Telia Company today announces that it has reached an agreement with Polhem Infra for the sale of its international carrier business, Telia Carrier, for a value of SEK 9,450 million on a cash and debt free basis. At the same time, Telia Company enters a long-term strategic partnership with Telia Carrier, securing continuous world-leading network solutions to Telia’s customers. The Board of Directors has also decided to propose an additional dividend of 0.65 SEK/share, bringing the total dividend for 2019 back to 2.45 SEK/share which was originally proposed in January this year.
Global leader in internet backbone networks
Telia Carrier holds the top position in the global ranking of companies with Internet backbone networks. Content, services and operator customers of Telia Carrier account for 65 percent of global Internet routes. Its network spans across Europe, North America, and Asia, connecting customers in more than 120 countries, with the Scandinavian footprint being particularly strong through the so-called Scandinavian Ring – the part of Telia Carrier’s network that connects major Baltic and Nordic cities.
Capital gain of SEK 7 billion
For 2019, Telia Carrier reported net sales of SEK 5,388 million, an EBITDA excluding IFRS-16 of SEK 500 million (SEK 888 million including IFRS-16) and capital expenditures of SEK 396 million resulting in EBITDA, excluding IFRS-16, less capital expenditures, of SEK 104 million. The agreed price for Telia Carrier equals an EV/EBITDA, excluding IFRS-16, multiple for 2019 of 18.9x. The transaction is expected to generate a capital gain of approximately SEK 7 billion at closing.
Long-term partnership Telia Carrier & Telia Company
In connection with the divestment and change of ownership, a strategic, long-term partnership between Telia Carrier and Telia Company has been established, to safeguard the two companies’ unique ability to provision services and to develop new solutions for Telia’s customers. The change of ownership will enable Telia Carrier, with its 530 employees, to drive a level of investment in network development, services and customer care programs that brings benefits to content providers, operators and enterprises beyond that of any competitor.
Focus on Nordic & Baltic Footprint
Allison Kirkby, President and CEO of Telia Company, says: ”The divestment of Telia Carrier highlights the value Telia has built in its digital infrastructure - and today we are able to crystallize some of that value. As a consequence, we can now fully concentrate on our Nordic and Baltic footprint, while we at the same time have secured future access for our customers to Telia Carrier's world-leading solutions, through a long-term strategic partnership
Focus on cooperation and sustainability
The acquisition is Polhem Infra’s first investment in digital infrastructure. Polhem Infra is jointly owned by the Swedish Pension Funds; First AP Fund, Third AP Fund and Fourth AP Fund. The company’s goal is to lay the best possible foundation for long-term investments in infrastructure to meet society’s long-term needs. The focus is on cooperation and sustainability.
Mikael Lundin, CEO, Polhem Infra, says: “As an investor in Nordic infrastructure we will be a stable and long-term owner, committed to the company and its role in the transition towards sustainable and thriving societies globally. We will support the company with a thought-leading board of directors, and we will continue to invest in digital infrastructure, a core investment area for us.”
The transaction is subject to regulatory approvals (relating to e.g. competition and foreign direct investments) in, inter alia, the EU and the US, and is expected to be completed during the first half of 2021.
As of September 30, 2020 the Telia Carrier operation will be regarded as assets held for sale in Telia Company’s accounting.