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Sweden's Tele2 exits Russian mobile market
March 27, 2013 / 6:26 PM / in 5 years

Sweden's Tele2 exits Russian mobile market

STOCKHOLM (Reuters) - Nordic telecom company Tele2 (TEL2b.ST) said on Wednesday it would sell its Russian operations to Russian bank VTB Group (VTBR.MM) in a $3.5 billion deal and would return much of the money to its shareholders.

“Tele2 AB has agreed to sell Tele2 Russia to VTB Group in a cash transaction comprising $2.4 billion in equity value and $1.15 billion in net debt,” Tele2 said in a statement.

There has been speculation about a sale for some time as Tele2 does not have a 3G or 4G license in Russia and analysts have said that without the ability to offer data services, its growth prospects were limited.

Tele2 was Russia’s fourth-biggest mobile operator with around 23 million subscribers, behind MTS (MBT.N), MegaFon and Vimpelcom VIP.N.

The Swedish company said it would focus on growth in its existing core markets - Sweden, the Netherlands, Norway and Kazakhstan. It will use much of the proceeds from the sale to buy back shares worth around 12.5 billion Swedish crowns ($1.92 billion).

Tele2 also issued new growth targets, saying it expected compound annual revenue growth of 5-7 percent up to 2015 and compound annual growth in earnings before interest, tax, depreciation and amortization of 10-12 percent over the same period.

Reporting by Simon Johnson. Additional reporting by Megan Davies in Moscow. Editing by Jane Merriman

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