HELSINKI, Finland—Whatever the ultimate outcome of Telia’s strategic Scandinavian union with Sonera, the net effect will certainly not be a merger of equals. The boards of Telia and Sonera have conceded that Telia’s takeover of Sonera has transpired because of a “political” decision in Stockholm, Sweden, and Helsinki to create a dynamic Nordic telecom operator capable of growing in Europe and globally.
“The merger of Sonera and Telia is only the first step on the path of the new Nordic telecommunications giant,” commented Anders Stenlund, a telecom analyst with the Helsinki-based Aktea Bank. “The prospect now is for other Nordic telecoms to join, and in particular Denmark’s TDC.”
The union of Sonera and Telia is the first such cross-border merger of state-held telecom companies in Europe. The merged company will have a strong presence in the Nordic region, Russia, and Eastern Europe. Significantly, the merger will wipe away Sonera’s US$2.5 billion debt.
The merger will be effected through an exchange of shares, with each shareholder in Sonera receiving 1.5144 shares in Telia. In total, the shareholders in Sonera will secure 34 percent of the share capital in Telia. The price offered represents a 16-percent premium on Sonera’s share price in Helsinki on 20 March, prior to the takeover offer.
Shares in the “new Telia” are to be listed in Stockholm, Helsinki and New York.
“The timing of the merger is important. Sonera’s share has doubled in value since September. However, this upward curve has slowed in recent weeks,” said Kimmo Sasi, Finland’s Transport and Communications Minister.
The operations of the two telecoms will overlap only to a minor extent. It is certain that Telia will be required to sell its shareholding in Telia Mobile, the second-largest mobile operator on the Finnish market.
Telia has more than 200,000 mobile customers in Finland.
“The merger creates a regional telecoms leader with a European market presence, and a capitalization of over US$17 billion. This makes Telia-Sonera one of the five largest European telecoms. If TDC were to join, the effect would be to add a further US$7 billion to the company’s value. This would make this merger the third-largest telecom in Europe,” said Stenlund.
“The merger is no great surprise. A merger between Sonera and Telia was always a certainty. It was just a question of time and price,” said Hakan Persson, a telecom analyst at Stockholm-based investment bank, Aragon Fondkommission.
“The political will is there to close a merger agreement by the end of March. Sonera and Telia are both state controlled, and it is the wish of their principal shareholders that a merger takes place at the very earliest time. This merger was first reached at a political level, and the boards of each company were then given the task to complete,” said Persson.
