Telia Co. of Sweden says it has agreed to sell Telia Carrier, its international carrier business to newly created investment firm Polhem Infra. Telia will receive SEK 9.45 billion ($1.06 billion) in cash on a debt-free basis. The company will enter an agreement with Telia Carrier for continued service provision. The deal, subject to regulatory approvals in Europe and the U.S., is expected to be close during the first half of 2021.
Telia Carrier employs 530 people and operates the AS1299 backbone network, a global fiber network infrastructure, that offers connectivity in more than 120 countries across Europe, North America, and Asia. The infrastructure includes the Scandinavian Ring, which connects Baltic and Nordic cities. Telia Carrier reported net sales in 2019 of SEK 5.388 billion ($60 million), an EBITDA excluding IFRS-16 of SEK 500 million ($56.12 million), and capital expenditures of SEK 396 million ($44.4 million), resulting in EBITDA, excluding IFRS-16, less capital expenditures, of SEK 104 million ($11.67 million). The sale price thus represents an EV/EBITDA, excluding IFRS-16, multiple for 2019 of 18.9X. Telia expects to realize a capital gain of approximately SEK 7 billion ($790 million) at closing. Staffan Göjeryd, head of Telia Carrier, is expected to continue to lead the company.
The divestment of Telia Carrier highlights the value Telia has built in its digital infrastructure - and today we are able to crystallize some of that value. As a consequence, we can now fully concentrate on our Nordic and Baltic footprint, while we at the same time have secured future access for our customers to Telia Carrier's world-leading solutions, through a long-term strategic partnership,” said Allison Kirkby, President and CEO of Telia Co. “The majority of the proceeds from the sale will be used to strengthen our balance sheet and thereby provide a solid financial base for Telia Company and our shareholders, enabling both investments in services and networks in our core markets as well as providing a strong foundation for attractive shareholder remuneration.”
Polhem Infra is jointly owned by the Swedish Pension Funds First AP Fund, Third AP Fund, and Fourth AP Fund. It was formed to focus on infrastructure investments; this is its first in the digital domain. “As an investor in Nordic infrastructure, we will be a stable and long-term owner, committed to the company and its role in the transition towards sustainable and thriving societies globally. We will support the company with a thought-leading board of directors, and we will continue to invest in digital infrastructure, a core investment area for us,” commented Mikael Lundin, Polhem Infra’s CEO.
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