Norway's Telenor has purchased Tele2's Swedish cable and fibre business for a total of Skr794m (€91.2m) cash. The purchase price consists of Skr775m (€89m) for the assets exchanged and a further Skr19m (€2.2m) for 'certain equipment' relating to the business. The deal encompasses Tele2's consumer operations, which according to Telenor, pass 370,000 homes. Telenor bought the assets through it's Swedish arm, gaining 125,000 fixed broadband customers, 75,000 digital TV customers and 220,000 cable TV homes. Telenor Sweden currently has cable and IPTV operations through both its Canal Digital and Bredbandsbolaget brands. The last published results for its fixed-line business showed 289,000 TV subscriptions and 534,000 internet subscriptions at Q2 2013. Whilst there has been an upward trend in Telenor Sweden's fixed-line TV subscriptions in recent years, it has not experienced organic growth in fixed-line broadband, largely due to continued growth from incumbent telco TeliaSonera.
The transaction marks an exit from Sweden's fixed-line consumer market for Tele2 in order to focus on mobile. The divested business generated revenues of approximately Skr530m (€60.8m) in 2012. The deal does not include Tele2's business customers or fibre infrastructure and is subject to approval by the Swedish Competition Authority.
Together with the fixed-line operations owned by its Swedish arm, at Q2 2013 Telenor had 305,000 subscribers to its Canal Digital DTH satellite business. If satellite is included, the Tele2 purchase will put Telenor in a comfortable second place behind Com Hem in terms of Swedish pay TV subscriptions, ahead of TeliaSonera, which currently has around 530,000 IPTV subscribers and Teracom's Boxer pay DTT service, which claimed 589,000 subscribers at Q2 2013. The strengthening of Telenor's fixed-line services will provide a stronger fall-back in relation to its satellite subscriber base, which has been in decline since 2007. The contrasting upward trend in fixed-line TV has been led by IPTV, but was also partly due to the acquisition of Ownit Broadband in August 2012. Overall however, Telenor has until now not significantly grown its television subscriber base in Sweden organically, largely due to the offsetting effect of satellite decline.
The broadband additions from the Tele2 acquisition provide the opportunity for Telenor Sweden to expand its multi-play offerings - an important competitive tool due to the protective effect of high speed broadband. Furthermore, it allows for a greater presence in the Swedish cable market, in which Telenor Sweden has experienced limited growth in recent years. If the acquisition is approved, it will bring the Swedish cable market more in line with Norway and Denmark, which are both dominated by two large players.