TeliaSonera to Merge Danish Phone Business With Telenor Unit

Nordic phone carriers TeliaSonera AB and Telenor ASA agreed to merge their Danish businesses, the latest combination in a region where operators are seeking consolidation to boost sales and alleviate price competition.

Each will own half of the joint venture, according to a statement from the companies today. The carriers expect annual savings of at least 800 million Danish kroner ($133 million), while costs for the integration are forecast at 800 million kroner over the next three years.

“Competition in Denmark is intense and we face continued pressure on revenue growth and profitability, making consolidation inevitable,” Kjell Morten Johnsen, head of Europe at Telenor, said in the statement.

Operators in the region have struggled to generate growth as competition makes it difficult for the companies to lift revenue. Executives in the Nordic region have said consolidation is needed to help stabilize prices and stimulate more network investments.

TeliaSonera shares rose 1.5 percent to 53.05 kronor at 10:43 a.m. in Stockholm trading, while Telenor increased 1.7 percent to 152.7 kroner in Oslo and Danish incumbent TDC A/S jumped 5.5 percent to 51.15 kroner in Copenhagen.

“The possibility of less intense competition is really good news for TDC,” Nordea Private Banking, a unit of Nordea Bank AB said today in a note to clients. “Even if TDC get a larger competitor, this is clearly preferable to having more, smaller rivals fighting for customers.”

Nordic Consolidation

The new company will have about 40 percent of the Danish market with 3.5 million mobile subscriptions, rivaling TDC in size, and annual sales topping 9 billion kroner. The smallest carrier in Denmark is 3 Scandinavia, with 1.1 million subscribers.

The transaction needs approval from European Union authorities, the companies said. They have cooperated through their jointly owned mobile network in Denmark since 2012. Telenor, based in Fornebu, Norway, is the Nordic region’s largest phone company. TeliaSonera is based in Stockholm.

The planned merger is the latest attempt at consolidation in the region. TeliaSonera deal to buy Tele2 AB’s Norwegian business for $687 million faces opposition from the country’s competition watchdog, which said the sale may harm competition. TDC paid 13.8 billion kroner in October to buy Norwegian cable company Get AS.

Before it's here, it's on the Bloomberg Terminal.