Telia Strikes $1 Billion Deal to Sell Carrier Unit to Polhem
Telia Strikes $1 Billion Deal to Sell Carrier Unit to Polhem
(Bloomberg) -- Swedish telecoms giant Telia Company AB has agreed to sell its carrier unit to Polhem Infra in a deal worth more than $1 billion.
The Stockholm-based company said the 9.45 billion-krona ($1.06 billion) agreement with Polhem is on a cash and debt free basis, according to a statement on Tuesday.
After securing the cash injection, Telia plans to bring back a dividend payment that was shelved as a result of the Covid crisis earlier this year. It cited “improved visibility” and a “strengthened balance sheet” after it sold stakes in Turkcell Holding and Telia Carrier.
Shares in Telia rose 4.6% after trading started in the Swedish capital.
Read: Telia Shares Hit 7-Month High After ‘Welcome’ Carrier Unit Sale
The board is now proposing that an additional dividend of 0.65 krona per share be paid. That would bring the total dividend for 2019 back to 2.45 kronor a share, which is what the company originally proposed in January.
Polhem Infra invests in and manages infrastructure assets. The company was founded 2019 and is jointly owned by the AP Funds -- First AP Fund, Third AP Fund and Fourth AP Fund -- which oversee Sweden’s pension wealth.
“In connection with the divestment and change of ownership, a strategic, long-term partnership between Telia Carrier and Telia Company has been established,” Telia said.
Jakob Magnussen, chief analyst at Danske Bank Credit Research, said the deal appears to be “credit positive for Telia in terms of its financial risk profile.”
In terms of business risk, Magnussen said he finds it “slightly negative that Telia is parting with a stable infrastructure asset,” but also points out that “network sharing regulation at adverse prices is an ever recurring risk in this industry.”
“Overall, we see this transaction as moderately positive for Telia,” he said.
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