Swedish telecom operator Tele2 has signed a contract to acquire a majority share of mobile operator Neo in Kazakhstan. Under the contract, Tele2 will pay in cash approximately SEK550m for 51% of the shares and commit to a capital injection of around SEK360m once the transaction has been finalised.
The company said that it will own 51% of the shares of Neo with options to buy the remaining 49% after five years from closing. The acquired company will be consolidated into the Tele2 group and will benefit from Tele2’s brand marketing and product strategies.
As per the contract, the company should have a market share of more than 20% within four years of commercial re-launch; Neo should be able to reach EBITDA break-even within 2-3 years after commercial re-launch; and the accumulated capital expenditure between 2010-2013 is expected to amount to SEK2.4 billion to SEK2.6 billion.
Harri Koponen, president and CEO, said: The acquisition of a mobile operation in Kazakhstan goes hand in hand with our ambition to carefully look for complementary assets in or close to our mobile footprint. Given the proximity of the Kazakhstan asset to other Tele2 operations, this acquisition should provide the potential of synergies deriving from the replication of our successful operational model.
Patrick Vosgimorukian, future representative of asianet on Neo board, said: We are delighted to be partnering with Tele2, an experienced telecommunications operator with a proven track record in the CIS region. They will bring operational expertise to Neo, accelerate its roll-out and move to profitability.
