Telia to offload Danish operation for £742 million

After nearly three decades in Denmark, Telia is heading for the exit.

The Sweden-based telco group on Tuesday agreed to sell 100% of Telia Denmark’s operations and network assets to local electricity, broadband and TV provider Norlys for DKK6.25 billion (£742.7 million). It’s an all-cash deal with a valuation equivalent to 8.9 times Telia Denmark’s 2022 reported EBITDA. As market exits go, this looks like a quick and clean one.

“Telia’s strategy is to focus on markets where there is a clear path to securing and defending a leading market position,” said a statement from Telia. “Having considered a number of strategic options in Denmark over several years, the combination of Telia’s strong mobile position with Norlys’ strong infrastructure position creates a unique opportunity to create a new national challenger with a committed long-term owner, while crystallising immediate value for Telia.”

The deal, which is expected to complete no later than January 2024, brings the curtain down on a mixed performance by Telia in Denmark.

It is one that began in 1995, shortly after the privatisation and subsequent liberalisation of the Danish telecoms market. Telia entered the cable TV and broadband market with the acquisition of Stofa, and followed that up with the launch of commercial fixed-line telephony and mobile services in 1997 and 1998 respectively.

The business turned its first profit in 2002, and two years later, Telia Denmark gobbled up one of its rivals, Orange. After that, things started to plateau somewhat. It doubled down on its mobile business with the 2007 acquisition of MVNO Debitel – which now operates as CallMe – but exited the cable business with the 2010 sale of Stofa to private equity firm Ratos for DKK1.1 billion.

In 2011, it established a mobile network-sharing venture, TTN, with rival Telenor, in an effort to mount a stronger challenge to incumbent TDC. That culminated in 2014’s attempt to fully merge Telia Denmark with Telenor. However, that plan was scrapped nearly a year later following stiff opposition from EU competition commissioner – and Danish national – Margrethe Vestager. Telia and Telenor continue to operate shared networks, and have been rolling out 5G infrastructure together since 2020.

Telia Company published its first quarter financials on Wednesday, and these underscore the relatively minor role its Danish operation plays within the group.

Telia Denmark turned over SEK1.32 billion (£101 million) in the three months to 31 March, and broadly flat on the previous year’s SEK1.28 billion. Adjusted EBITDA jumped to SEK288 million from SEK 235 million. By comparison, Telia’s group revenue and adjusted EBITDA came in at SEK23.1 billion and SEK7.3 billion respectively.

It’s a similar picture in terms of mobile customers, with Telia group boasting 18.25 million, of which just 1.7 million reside in Denmark. That puts it just ahead of Telenor Denmark, which has 1.64 million mobile customers, but comfortably behind TDC, which through its various brands serves 2.85 million.

“All in all, Telia will hardly miss Denmark. It has been 28 very hard years,” said John Strand, CEO of Denmark-based consultancy Strand Consult, in a press note.

With the fixed-line assets and scale that Nordlys has, he expects the merged entity to be a credible threat to TDC.

“This is probably the worst thing that could happen from TDC’s point of view, and it could easily have a very negative impact on TDC’s business. The story is not that Norlys has bought Telia Denmark, but that TDC will experience increasing competition in the market, which may put them under further pressure,” said Strand.

Indeed, and Norlys CEO Niels Duedahl sounds up for the challenge.

“Combining Telia’s mobile network with our fibre business will enable Norlys to provide a full-service solution in Denmark, paving the way for significant growth opportunities,” he said in a statement. “A strong mobile arm will expand our position as the number one challenger in the Danish market and add to our presence across both the digital and green value chains.”

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