Telia strikes $2.6 billion deal to buy rival TDC's Norway business

By Johannes Hellstrom and Olof Swahnberg

STOCKHOLM (Reuters) - Swedish telecom operator Telia Company is buying TDC's Norwegian business in a $2.6 billion deal that adds broadband and TV to its services in Norway.

Telia will become the second biggest player for both mobile and fixed services after Norwegian market leader Telenor once the acquisition is completed.

Rapid change in the global telecoms and media sectors as players look to pool services to drive revenue growth has also begun reshaping the Nordic market with Sweden's Tele2 making a bid for cable-TV firm Com Hem this year.

Telia's Norwegian purchase would leave it with mobile, fixed-line and TV operations in all of its seven Nordic and Baltic markets, though its business in Denmark remains too small to be sufficiently profitable.

The acquisition, which Telia expects to complete during the second half of 2018, comes as no surprise as Telia has long said purchases of broadband and cable-TV assets in Norway were a priority.

TDC's sale of its Norwegian business - GET and TDC Norway - comes after its new owners delisted the firm and opted to pursue investments in Danish infrastructure and digitial services.

Denmark's TDC was bought by a consortium led by Australia's Macquarie for $6.7 billion this year.

"GET and TDC Norway are high quality businesses, but it has become clear that we do not need to own these businesses in order for us to succeed with what is essentially an ambition focused on Denmark," TDC CEO Pernille Erenbjerg said in a separate statement.

ROOM FOR MORE

Telia has previously eyed a potential merger with TDC but opted against it due to expected anti-trust challenges, sources told Reuters earlier this year.

The Swedish company said its share repurchases and dividend policy would be unaffected by the deal, but its shares were down 3.5 percent by 1050 GMT while Telenor shares also fell amid worries over stiffening competition in its home market.

Chief Executive Johan Dennelind told Reuters that Telia, which still is in talks to buy Bonnier Broadcasting, had room for further acquisitions without affecting its plans for share buy-backs and dividends.

TDC's Norwegian business includes GET, a fibre and TV provider with a total of 518,000 households andbusinesses connected to its fibre-based network, as well as a business-to-business operation, TDC Norway.

GET also has more than 1 million private and business customers who use its TV and broadband services on a daily basis, Telia said.

"It will create a leading convergent operatorfor both consumers and enterprises in Norway which can compete in the market with a lot of attractive and new products and services," Dennelind said in a statement.

In 2017 GET and TDC Norway reported revenues of 4 billion Norwegian crowns and EBITDA (earnings before interest, taxes, depreciation and amortization) of 1.7 billion crowns.

Telia said it expected the deal to generate 600 million Norwegian crowns of synergies by 2021 while integration costs were seen at about 200 million annually during 2019 and 2020.

($1 = 8.0859 Norwegian crowns)

(Reporting by Johannes Hellstrom and Olof Swahnberg, additional reporting by Helena Soderpalm Stine Jacobsen and Gwladys Fouche; Editing by Kirsten Donovan/Keith Weir)