Multiplay time in Sweden as Tele2 buys Com Hem for $3.3 billion

The global trend towards consolation across telecoms, and content has reached Sweden with the acquisition of cable player Com Hem by operator group Tele2 for $3.3 billion.

The general theory behind multiplay is for a company to try to become a one-stop-shop for all a customer’s communications needs, which includes the internet and content streamed from it. Despite the fact that many big bets on content from the likes of BT have yet to deliver much return, operators don’t seem to have a plan B so are still doubling down on consolidation.

There’s a whole bunch of detail about the structure of the acquisition, who gets what equity, etc, but frankly it’s just too boring to detail. The price premium paid is only around 12% and the resulting company will be run by current Com Hem CEO Anders Nilsson, with Tele2 CEO Allison Kirkby calling it a day.

“We are delighted to have reached agreement to combine two great Nordic companies to create a leading integrated connectivity provider in the Swedish market,” said Tele2 Chairman Mike Parton. “Allison Kirkby has led Tele2 through a challenging period with great energy and commitment. We as a Board would like to thank her for everything she has done for the Tele2 group and especially for her pivotal role in laying solid foundations from which Enlarged Tele2 can prosper.

“In this exciting new chapter for Tele2, the Board would like to welcome Anders Nilsson as the incoming CEO at completion. His broad and deep operational experience in the Nordic media and connectivity market makes him extremely well suited to lead Tele2 to drive integration and delivery of the significant value creation potential that this transaction enables.”

“Merging is the best possible next step for both companies as it will enable us to meet the demands of tomorrow and unleash the power for the best possible digital quality of life in Sweden,” said Nilsson. “The combined company will be very well-positioned for the future to meet the expectations of our shareholders, customers and employees.”

“Enlarged Tele2 will be able to provide a wide range of complementary connectivity and digital services; a base that makes us well positioned to act as a customer champion in an increasingly integrated world,” said Kirkby. “I am confident that, at completion, I will hand over a company in very good shape and with Anders Nilsson and the current Tele2 management team leading the organization, it is in great hands to be even more successful going forward.”

There you have it. The driver of this deal is investment company Kinnevik and the underlying strategy is to make the most effective competitor for Telia. For the benefit of other investors the companies have to tick various boxes such as synergy and scale but at the end of the day prevailing sentiment in telecoms seems to be consolidate or die.