TeliaSonera and Telenor are to merge operations in Denmark into a new joint venture in the hope that it will create new value in a difficult market climate.
The telcos said the decision to merge came as operators faced continued pressure on sales and profitability, leaving less room for investments in new and innovative services.
TeliaSonera and Telenor have operated through a jointly-owned mobile network since 2012, and said a combined venture would help capture new synergies while also bringing “substantial” benefits to customers, including a wider distribution network with better coverage and performance.
Combining the fixed networks of both TeliaSonera and Telenor would also create an even stronger broadband provider for customers in Denmark, the operators claimed.
The new company, in which each operator will hold a 50 percent share, will have a combined mobile subscriber base of approximately 3.5 million and a market share of around 40 percent. Estimated annual efficiency gains were put at “at least” DKK 800 million (€107 million) thanks to new synergies in distribution, sales and marketing, network and IT and administration.
Integration costs are expected to run up DKK 800 million (€107 million) between 2015 and 2017. Meanwhile, a new governance structure will be formed to head the new company, comprising of three members from both TeliaSonera and Telenor. A Chairman will be appointed unanimously and the recruitment process of a new CEO was also confirmed to be underway.
Kjell Johnsen, EVP and Head of Telenor Europe, said: “Competition in Denmark is intense and we face continued pressure on revenue growth and profitability, making consolidation inevitable. By combining the assets and customer bases of Telenor and TeliaSonera in Denmark, the joint venture will become a robust operator.
“We will be able to offer our customers a high-quality network with outstanding connectivity and the best customer experience in Denmark.”
Robert Andersson, EVP and Head of Region Europe at TeliaSonera, said: “We are making a necessary and natural move by forming a joint venture with Telenor building on the network partnership we already have with them. By joining forces we can secure investments in Denmark, to the benefit not only of our customers but to the Danish society as a whole.”
The transaction is now awaiting the approval of the European Commission, with clearance and closing expected in 2015.