Tele2 and Com Hem have agreed to a merger that will create the second largest converged player in Sweden.
The two companies will combine their respective mobile and fixed offerings to take the fight to market leader Telia.
Tele2’s four million Swedish customers will get access to Com Hem’s range of broadband, TV and fixed telephony services.
In return, Com Hem’s 972,000 retail subscribers and 51,000 enterprise customers will be able to use Tele2’s mobile services.
The combined company would have annual sales of around SEK32 billion and an adjusted EBITDA of SEK9 billion.
Tele2’s shareholders will own 73.1 percent of the enlarged company, with those of ComHem retaining 26.9 percent.
The terms of the merger see Com Hem shareholders offered SEK146 per share, a premium of 11.8 percent compared to the closing price on 9 January, plus SEK6.6 billion in cash.
Investment house Kinnevik is the largest shareholder in both companies and will own 27.3 percent of the merged business.
It has signalled its approval for the merger, but all shareholders will get to have their say at Extraordinary General Meetings slated for the second half of the year.
Com Hem CEO Anders Nilsson (pictured) will become the CEO of new company, while Tele2 Board member Georgi Ganev is set to become Chairman.
Current Tele2 CEO Allison Kirkby is set to leave on completion of the deal.
The new management team is expecting synergies of around SEK900 million within five years, equally split between opex/capex and revenues.
It hopes to complete the merger, which requires the blessing of the European Commission, before the end of the year.
It noted that the main hurdle could be related to the dominance of the combined business in the digital TV space, but indicated it was willing to work with the authorities to overcome any concerns.
No decision has been made yet about the branding of the new business and it is not clear what the plans are for Tele2’s other opcos.
The operator has over 11 million customers in Croatia, Estonia, Germany, Kazakhstan, Latvia and Lithuania.
Nilsson said: “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.
“I am humbled by the responsibility and enormously excited by the opportunity to lead enlarged Tele2 as Group CEO.
“The combined company will be very well-positioned for the future to meet the expectations of our shareholders, customers and employees.”
Kirkby said: “This transaction will strengthen and diversify the combined company’s Swedish operations while increasing the long-term cash flow resilience.
"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."