Telia Company said it has agreed to buy Get TDC Norway from Danish operator TDC at an enterprise value of NOK 21 billion on a cash and debt-free basis, which will result in a comprehensive supplier and a challenger in the market. The announcement comes shortly after TDC Group was taken over by a consortium of pension funds and Macquarie Infrastructure and Real Assets and decided to split up its Danish operations into network and services arms.
Telia Norway CEO Abraham Foss said the merged company will be a powerful and independent competitor to the market leader, obviously referring to Telenor. The acquisition requires competition authority approval, and this is expected in the second half of 2018.
Telia Norway runs the Telia, OneCall, MyCall and Phonero brands and employs 1,350 people. It has approximately 2.3 million retail and corporate mobile customers and achieved NOK 9.8 billion revenue in 2018 with EBITDA of NOK 3.4 billion.
Get and TDC Norge run the brands Get and TDC and employ 870 workers altogether. They have about 420,000 television customers and 370,000 broadband customers. Their 2017 turnover was NOK 4.0 billion and EBITDA was NOK 1.73 billion.
The purchase price of NOK 21 billion corresponds to an EV/EBITDA multiple of 12.1 times based on 2017, and 9.0 times including expected synergies. Telia expects to generate full run rate synergies of NOK 0.6 billion by 2021 from B2C and B2B cross-sales, churn reduction and other cost efficiencies. The acquisition is estimated to incur integration costs during 2019 and 2020 of approximately NOK 200 million annually.
Telia said the transaction puts its net debt to EBITDA pro forma at 1.9 times, which is slightly below its target of 2 times plus or minus 0.5 times. Its share buy-back scheme and dividend policy remain intact. Bank of America Merrill Lynch, LionTree Advisors, EY and Simonsen Vogt Wiig acted as advisors to Telia Company.
Gunnar Evensen, CEO of Get and TDC Norway, said Get had led the development of digital services and had transformed itself from a cable TV supplier to a provider of modern broadband supplier with TV and streaming services. In August, he said, it would reach gigabit broadband, and will bring out new smart home products in the autumn. He added that TDC has provided the business market with multi-service networks and value-boosting cloud products.
Telia Norway said its 4G network covers 98 percent of the Norwegian population. Get and TDC have a nationwide fixed line network stretching more than 21,000 km and have been investing billions of kroner into moving towards gigabit broadband in recent years. It will continue investing billions in the years to come.
Customers of Telia Norway, Get and TDC Norway will not notice any practical difference for the time being and their contracts remain valid.
TDC Group said that Get and TDC Norge are well-run operations but selling them will enable the group to concentrate on its vision as a Danish company. Some of the sales revenue will be used to reduce debt, in the expectation that the divestment will not have any negative effect on TDC Group’s corporate credit ratings. Any excess could be used to invest in activities in Denmark, or to cut debt further.
