Tele2 is buying TDC Sweden in a move intended to bolster its business-to-business propositions in its home market.

“The acquisition of TDC Sweden is consistent with our strategy to be champions of customer value for both consumers and businesses. This deal is a unique opportunity for Tele2 to build scale and expand its range of services in the B2B market, it is hugely complementary to our existing Swedish business, and it allows us to meet the global trend of large B2B customers demanding a wider range of communication and network services,” said Allison Kirkby, president and CEO of the acquirer, Sweden’s fourth largest mobile operator.

TDC Sweden is said to have “a strong position in attractive product segments”, with EBITDA of SEK402 million ($48.9 million) on net sales of SEK3.4 billion in 2015. The deal gives an enterprise value for the business of SEK2.9 billion ($352 million).

TDC said the disposal follows a strategic review which found “Tele2 is a better long term owner of TDC Sweden and the price obtained is higher than the value of continued TDC ownership”. It expects to record a DKK800 million ($122 million) gain after tax once the deal goes through.

“Tele2 has traditionally been strong in mobile telephony and fixed telephony while TDC Sweden is further ahead in network as a service, unified communications and hardware. The unique complementary profiles of the two companies will enable us to provide our customers with even greater value going forward,” claimed Samuel Skott, EVP and CEO of Tele2 Sweden.

The transaction is subject to regulatory approval. It is expected to close in the fourth quarter of 2016.

Rights issue
In conjunction with the deal, Tele2 is planning an equity issue to existing shareholders to raise around SEK3 billion. However, it also said that the Swedish buy is not conditional on the extra financing, as it has funds and credit facilities in place to provide finance.

The rights issue, it said, is to “maintain the company’s financial strength”. It is supported by Kinnevik, the largest shareholder of Tele2.