TeliaSonera To Buy Orange Denmark
By Carlo Longino, Thu Jul 08 20:15:00 GMT 2004

The biggest Nordic phone company will pay 600 million euros for the carrier and double its market share in the country.

Orange parent France Telecom has been on a debt-slashing spree, and Orange has said it would sell out of countries where its units hold less than 20% share. Orange at the end of 2003 had 12 percent in Denmark, and TeliaSonera 10%. Analysts say the Danish market is extremely competitive, and the buyout should reduce some of that competition now that TeliaSonera will have share about equal to number-two Sonofon, which is owned by Telenor.

TeliaSonera, in addition to fewer customers, also has lower revenues in the country than Orange. In the first quarter, TeliaSonera turned EBITDA of 15 million kronor ($2 million) on sales of 450 million kronor ($60.6 milion), while Orange earned 79 million kronor ($10.6 million) on 535 million kronor ($72.1 million) in revenue.

There's some concern that TeliaSonera, which plans to assume Orange's customers then shut down one of the networks, may have overpaid. Analysts Ovum say the deal values Orange's 605,000 customers at EUR 1000 each, while Orange's ARPU in Denmark last year was EUR 373, and market leader TDC paid just EUR 88 per subscriber when it acquired Telmore earlier in the year.

Though it's not a mega-merger, this deal does look like it's more about sentiment and acquiring customer, revenue and earnings growth rather than solid financials.