billionaire Li Ka-shing, wants to buy more telecommunications assets in the Nordic region, a person familiar with the situation said in November. The Hong Kong-based company has evaluated a bid for Tele2, said another person at the time.

Zeitoune said Tele2 should also consider selling its Dutch assets, which may fetch 8 billion kronor. Selling both its Norwegian and Dutch units for 12 billion kronor would allow Tele2 to pay out an additional 27 kronor a share to shareholders and still leave Tele2 with a net debt to earnings ratio of 1.6, a level that is “prudent,” Zeitoune said in a note yesterday.

“For us, Tele2 is the perfect breakup candidate,” Zeitoune said, adding its assets in Norway would be valuable to another carrier with spectrum.

AINMT Holdings AB, also owned by Access, sells 3G mobile services in Scandinavia using the 450MHz frequency. AINMT yesterday announced the sale of 1.5 billion kronor of five-year senior secured bonds with a coupon of 9.75 percent. DNB ASA, Pareto Securities AS and Swedbank AB are joint lead managers.

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