TeliaSonera, the biggest telco in the Nordic region, has entered a cash offer of EEK7.82 billion (USD500 million) for the 51.1% stake in Estonian holding company Eesti Telekom Group (currently 27.23% owned by the Estonian government, and 23.86% by other investors) that it does not already own. The move was triggered by the expiry of a shareholder agreement between TeliaSonera and the Estonian government next month, which prevented the former from taking its stake in Eesti Telekom above 48.9%. The Finland-based operator, which owns its stake in Eesti Telekom through holding company Baltic Tele, hopes to gain full control of all its operations in the Baltic region in the future; it currently holds 49% of Lattelekom and 60% of Latvia Mobile in Lativa, as well as 60% of Lietuvos Telekomas and just over 90% of Omnitel in Lithuania.
Eesti Telekom’s strong Q1 operational and financial performance has, no doubt, encouraged TeliaSonera to go ahead with the takeover offer. The holding company, which operates fixed line arm Elion Enterprises (formerly Eesti Telefon) and mobile operator Eesti Mobiiltelefon (EMT), reported a net profit of EEK319 million for the first quarter of 2004, up from EEK39 million the year before. Revenues for the three-month period stood at EEK1.22 billion, an increase of 10% in a year, while its total assets were worth EEK4.9 billion, up from EEK4.6 billion. At the same date Elion Enterprises claimed 440,201 main lines in use, down marginally from 449,000 at the same time in 2003, while EMT claimed 507,500 customers, of which 188,600 were pre-paid.
According to analysts, however, investors in Eesti Telekom may not accept TeliaSonera’s offer, as its bid of EEK111 per share is significantly lower than the telco’s current share price of EEK122. TeliaSonera has said it will not increase its offer, claiming that the share price is too high.