Danish network operators Telenor and TeliaSonera have signed an agreement to merge their Danish businesses in a 50/50 joint venture. The two companies have agreed that the valuation of their respective companies approximates, and the agreement is therefore based on equal ownership; differences in net debt and other changes from signing to completion of the transaction will be settled in cash. The deal is subject to regulatory approval by the European Commission (EC), with a final decision expected to be announced in 2015. Until then, the two network providers will continue to operate independently.
According to a press release, the deal will create a mobile operator with annual revenues of over DKK9 billion (USD1.5 billion) and around 3.5 million subscribers, corresponding to a market share of roughly 40%. Telenor noted that there has long been a pronounced need for consolidation in the Danish telecoms market, where operators have experienced pressure on both revenue and profitability, which has led to limited scope for investment and innovation. As a result, the two parties have agreed that a full and independent telecom company is the strategic preferred solution to exploit synergies and create value going forward. TeleGeography notes that in June 2011 the two operators entered into an agreement to operate a shared mobile network, and following the approval of the Danish Competition Council, in February 2012 they established a common infrastructure company – TT-Netvaerket – to operate the shared mobile networks.
Robert Andersen, executive vice president and head of European operations at TeliaSonera, said: ‘To establish a joint venture with Telenor, where we build on our existing network collaboration was both a natural and necessary step to take. By joining together we can ensure continued investment in Denmark, not only for the benefit of our clients but also for the Danish society.’