Norwegian operator Telenor is moving to consolidate its position in the Swedish broadband and television services sector with the acquisition of Tele2 Sweden’s fiber and cable business for SEK775m ($121.4m).
Tele2 has some 370,000 households connected with fiber and cable, including 125,000 fixed broadband customers, 75,000 digital TV customers and 220,000 cable TV customers. The deal includes the transfer of 68 staff.
If approved, the transaction will propel Telenor from a close third to a strong second place in the Swedish broadband market, with 723,000 subscriptions, according to figures from Informa’s WBIS, behind incumbent Telia.
“In today’s society, access to high-capacity broadband plays a very central role for most people. Telenor aims to provide optimal connectivity and we want to continue our commitment on fixed broadband and TV through our brand Bredbandsbolaget. This topic is a priority for us and our new customers and employees will play a vital role in our business going forward,” said Lars-Åke Norling, CEO of Telenor Sweden.
The acquisition continues two trends in the European communications market; in-market consolidation and a growing enthusiasm among operators for multiplay offerings. Other recent examples include Telefonica’s acquisition of E-Plus and Vodafone’s move for Kabel Deutschland in Germany, as well as Hutchison’s purchases in Ireland and Austria.
This latest deal raises questions about the potential for further consolidation in the Swedish market, including the mobile sector which sees five operators competing in a market of less than ten million people and 14.56 million mobile connections. With 2.4 million mobile connections Telenor is in third place in the Swedish mobile market, behind Tele2 with 3.8 million and TeliaSonera with 6.7 million, and ahead of Hutchison’s 3 with 1.58 million, according to Informa’s WCIS+.
But any consolidation would be likely to also involve Sweden’s leading pay-TV and broadband provider, Com Hem, currently owned by private equity firm BC Partners, said Bengt Nordström, CEO of Swedish industry consultancy Northstream. “Both Telenor and Telia have the right portfolio, they have fixed and mobile broadband and they both have TV. Those are the components you need to be a long term player in the market,” said Nordström. “A third quad-play player has to emerge from Tele2 and 3 and Com Hem, or any combination thereof but it’s not yet clear how that will happen,” he said.