* M&A hopes boost shares in Tele2 and Nordic peers
* Report says Hutchison in talks on Tele2 Swedish business
* Tele2 pledges solution to Norway uncertainty
* Tele2 sees flat 2014 earnings, less than analyst forecasts
(Adds M&A report, CEO comment, analyst, share, detail)
By Sven Nordenstam
STOCKHOLM, Feb 7 Shares in Nordic telecom
operator Tele2 jumped as much as 8 percent on Friday
on expectations of a bid for its business in Sweden that would
bring about long-awaited consolidation of the country's telecoms
Tele2's shares had fallen earlier in the day after the
company's tepid 2014 forecast but they rose on a report in
industry publication TMT Finance that said Hong-Kong's Hutchison
Whampoa was in talks to buy Tele2's Swedish
operations, its biggest business. (r.reuters.com/vav66v)
Tele2 and Nordic rivals Teliasonera and Telenor
were among the biggest gainers in the STOXX Europe 600
Hutchison already owns 3 Sweden, the smallest of the
country's four mobile operators and would be a natural player in
any consolidation. 3 Sweden has a market share of around 11
percent, Tele2 is number two with a market share of 29 percent
behind market leader Teliasonera.
TMT Finance also said Hutchison might buy TeliaSonera's
business in Denmark.
Tele2's Chief Executive Mats Granryd declined to comment on
the report but repeated that his firm sees itself as a buyer in
the Swedish market should any consolidation happen.
"It feels very premature to be talking about that, but of
course we are a buyer rather than a seller," Granryd told
Reuters. Hutchison declined to comment.
There has already been speculation about consolidation in
Sweden's telecoms sector as M&A is picking up in Europe. The
European Commission is probing deals that would cut the number
of operators in Germany and Ireland from four to three.
"Speculation around Tele2 and 3 merging in Sweden have been
relatively common the last nine months," Swedbank analyst Sven
Skold said. "I haven't believed in such rumours - if so, I have
seen Tele2 as a buyer of 3 in Sweden with its own shares."
A senior banker said cost savings from merging Swedish
mobile operators were likely to be less substantial than in
other countries, as there are already network sharing agreements
in place, adding 3 and Tele2 were already run very efficiently.
"Those who would gain from it are the operators who don't
participate in the consolidation," the banker said, pointing to
the cumbersome process of getting a deal approved by competition
authorities and merging two groups, giving other carriers
opportunity to woo their clients.
He said it would be costly to exit existing network sharing
agreements and instead splice networks with a new partner. "The
initial negative synergies are often rather large."
In Sweden, Tele2 and Teliasonera share a 3G network, as do 3
and Telenor outside the big cities. Teliasonera and 3 run their
own 4G networks, whereas Telenor and Tele2 cooperate on 4G.
Shares in Teliasonera, Sweden's biggest operator,
rose 2.7 percent and Norway's Telenor, number three in mobile in
Sweden, was up 2.9 percent.
Tele2 shares, up 3.2 percent by 1426 GMT, had fallen as much
as 3.7 percent earlier on Friday after the company gave a profit
forecast for this year below analyst expectations and scrapped
its outlook for next year.
Tele2 said it would clear up the uncertainty about its
prospects and left all options on the table for Norway, its
third biggest market.
"The situation in Norway will be addressed in a way that
maximises value for shareholders," CEO Granryd said.
Tele2 is banking on Norway, the Netherlands and Kazakhstan
for growth outside its home market but these plans were dealt a
blow in December when Tele2 lost an auction in Norway for mobile
spectrum it needed to expand its network.
Sources told Reuters this week that Tele2 is in talks to
strike a deal for its Norway business with the winner of that
auction, holding company Access Industries, owned by
Ukrainian-American billionaire Len Blavatnik.
Granryd said Tele2 would continue to use its existing
spectrum in Norway while taking advantage of roaming agreements
to use competitors' spectrum. He played down the need for
immediate action. "This base scenario will also be a profitable
business," Granryd said. "We don't feel we are under pressure,
and we have many alternatives."
Tele2 scrapped its previous financial guidance for 2015 due
to uncertainty over Norway and said it expected earnings before
interest, tax, depreciation and amortisation (EBITDA) of around
6.0 billion crowns ($924 million) in 2014, in line with 2013 and
less than the average 6.3 billion forecast in a Reuters poll
ahead of the report.
The firm reported fourth-quarter EBITDA earnings of 1.46
billion crowns compared with the 1.45 billion seen by analysts
and 1.44 billion a year ago.
Link to full report: r.reuters.com/det66v
($1 = 6.4954 Swedish crowns)
(Additional reporting by Olof Swahnberg,; editing by Niklas
Pollard and Jane Merriman)