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Financials Mergers & Acquisitions

Europe’s M&A wave continues as MNOs look to get lean

Collectively, the European MNOs are tightening their belts, and looking to consolidate their most disparate operations – which they gained during a period of finance-driven expansions from core markets into new territories.

This week, TeliaSonera has agreed to sell the 77% stake it holds in Spanish MNO Yoigo, to Spanish rival Masmovil Ibercom. The move comes after around 10 years of operations in the country, and is part of Swedish Telia’s plans to focus on markets closer to home, and the Baltic.

The deal values Yoigo at around $700m, and Masmovil is planning on buying out the smaller Yoigo shareholders in time. Telia has struggled to compete against the bundled offerings that its Spanish rivals can offer, as it only provided cellular services.

Masmovil is going up against Orange, Telefonica, and Vodafone in the Spanish market. It had around a 7% market share, with 3.3m subscribers, before adding Yoigo’s 4m+ subs. It also has some ADSL customers after buying PepePhone, and also a slice of Jazztel’s fiber customers, which it picked up when Orange acquired Jazztel. Currently, it has some 750,000 fiber connections to buildings, and is aiming for 2.3m within the next three years.

Telia also announced a plan to sell its debt-collection division, Sergel Group, to Marginalen for $251m, and also to bid on acquiring Finnish fiber optic network provider Anvia, with an initial offer of $146m. Notably, Anvia says that it is still considering a $120m bid from Elisa – so Telia might not win out.

Tele2 has also announced a similar network investment, spending $352m to buy TDC’s Swedish wing, in a move to boost business sales to large customers in the Nordics. TDC has been struggling of late, cutting its dividends and full-year forecasts, but says that the revenue from the sale of its Swedish operations will help bolster its Danish and Norwegian wings.

“This deal is a unique opportunity for Tele2 to build scale and expand its range of services in the B2B market, it is hugely complimentary to our existing Swedish business, and it allows us to meet the global trend of large B2B customers demand a wider range of communication and network services,” said Tele2’s CEO Allison Kirby.

Tele2 will hope that the expansion of its home market will improve its recent performance. Bloomberg says that the company value is down 16% in 2016, but it has recently made something of an IoT pivot.

A partnership with IBM will see Tele2 effectively provide the connectivity link to IBM’s Watson IoT platform, and the pair will be offering an IoT Starter Kit that includes SIM cards and the software to easily integrate devices with the Watson cloud.

Elsewhere, Tele2 is rolling out a LoRa LPWAN network in Gothenberg, in collaboration with Talkpool, and a contract win with the 1-Fleet Alliance, to deliver 150,000 SIM cards to support fleet management and telematics.

The final piece of looming EU M&A news is the ongoing 3 Italia and Wind merger, which has now seen the European Commission grant itself an extension until September to consider the proposed merger – which had a previous August deadline.

Bloomberg is reporting that Swisscom’s Fastweb ISP brand, French operator Iliad, and the Caribbean Digicel Group have all made preliminary bids on assets that might be freed up through the acquisition. The commission had previously settled on an August deadline, although 3 Italia’s owner CK Hutchison has already begun offering concessions in order to improve the chances of the deal going through.

Wind currently sits in third-place in Italy, with around 21.3m subs. 3 Italia is the in fourth, with 10.2m subs. In first is TIM, with 30.1m, and Vodafone holds around 24.7m in second place.

Hutchison is hoping that the spectrum and 5000-tower concessions would help create a new fourth operator in the country – and the EC dragged its heels on a decision that would turn France into a 3-operator market that led to Orange calling off its planned takeover of Bouygues.

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