Tele2 Sweden acquires broadband arm of utility E.ON

Tele2 Sweden has bought 75.1% of the broadband division of Swedish energy utility E.ON for SEK409 million (USD56 million) plus assumed net debt of SEK90 million. The transaction will be concluded on 31 August, subject to the approval of the Swedish competition authorities. E.ON Bredband Sverige specialises in providing broadband solutions for SMEs, large companies and the public sector, mainly in southern Sweden. Residential broadband services over E.ON’s southern network are currently sold by a third party, ISP Bredbandsbolaget, a 100% subsidiary of Norway’s Telenor. In 2005 E.ON Bredband had revenues of SEK224 million and EBITDA of SEK79 million. ‘This acquisition shows that we will always seize good opportunities, at the right price, to improve and expand our position in the fast growing broadband markets both in Sweden and Europe,’ said Tele2’s CEO Lars-Johan Jarnheimer. Tele2 expects to achieve synergies of SEK25 million per year from the acquisition, beginning one year after the deal closes. Integration costs are expected to be in the region of SEK35 million, spread over the next two years. Tele2 offers broadband services in Sweden over ADSL, cable and wireless networks, and had 69,000 retail broadband subscribers at the end of 2005, according to TeleGeography’s GlobalComms database.