TeliaSonera looking to up Xfera stake to 80%, launch by year-end

24 May 2006

Scandinavian telco TeliaSonera is in talks to acquire increase its stake in Spanish 3G start-up Xfera to 80% with a view to launching commercial services by the end of the year, according to business publication Expansion, citing unnamed sources. TeliaSonera is reportedly close to finalising a deal in an attempt to prevent the government revoking Xfera’s UMTS licence. It hopes to raise its stake from about 23% to 80%, buying shares at a low price, which would later be revised based on the company’s performance. It will also take on most of Xfera’s EUR300 million security deposit currently held by the government.

If the deal goes through, Spanish construction company Actividades de Construcción y Servicios (ACS) would reduce its holding in Xfera from around 37% to 20%, whilst the company’s remaining minority shareholders would likely exit the venture. TeliaSonera and ACS currently hold 34.18% of Xfera jointly, while ACS has a separate 17.95% stake and TeliaSonera an extra 2.23%. Other core Spanish shareholders in Xfera include Corp Alba (11.72%), Abertis Infrastructuras (8.4%), Fomento de Construcciones y Contratas (7.75%) and Abengoa (5.4%). A final agreement among Xfera shareholders is expected in coming the days, with a definitive business plan to be put to the government within the next few weeks. Expansion claims that TeliaSonera has already approached equipment vendors including Ericsson, Nokia, Siemens and Huawei Technologies as potential suppliers for Xfera’s network.

Earlier this month it was reported that Spain’s Industry Ministry was drafting a report outlining various ways in which the UMTS licence awarded to Xfera in 2000 can be revoked, because the state does not believe that the company will be able to comply with its deadline set to start operations by 30 June 2006.