Tele2 shrinks further as it sells Dutch unit to Deutsche Telekom

Alan Burkitt-Gray
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Weeks after selling Tele2 Austria to CK Hutchison, Swedish group offloads Netherlands business to T-Mobile in €190m deal

Tele2 is selling its Netherlands mobile operation to Deutsche Telekom for €190 million and a 25% stake in the merged company.

The combination sees the Netherlands become the latest European country to try to reduce its mobile market from four to three players – and the latest sale by Tele2, which is controlled by Swedish group Kinnevik.

The deal comes only a month after CK Hutchison’s Three Austria completed acquisition of Tele2 Austria for €95 million.

Thorsten Langheim, head of the group development segment of Deutsche Telekom that oversees T-Mobile Netherlands, said the latest merger would help the company compete with KPN, the incumbent, and the recently created VodafoneZiggo, a joint venture between Vodafone and cable operator Liberty Global.

“We’ve started our journey to disrupt the Dutch market and we will be creating a viable and strong attacker of the duopoly KPN and VodafoneZiggo. We now can truly live up to our promise to become the customer champion,” said Langheim.

Deutsche Telekom said it would also spin off its Netherlands mobile tower and rooftop assets into a separate company, which would not be part of the merger but would remain in its full ownership.

Søren Abildgaard, CEO of T-Mobile Netherlands, said: “This duo has been getting away with this game for far too long and there was only one victim, namely the customer. No more. No longer. We will be able to compete against the duopoly much more efficiently and give all Dutch customers a fair choice.”

Allison Kirkby, president and CEO of Tele2, said: “I see this as a logical next step to become part of a stronger number three player that will benefit our customers, our shareholders and our employees.”

The combined company will take up to a year to get through competition regulators. It will be called T-Mobile Netherlands but will use both T-Mobile and Tele2 brand names.

It will own Tele2’s 800MHz and 2,600MHz licences and will have access to Tele2 Netherlands’ business-to-business fixed-line infrastructure and improved scale in business-to-consumer broadband, said the companies.

The companies did not say what would happen to former Com Hem COO Jonathan James, who became CEO of Tele2 Netherlands in March 2017.

The enlarged T-Mobile Netherlands will have pro-forma revenues in excess of €2.0 billion and around 4.3 million mobile postpaid subscribers and expects to generate annual run-rate synergies of some €150 million within three years from closing, said the companies.