Telenor completes Nordic sweep with DNA acquisition

Norwegian telco Telenor has completed its reach across the Nordics, taking the first steps to acquire Finnish operator DNA.

Telenor has now officially entered into agreements with DNA’s two largest shareholders Finda Telecoms and PHP, who hold stakes of 28.3% and 25.8% respectively. Following approval at the Finda Telecoms and PHP AGMs, and regulatory approval, a mandatory public tender offer will be triggered for the remaining outstanding shares in DNA by Telenor. The current 54% will cost Telenor €1.5 billion.

The transaction is expected to be completed in Q3 2019, with the remaining shares being purchased for the same amount, valuing the entire DNA business at roughly €2.8 billion.

“I am very pleased to announce today’s transaction and our entry into Finland, the fastest growing mobile market in Europe,” said Telenor Group CEO Sigve Brekke.

“DNA is an exciting addition to Telenor Group, and a natural complement to our existing operations in the Nordic region. Not only are we strengthening our footprint in the Nordic region, we are also gaining a solid position across fixed and mobile in the Finnish market and making room for further value creation.”

DNA has been crafting itself a useful position in the Finnish market, with both fixed and mobile offerings. Having been founded in 2000, and restructured through various mergers in 2007, DNA has grown to become Finland’s third largest telco with a mobile market share of 28%. With Finland proving to be one of the fastest growing markets in Europe, this could be a useful acquisition from Telenor.

Having grown its mobile service revenues by at least 9.3% year-on-year for the last three years, Telenor expects to use its own expertise to grow revenues further through a larger product portfolio, though the enterprise market is also a target. On the business side of things, Telenor’s international footprint will certainly help, with operations across the Nordics.

The transaction will also offer Telenor more ammunition as it battles its Nordic competitor Telia,

Although Telenor still does have assets across various Asian markets, Pakistan and Thailand for example, it has been narrowing its focus on the Nordic markets recently. Exiting from India, although this was partly forced due to the success of Reliance Jio, while offloading its Eastern European business units will give the team more resources to dominate the Nordic region, though it will have to deal with Telia.

Should the transaction be approved by all the relevant parties, Telenor will have a presence in all the Nordic markets, pinning it head to head with long-time rival Telia. Aside from the Swedish market where Telia dominates, the pair are largely on level pegging, though the DNA business will add momentum.

Alongside considerable growth over the last three years, Finnish consumers have the biggest data appetites across the bloc. According to data from the OECD, the average Finnish mobile data subscription is a massive 15 GB per month which dwarfs the likes of the UK and France, where the average contract is 2.6 and 3.6 GB per month.

Nordics team up to storm the 5G world

All five of nations in the Nordic region have signed a Letter of Intent, favouring regional collaboration to launch a leadership bid in the 5G rankings.

The letter itself was signed in Örnsköldsvik in Sweden at the annual two-day meeting of the regional leaders, with each Prime Minister committed to the collaborative dream. It’s an approach which hasn’t really been seen elsewhere, passive aggressive comments seem to be the speciality for 5G, but considering the relatively small size of the economies and populations in the five countries, pooling resources and objectives does seem like a sensible move.

The prime minister signatories are: Stefan Löfven (Sweden), Erna Solberg (Norway), Lars Løkke Rasmussen (Denmark), Juha Sipilä (Finland), Katrín Jakobsdóttir (Iceland).

Nordic Prime Ministers

“The deployment of 5G will require substantial investments as well as the appropriate regulatory framework,” the letter reads. “At political level, we commit to creating the conditions in the public sector for digitalisation and 5G to flourish. As Nordic prime ministers, we have agreed to the common vision of being the first and most integrated 5G region in the world. We want to create a common Nordic 5G space.”

The letter itself agrees to set up a common action plan addressing the development of testing facilities and test beds, technical coordination of 5G frequency bands within the region and the removal of obstacles to expansion of the 5G network, in particular deployment of base stations and antennas. More specifically, transport, mission critical communications, smart manufacturing, energy and agriculture are the targeted segments.

As you would imagine, there has been a rousing welcome from vendors and operators, signing their own letter in response:

“As CEOs of the leading Nordic telecommunication companies, we welcome the letter of intent on 5G development signed today by the leaders of Nordic countries. A vision for a common Nordic 5G space agreed today confirms our region’s ambition to remain a leading digitalized and innovation region to the benefit of our societies. The challenge ahead is to make this vision a practical reality.”

As an idea, it is certainly a sound one. Getting 5G right is certainly going to be a costly investment and achieving economies of scale will be critical to ensure an effective experience. However, balancing the needs of the individual countries against the greater good of the region will be a tricky task. Sacrifices will have to be made, and could be the deciding factor as to whether this nice idea becomes a reality.