HELSINKI, Finland-DNA Finland, the Finnish regional telecom group, has displaced Virgin Mobile as the lead contender to acquire Telia Mobile’s network operations in Finland. DNA is reported to have placed a bid worth US$102 million for Telia Mobile Finland (TMF). The offer is believed to be around US$10 million higher than what Virgin is willing to pay.
DNA is a mobile telephone network operator owned by regional telephone companies in Finland. “We are continuing with talks. Now that a merger between Telia and Sonera is a certainty, we expect a decision on Telia Mobile Finland, and its future, very soon,” said DNA Chief Executive Officer (CEO) Ari Tolonen.
DNA is primarily interested in Telia’s 250,000 mobile customers, as its own mobile network covers the same regions as TMF’s coverage. “The Telia network would certainly add additional value to DNA’s current offering,” stated Tolonen.
DNA’s subsidiary, 2G, operates the group’s network in Finland.
DNA’s offer comprises a cash payment of US$80 million and a further US$20 million, which would be used to recapitalize and reorganize TMF’s core operations. DNA said it would finance the acquisition through one or more bank loans, a scenario that would increase debts, in absolute terms, to around US$200 million.
However, Virgin Mobile remains very much in the picture. The U.K.-based company may be unwilling to match DNA in cash-price offered, but the group’s bid comes with a proposal to lease network capacity from Telia in Sweden and in Denmark, should it negotiate a takeover deal.
The Finnish Internet company Jippii decided to withdraw from the race when the bid price rose above US$60 million. Jippii also considered the possibility of a joint bid with Virgin. However, exploratory talks between the two companies proved inconclusive.
Other companies that have expressed an interest in the TMF network include Hong Kong-based Hutchison Whampoa and local telecom company Elisa Communications. Elisa is the parent of Radiolinja, Finland’s second-largest mobile telephone company.
“Talks have been active for over six months, and we expected a sale within weeks,” said Esa Hirvonen, a telecom analyst with the Helsinki-based investment company Mandatum.
Janne Rantanen, a communications sector analyst with Nordea Securities in Helsinki agrees. “While the Virgin offer looks interesting, we believe that DNA holds all the cards in terms of synergy value and an inside track into the mobile side of Telia’s business in Finland. We don’t expect a foreign buyer in this case. The smart money is on DNA,” he said.
“While DNA is the strongest runner, we cannot rule out a late dash by Radiolinja. Both telecoms would profit from substantial synergy gains from a takeover,” said Rantanen.
