Monthly Archives: July 2014

TeliaSonera consolidates Teo, Omnitel results in H1

TeliaSonera group consolidated the first half financial results for Lithuanian fixed operator Teo and mobile operator Omnitel for the first time, reports Vz.lt. Omnitel revenues fell 5.7 percent year-on-year on the back of reduced rates. The number of mobile subscribers dropped significantly, to 1.58 million from 1.95 million the year before.

The company noted that Omnitel revenues should not be confused with TeliaSonera mobile revenues in Lithuania, because both Omnitel and Teo sell mobile end-user devices, and the results are calculated jointly.

Teo will continue to report its results separately while it is listed on the Vilnius exchange.

http://www.telecompaper.com

TeliaSonera’s Behind-The-Scenes Connection To Azerbaijani President’s Daughters

Through a trail of owners and offshore registrations, the two daughters of President Ilham Aliyev appear to be connected to Azerbaijan’s largest mobile phone business, Azercell.

Records indicate they are linked to two of the three largest providers, which means the government is potentially controlling nearly three-quarters of the mobile market.

This raises serious questions about Internet surveillance and communications security within Azerbaijan and may help to explain complaints about costly service.

It also indicates more unusual ties between Swedish telecom giant TeliaSonera and Eurasian political figures than the company has publicly acknowledged, according to documents reviewed by the Organized Crime and Corruption Reporting Project (OCCRP) and (RFE/RL).

It has been a difficult 18 months for TeliaSonera.

In late 2012, Swedish TV and OCCRP revealed that TeliaSonera was being investigated for bribery in connection with $320 million paid to a company run by a close friend and business partner of Uzbekistan’s ruling family in order to obtain a 3G license in that country.

In Azerbaijan, the surreptitious links between the ruling family and the country’s mobile phone companies raise questions about how real the competition can be among the top companies.

The answers lie in a complex web of offshore and business records that connect Azercell, the company’s largest mobile provider, to the Aliyev daughters. TeliaSonera owns nearly 40 percent of Azercell.

After the affair in Uzbekistan, TeliaSonera changed its management roster and vowed to overhaul business practices and ethical standards. Company officials, however, refuse to discuss any specific actions they have taken or are taking in Azerbaijan.

Today Azerbaijan’s telecom market is split between Azercell, Bakcell, and Azerfon. And while the Aliyev daughters’ ownership of Azerfon has been widely reported, newly examined documents reveal a close connection between the Aliyevs and Azercell as well.

Azercell, with nearly half of the market, was established in 1996 by the government of Azerbaijan and its parent company Azertel, which at that time was a subsidiary of Turkcell in Turkey.

Since then, TeliaSonera has bought shares in Azercell through an offshore subsidiary called Fintur Holdings. The Swedish firm also owns shares of Turkcell.

The second-largest provider is Bakcell, with about one-third of the market. It was established in 1994 by the government and GTIB 1996 LTD, registered in the British Virgin Islands, a well-known offshore tax haven. It is unclear who ultimately controls Bakcell.

The third-biggest provider is Azerfon, with about one-fourth of the market. As reported previously, 72 percent of Azerfon shares is owned by Leyla and Arzu Aliyev, daughters of the Azerbaijani president.

To understand the connections between the companies, follow the paper trail of a Swiss national named Olivier Mestelan, who has frequently served as secretary in companies owned by the Aliyev daughters and whose name keeps popping up in telecom records.

For example, Azertel is the parent company of Azercell. TeliaSonera’s partner in Azertel — a company called Cenay Iletishim — is represented by Mestelan. Mestelan also shows up in records of Azerfon.

This means figures linked to the Aliyev family control nearly three-quarters of all mobile communication providers, including mobile Internet, and are capable of monitoring phone calls and website visits on a massive scale.

Media watchdogs say these hidden connections behind the ownership of mobile-phone operators raise serious questions about Internet freedom and the extent to which government officials may be listening to citizens.

Rashid Hajili is the director of the Media Rights Institute in Baku, which monitors media and protects journalists’ rights. He says the Internet is heavily monitored by the Azerbaijani government, which has a history of blocking websites that criticize it.

Hajili says the Ministry of Communication requires all communication companies to provide equipment and special facilities to the Ministry of National Security for surveillance. But while the companies have cooperated with Azerbaijani law enforcement in cases involving journalists and bloggers, Hajili says media rights advocates haven’t received information needed to defend those journalists.

Defense lawyer Elchin Sadigov says Azerbaijan’s mobile companies don’t even seek court approval to listen in, as required by law. “The court-order requirement was neglected in the case against journalist Avaz Zeynalli, when his colleagues — all of them journalists working for the ‘Khural’ newspaper — had been illegally monitored,” he says.

“All of the phone operators, including Azercell, provided access to recorded phone conversations without due legalities. The same happened in the case of the journalist Parviz Hashimli. In this case the investigation was conducted by the Ministry of National Security and, according to the indictment, they had full access to phone conversations.”

Amnesty International has declared Hashimli and Zeynalli “prisoners of conscience.”

Recent cases show how dangerous it can be for a government to have this much power.

Agil Khalil, a reporter for the Azadliq newspaper, has sued Azerbaijani mobile operator Azercell in the European Court of Human Rights and is awaiting a verdict.

Khalil, who fled the country in 2008 after a series of attacks on him, has accused the Azerbaijani government and the mobile phone operator of plotting against him.

In 2008, Khalil was stabbed in the chest after publishing an article alleging that employees of the Ministry of National Security were involved in corrupt land deals in Baku. According to the Media Rights Institute, Azerbaijani law enforcement tried to present the attack as irrelevant to his work and to start a smear campaign against him, alleging that the journalist was stabbed by a jealous homosexual lover, Sergey Strekalin. The rights institute has led Khalil’s defense.

Khalil, who says he is not homosexual and has never met Strekalin, demanded that law enforcement investigate and punish the real attackers. Law enforcement ignored that and Strekalin, who testified on behalf of the prosecution, served less than half of a 1 1/2-year prison term.

The prosecutors’ office alleged that they had SMS exchanges between Khalil and Strekalin, provided by Azercell. Azercell, however, refused to provide those messages to Khalil or his lawyers. Khalil maintains that the messages are fraudulent and that he never sent them.

Activists say it is not only journalists who are victims of illegal activities involving the telecommunications companies.

When Nigar Yagublu, a youth activist and daughter of opposition party member Tofig Yagublu, was facing trial for a car accident, she learned that both her phone and that of her father were being tapped.

Investigators claimed that they obtained a court order permitting the wiretapping on the same day the investigation into the accident began. However, the indictment quoted conversations that took place immediately after the accident, proving that the listening had been underway before a court order could have been in place.

Competing Companies, Same Signature

When TeliaSonera’s subsidiary Azercell entered the Azerbaijani market in 1996, it was a joint venture between the government and Azertel, a Turkish company whose owners were Fintur Holdings  (79.8 percent) and two Turkish companies: Cenay Iletisim and Cenay Insaat (10.1 percent apiece). TeliaSonera is the majority owner of Fintur Holdings.

Azertel ownership structure before October 2005

In November 2005, two Panamanian companies — Dilsan Investment SA and Colville Group SA — bought Cenay Iletisim for 8.85 million Turkish liras (US$ 6.6 million). In Panama, it is easy to hide true ownership of a company behind proxy names; the incorporation documents were signed by Olivier Mestelan, while his name didn’t appear as an officer.

Azertel ownership structure after Panamanian companies Dilsan Investment SA and Colville Group SA, represented by Olivier Mestelan bought Cenay Iletishim’s shares

That same year, a new communications company — Azerfon — entered the country’s mobile phone market. The government bypassed tender procedure laws to grant Azerfon its license. Six years later — in 2011 — journalists discovered that the Aliyev daughters owned 72 percent of Azerfon through three Panamanian companies.

Leyla and Arzu Aliyeva alternate in the role of either president or treasurer of all three Panamanian companies, while Mestelan is listed as secretary of all three. Mestelan is a well-known figure in Baku who owns a high-end art gallery. His perceived relationship with the Aliyev family earned him a spot on a short list of people “of particular interest” compiled by the US State Department.

Mestelan has been profiled by “Baku” magazine, published by Leyla Aliyeva in Moscow. She is also an editor in chief.

Mestelan also sits on the advisory board of Ata Holding, owned largely by a Panamanian company, Hughson Management, where Arzu Aliyea is president, sister Leyla is treasurer, and Mestalan is secretary.

Mestelan is also connected to one of the companies that owns Azercell. His signature appears on the Panamanian incorporation for Dilsan Investment, but documents do not list any position he holds. A search in the Turkish Official Business Gazette finds  Mestelan listed as a signatory for both Dilsan Investments and Colville Group, the two Panamanian companies that bought a 10.1 percent share of Azercell in 2005.

In 2008, the government of Azerbaijan sold its 35.7 percent share of Azercell to its Turkish-Swedish-Panamanian partner Azertel for $180 million. After the Azertel partners each raised their investment stakes by varying amounts, Fintur Holding owned 51.3 percent, Cenay Iletisim owned 42.2 percent, and Cenay Insaat owned 6.5 percent.

Ownership structure of Azertel after becoming a sole owner of Azercell in 2008

It was a lucrative deal for the Cenay Iletisim owners . According to Azertel financial reports listed in the Turkish Official Business Gazette, from 2006 to 2012 Cenay Iletisim received dividends worth at least  $249 million while investing only $95 million, for a profit of $154 million.

Despite its indirect links with the ruling family, Azercell spent six years trying to get a license to provide 3G service to its mobile phone customers. Azerfon — the competing company controlled by the Aliyeva sisters — held the 3G monopoly until the end of 2011.

At about the same time that Azercell finally received a 3G license, a newly-formed company, FA Invest Malta Limited, took over the 6.5 percent shares from Cenay Inshaat.  FA Invest was incorporated in Malta and its ownership structure is hidden.

Ownership of Azertel following government’s decision to grant 3G license in 2011

But according to the Turkish Official Business Gazette, Azerbaijani citizen Hamzayev Rashad Firidunoglu was appointed to represent FA Invest Malta Limited at Azertel board meetings. A person by the same name is a major in  the Special State Guard Service, responsible for the President’s personal security. His names appears on a list of Guard Service employees who received special awards “For the service to motherland” from Aliyev in 2010.

Hamzayev did not respond to a request for comment.

In its 2013 annual report, TeliaSonera noted the formation of a new Sustainability and Ethics Committee and listed “anti-corruption” as a focus area.

When asked about the ownership of Azercell and whether the company had begun to take promised measures, including renegotiating or even terminating agreements with business partners, Salomon Berkele, head of external communication for TeliaSonera, said the company would go into no further detail beyond the goals stated in the annual report.

The Appearance Of Competition

The near-monopoly on mobile phone service may also be driving up prices.

Baku resident Jahangir Alibeyzade juggles daily with three phones. He says the only way to afford phone communication in Azerbaijan is to have simcards from three different operators. Calls between carriers are too expensive. Even with this trick, mobile communication tariffs are still too high, Alibeyzade says.

Azerbaijan charges one of the most expensive mobile call tariffs in the area:

Price for prepaid minutes in euros (source: http://www.numbeo.com/cost-of-living/prices_by_country.jsp?displayCurrency=EUR&itemId=32)

Kamal Mahammadli, who also uses three SIM cards, says operators charge nearly the same rates because there is no real competition. Alibeyzade also thinks there is no free market. Ahmed Mahmudov, who lives in the town of Agdash and works in a shop selling construction materials, has his own explanation for why he couldn’t choose among the three operators.

“They claim they have different campaigns and cheaper prices, but at the end of the month you see that you didn’t pay less for using their services,” he says.

Asked why the existence of three competitors doesn’t reduce prices, Mahmudov says, “Your logic doesn’t work here. We have our own logic in this country.”

The Azerbaijani government and the three companies claim there is competition. A deeper look into incorporation documents tells a different story.

By Khadija Ismayilova

Friday, July 18, 2014

http://www.rferl.org

Telia Sonera faces new dictator probe

New allegations have emerged linking Swedish-Finnish telecom firm TeliaSonera with the family of Azeri dictator Ilham Aliyev, a claim to which the company’s CEO has admitted knowing nothing.

“We actually don’t know what the situation is. It’s not good that we don’t know who is behind our affiliated company in Azerbaijan,” Telia Sonera CEO Johan Dennelind told told the TT news agency.
“Now we’re doing everything we can do find the answer to that question, and are very focused on it.”
Dennelind adds that before they are certain of the circumstances they can not make any further comments.
“It’s a basic rule that when we enter a country we need to know who’s behind our subsidiaries.”
The new allegations emerged in a fresh report by the Organized Crime and Corruption Reporting Project (OCCRP) – a group which investigates corruption in eastern Europe.
The story dates back seven years to when Telia Sonera bought out the Azerbajdzjan state’s shares in its subsidiary in the country. According to the OCCRP report the company however maintains close links to the Aliyev family through an unidentified Swiss art dealer.
Chief prosecutor Gunnar Stetler, who heads an investigation into allegations of bribery and money-laundering involving the firm in Uzbekistan, has refused to comment but has confirmed the prosecution office is “keeping an eye on” the situation in Eurasia.
The news emerged as Telia Sonera present a 500 million kronor ($73 million) drop in pre-tax profit for the second quarter 2014.
Dennelind explained the drop due to a decline in revenues in its Spain operations. The company’s share fell by 2 percent on the Stockholm bourse on Thursday.
www.thelocal.se

Reporter’s Notes To ‘TeliaSonera’s Behind-The-Scenes Connection To Azerbaijani President’s Daughters’

Journalist Khadija Ismayilova compiled the following list of helpful links during her reporting for her story for the Organized Crime and Corruption Reporting Project on Teliasonera’s ties to Azerbaijani President Ilham Aliyev’s daughters:

Hughson Management SA Panama incorp doc – Aliyeva and Mestelan

Hising Management SA – Arzu Aliyeva, Leyla Aliyeva, Olivier Mestelan
Incorporation documents of Hising Management SA from Panama registry. 

Rashad Hamzayev award decree for Azercell story
Rashad Hamzayev received medal for Service to Motherland 

Ata Holding emission prospect Olivier Mestelan for Azercell story
Ata Holding share emission prospect with Olivier Mestelan in the board

TeliaSonera Statement on Azercell privatization in 2008

Information requests
Inquiries to TeliaSonera, Cenay Iletishim and Azercell Telekom

Fintur Holding shareholders
Fintur Holding shareholders according to their website 

Azertel finance charts by 2012
Azertel finance charts, investment and dividends calculations by shareholder and year

Dilsan Investment SA docs for Azercell story
Dilsan Investment SA incorporation documents from Panama Registry 

FA INvest all docs for Azercell story
Incorporation documents from Maltese registry and Turkish registry for FA Invest Malta Limited

Azertel all documents together – Azercell
Azertel incorporation documents from Turkish registry

Cenay Iletishim all docs together _ Azercell
Incorporation documents of Cenay Iletishim from Turkish registry

2008 investment and share change Azercell
17 MART 2008 change in capital of Azertel – published in Sicil gazetesi # 7031 page 149 (This happens right after privatization of Azerbaijani state’s share in Azercell) 

2008 share change in Azercell – explanatory graph
17 MART 2008 change in capital of Azertel – published in Sicil gazetesi # 7031 page 149 (This happens right after privatization of Azerbaijani state’s share in Azercell) 

Bakcell emission prospect – info on shareholder
Share emission prospect of Bakcell and info on shareholder 

Bakcell shareholder GTIB1996
Incorporation document of Bakcell’s shareholder GTIB 1996 (BVI)

http://www.rferl.org/content/gulnara-karimova-telecom-bribes-swedish-tv/24796854.html

Telia Sonera’s summary of finding  http://www.teliasonera.com/Documents/AGM/Sammanfattning%20av%20NRF%20a%CC%8Arssta%CC%88mman%202014_ENG_ver%20140401.pdf

Calculation: here Telia says it’s direct and indirect ownership of Fintur is 74 %.

http://www.teliasonera.com/Documents/Public%20policy%20documents/TELIASONERA%20FACTBOOK_EURASIEN_2013.pdf

we calculated 74 % of 51,3 %  with this formula: 51,3/100*74=37.96

http://www.telegeography.com/products/commsupdate/articles/2014/02/03/azerbaijan-implements-mnp/

Türkiye sicil gazetesi sayi 6434 sayfa 288

Dilsan İnvestment incorporation document  page 635323601022317349

Khadija Ismayilova investigation on Azerfon. Panama documents

https://wikileaks.org/cable/2010/02/10STATE13575.html

cenay iletisim dec 2005 mestelan signature

http://www.mediaforum.az/az/2008/02/11/AZ%C6%8FRBAYCANIN-%C6%8FN-%C4%B0R%C4%B0-MOB%C4%B0L-OPERATORU-TAM-%C3%96Z%C6%8FLL%C6%8F%C5%9ED%C4%B0R%C4%B0L%C4%B0B-072758739c.html#.U1EOuPmSw_Y

http://xeberler.az/site/index.php?name=yazar&news_id=10

http://xeberler.az/site/index.php?name=yazar&news_id=10

http://www.mediaforum.az/az/2008/02/11/AZ%C6%8FRBAYCANIN-%C6%8FN-%C4%B0R%C4%B0-MOB%C4%B0L-OPERATORU-TAM-%C3%96Z%C6%8FLL%C6%8F%C5%9ED%C4%B0R%C4%B0L%C4%B0B-072758739c.html#.U1EOuPmSw_Y

http://www.teliasonera.com/az/newsroom/news/2012/background-to-azercell-and-telecommunications-in-azerbaijan/

http://www.huquqiaktlar.gov.az/StatementDetails.aspx?statementId=25185

http://annualreports.teliasonera.com/en/2013/annual-report/board-of-directors-report/ethics-and-sustainability/

In order to reduce TeliaSonera’s risk exposure the following measures have been taken:

Agreements with business partners have been renegotiated and in some cases terminated…
Source: Summary of the internal audit of Teliasonera http://www.teliasonera.com/Documents/AGM/Sammanfattning%20av%20NRF%20a%CC%8Arssta%CC%88mman%202014_ENG_ver%20140401.pdf

Email exchange with press service of Teliasonera and  Salomon Berkele

1Q Hi,

My name is Khadija Ismayilova, I am a journalist working with OCCRP (www.occrp.org)  and Radio Free Europe/Radio Liberty (www.rferl.org). I am doing a research on one of your subsidiaries – Azercell. You are kindly requested to answer following questions:

Please describe ownership structure of Azercell (which is owned by Azertel). TeliaSonera website indicates that it owns 38 percent of the shares. Who owns the rest of the shares?

I am under tough deadline, so please be kind to answer these questions till tomorrow.

1 A Hi,

You find all facts in our Eurasia factobook.

http://www.teliasonera.com/Documents/Public%20policy%20documents/TELIASONERA%20FACTBOOK_EURASIEN_2013.pdf

Just call or email us if you have any other questions.

Kind regards

Iréne Krohn
Senior Media Relations Manager, Group Communication
Mobile +46 706662614   Phone +46 850462033

Follow us on Twitter @TLSN_Media

2Q     Dear Ms Krohn,

Thank you very much for prompt answer. I do have this factbook in print. What I need to know is who are owners of the Cenay Iletishim and FA Invest, your business partners in Azertel.

Thank you,

Khadija

2A  Hi Khadija,

If you have questions regarding Cenay Iletishim and FA Invest I kindly refer you to contact them directly.

Kind regards

Irene

3.Q  Dear Ms Krohn,

I have researched together with my colleagues at OCCRP (occrp.org) the ownership structure of Azercell Azerbaijan where Telia Sonera is a partner and I found out that one member of the consortium running the Azeri telecom company, namely Cenay Iletisim, is connected to the Azerbaijani president’s family.

Could you please explain how did your company partner up with Cenay Iletisim and could you please expand on the nature of Telia Sonera’s investment in Azercell? Have you met with members of the Azerbaijani’s president family?

How much did Cenay Iletisim invested in this partnership? How was the partnership built? Why did you choose to work with this company?

In June 2011, the name of the Azertel signatory Olivier Mestelan appeared in scandal with Azercell’s competitor in the market – Azerfonhttp://www.rferl.org/content/azerbaijan_president_aliyev_daughters_tied_to_telecoms_firm/24248340.html.

Are Azerfon and Azercell competitors in the market?
3A.   Dear Ms Khadija Ismayilova,

 

Fintur Holding, owned by TeliaSonera and Turkcell, holds a stake in Azercell which has remained at 51.3 percent through the years, while the ownership of the remaining stake has changed as described in the Eurasian fact book which you have read. It is worth pointing out that since the changes in ownership of Azercell were carried out the board and management of TeliaSonera has changed. From April 2013 TeliaSonera has a new board, and a new CEO took office in September last year. At this month’s AGM our Chair reported on the board of director’s review of transactions, agreements and partnerships in our Eurasian operations. On our website there Is a summary of the review, describing its scope and methodology as well as the conclusions and measures taken. Azerbaijan is part of the scope, and for the reasons spelled out in the summary and in the Chair’s speech we will not go into further detail. The link below will direct you to our site where you can read the summary and the speech.

 

Kind regards,

 

Salomon Bekele

Head of External Communication

TeliaSonera

 

http://www.teliasonera.com/en/investors/annual-general-meeting/2014/2/annual-general-meeting-2014/
4Q Dear Mr Bekele,

In my previous email I have asked very specific questions. Please let me know if you are going to answer them.

In addition to those questions:

Summary reads that some measures had been taken and are being taken in terms of the transactions, causing concerns. What kind of measure are being taken in Azerbaijan? Did you terminate the partnership with Cenay Iletisim and FA Invest?

Thank you,

Khadija Ismayilova

4A Dear Ms Ismayilova

I have answered your previous questions. The summary of the boards review of transactions, and the Chairs speech, is the level of detail we will give on measures taken. Cenay Iletisim and FA Invest are as you can see on page 12 in the TeliaSonera Eurasia fact book owners of Azercell.

Kind regards,

Salomon Bekele

July 15, 2014

http://www.rferl.org

TeliaSonera to buy Tele2’s Norway mobile business for $744 million

Sweden’s Tele2 has agreed to sell its Norwegian mobile telecoms business to rival TeliaSonera for 5.1 billion Swedish crowns (434.43 million pounds), in a deal that will test the resolve of competition regulators amid a wave of telecoms industry consolidation.

The sale follows Tele2’s loss in December of an auction of key mobile frequencies that it needed to power its Norwegian mobile network of some 2,000 antennas, leaving it without a clear way forward in its third-biggest market.

Norway will now be left with two established mobile network operators – TeliaSonera and market leader Telenor – plus new entrant Access Industries, which trumped Tele2 in last year’s spectrum auction.

If they approve the sale, Norwegian regulators are likely to ask TeliaSonera for concessions to prevent a duopoly and protect consumers. That could include selling Tele2’s entire mobile network, analysts said, leaving TeliaSonera with Tele2’s subscriber base.

“We are convinced that this is a deal that we can bring to a closing, otherwise we would not have announced it,” TeliaSonera Chief Executive Johan Dennelind said on a conference call.

He declined to say what concessions TeliaSonera would offer to regulators. In a move to show that the deal would be good for consumers, TeliaSonera pledged to accelerate the rollout of super-fast 4G mobile technology in Norway so that 98 percent of the population was covered by 2016 instead of 2018.

Industry consultant John Strand said regulators may ask TeliaSonera to sell one or more of Tele2’s mobile brands or rent network capacity to smaller rivals that lack their own networks.

“The Norway competition regulator is no pushover,” said Strand. “Getting approval for this case will not be a walk in the park.”

TeliaSonera shares rose 2 percent to 50.65 Swedish crowns, while Tele2 was up 2 percent to 83 crowns at 1029 GMT (11.29 a.m. BST). Telenor gained 2 percent to 143.3 Norwegian kroner.

If the deal were blocked, TeliaSonera would pay an undisclosed break-up fee to Tele2 and carry Tele2’s mobile traffic for two and a half years under a roaming agreement.

Success would help TeliaSonera bolster its position in its fourth-biggest market, where it has been losing customers to Tele2 and Telenor.

TeliaSonera’s mobile market share would climb to 40 percent from 23 percent, giving it 2.7 million customers compared with Telenor’s 3.2 million.

TeliaSonera said the acquisition would lead to cost savings of at least 800 million crowns per year from 2016, largely from transferring traffic from Tele2’s network to its own.

The companies said they expected the deal to close in the first quarter of next year at the latest.

TELE2 PONDERS NEXT MOVE

For Tele2, the sale would bring a capital gain of around 2 billion crowns. The company had been banking on growth in Norway along with the Netherlands and Kazakhstan after exiting Russia last year. It said it was too early to say what it would do with the money raised from the Norwegian sale, but that it was unlikely to enter new markets.

Norway’s newest telecom player Access, which is backed by Ukrainian-American billionaire Len Blavatnik who also owns Warner Music Group, could benefit from the Tele2 deal since the regulator may force TeliaSonera to sell Tele2’s mobile network.

Access, which operates a small mobile broadband company called ice.net with roughly 200,000 customers, would be the logical buyer since Tele2’s network would quickly turn it into a real player in Norway.

Tele2 Norway had sales of 4.1 billion Swedish crowns in 2013 and core earnings (EBITDA) of 121 million crowns.

The deal is the latest in a flurry of M&A activity in Europe’s telecom sector as operators seek to bulk up to cope with falling revenues and tough competition.

Europe’s antitrust watchdog last week cleared Telefonica’s 8.6 billion euro purchase of KPN’s E-Plus, a smaller mobile rival in Germany. In May, Hutchison took the Ireland market from four to three by buying out Telefonica’s local unit.

In both cases, the regulator required the buyer to rent out capacity on its network to smaller rivals that do not own their own networks, in an effort to maintain competition and prevent price rises after the deals.

uk.news.yahoo.com

 

After losing 4G bid, Tele2 Norway sells up to TeliaSonera

TeliaSonera has announced plans to acquire its rival in Norway Tele2 for 5.1bn SEK ($746m), leaving the country with two operators in control of 90 percent of the mobile market.

Tele2, the third largest mobile operator in Norway, has agreed to sell its operations in the country following a review of its business there after failing to secure high-bandwidth mobile spectrum in last December’s licence auction.

“The competitive constraints we faced without resources on the multiband frequency required us to evaluate different options for our Norwegian businesses. Whilst we have not been able to complete our originally desired strategy, the proposed deal is good for our customers, shareholders and for Tele2 as a whole,” Mats Granryd, president and CEO of Tele2, said.

Telenor and TeliaSonera’s Norwegian brand NetCom, as expected, won bids for spectrum, while Tele2 was trumped by a mystery bidder, later revealed to be Access Industries — a holding company owned by Ukraine-American billionaire Len Blavatnik.

Access also owns Nordic mobile broadband operator Ice.net, which has customers across Sweden, Denmark, and Norway.

Tele2 was reportedly in talks this February with Access Industries to save it operations in the country.

The deal, which leaves Norway with two main players, still needs approval by the country’s regulators, however Telia and Tele2 are confident it will close by the first quarter of 2015 at the latest.

TeliaSonera also announced plans to accelerate its 4G rollout to reach 98 percent of the population by 2016 instead of the original 2018 deadline.

TeliaSonera will bring forward 300m SEK in capital expenditure to fund the accelerated two-year 4G rollout between 2015 and 2016.

With Tele2’s subscribers, TeliaSonera will nearly double its share of mobile subscriptions from 23 percent to 40 percent, giving it a total of 2.7 million subscribers. Telenor’s 3.2 million mobile subscribers represent around a 50 percent share.

TeliaSonera said it expects cost savings of at least 800m SEK from 2016, mainly as a result of transferring Tele2’s traffic to its own network.

Access could stand to gain from the deal if regulators force TeliaSonera to sell Tele2’s network, according to Reuters.

www.zdnet.com