Malaysia’s Axiata struck a deal to acquire TeliaSonera’s stake in Nepal mobile operator Ncell for more than $1 billion, as it continues its regional expansion across Asia.

The two companies issued separate statements announcing the deal, with Axiata entering into a conditional sale and purchase agreement with the Swedish operator to acquire its 60.4 per cent in the company for $1.03 billion.

At the same time, TeliaSonera will also receive an additional $48 million in compensation as it dissolves its economic interests in a 20 per cent stake in the company which is owned under a local ownership structure, as required by Nepalese law. Axiata will pay approximately an additional $335 million to acquire the stake from SEA Telecoms, giving it a total 80.4 per cent holding in the operator.

Axiata’s proposed entry into Nepal adds to its existing operations across Asia, with existing reach in Malaysia, Bangladesh, Sri Lanka, Indonesia, India, Singapore and Cambodia.

Eurasia retreat
For TeliaSonera, the sale represents the company’s first major step towards its plans to eventually exit from seven markets in the Eurasia region.

The company said in September it was in the process of reducing its presence in Nepal, Kazakhstan, Uzbekistan, Azerbaijan, Moldova and Tajikistan, as part of a change in strategy to increase its focus on Europe. TeliaSonera said it will use the proceeds from the sale to cut debt.

“Today, I am very pleased to announce a first step and proof point in this reshaping of TeliaSonera,” said Johan Dennelind, TeliaSonera’s president and CEO, with regards to the deal.

Axiata’s rationale
Axiata said Ncell was “both a rare and opportunistic expansion of its footprint in South Asia”.

Ncell has 11.5 million connections according to GSMA Intelligence, representing 44 per cent market share in the country, and claims a stronghold of close to 57.5 per cent revenue market share. Market leader Nepal Telecom has a 48 per cent market share of connections.

“The scarcity of a controlling stake and very sizeable, high quality assets within our target region with a number one market leadership position makes Ncell a rare opportunistic asset to come by,” said Dato’ Sri Jamaludin Ibrahim, president and CEO of Axiata.

TeliaSonera said the deal is expected to close in the first half of 2016.