Telia Company said that it has agreed to sell its international operation Telia Carrier to pensions investment firm Polhem Infra for SEK 9.45 billion on a cash and debt-free basis but is forming a long-term partnership with Telia Carrier to enable it to keep providing network services to Telia customers. The transaction is expected to generate a capital gain of about SEK 7.00 billion and the directors are proposing an extra dividend of SEK 0.65 per share, bringing the total dividend for 2019 back to the level originally proposed in January.
The proposal to pay the extra dividend follows better visibility of the underlying performance of Telia and the stronger balance sheet after the disposals of the stakes in Turkcell and Telia Carrier. This will return the total dividend for 2019 to the SEK 2.45 originally proposed this January, and equates to 80 percent of operating free cash flow. An invitation to an EGM to vote on the proposal will be sent out shortly.
For 2019, Telia Carrier reported net sales of SEK 5.39 billion, EBITDA excluding IFRS-16 of SEK 500 million and capital expenditure of SEK 396 million, resulting in EBITDA ex-IFRS-16 and without capex of SEK 104 million. The agreed price for Telia Carrier equals an EV/EBITDA multiple ex-IFRS-16 of 18.9 times. The transaction is expected to generate a capital gain of approximately SEK 7 billion at closing
Content, services and operator customers of Telia Carrier account for 65 percent of global internet routes. Its network spans Europe, North America, and Asia, connecting customers in more than 120 countries.
In view of the sale, a partnership has been established between Telia Carrier and Telia Company to enable them to provide services and to develop new products for Telia’s customers. The company said the change of ownership will enable Telia Carrier, with its 530 employees, to support investment in network development, services and customer service programmes.
President and CEO Allison Kirkby said Telia Company can now fully concentrate on its Nordic and Baltic footprint and has secured future access for its customers to Telia Carrier's services. Most of the proceeds of the sale will be used to strengthen the balance sheet, enabling investments in services and networks in core markets, and providing a strong foundation for “attractive” shareholder remuneration.
The acquisition is Polhem Infra’s first investment in digital infrastructure. Polhem Infra is jointly owned by the Swedish Pension Funds First AP Fund, Third AP Fund and Fourth AP Fund. Polhem Infra CEO Mikael Lundin said the investor intends to be a stable and long-term owner that is committed to Telia Carrier and its role “in the transition towards sustainable and thriving societies globally”.
The transaction is subject to regulatory approvals relating to competition and foreign direct investments in the EU and US, among others, and is expected to be completed during the first half of 2021.
