Telia and Turkcell offload Azercell to government for €222m

Alan Burkitt-Gray
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Central Asia exit continues as Azerbaijan government buys Telia and Turkcell’s stake in Azercell for €222m

Telia Company’s exit from its troublesome operations in central Asia and eastern Europe has taken another step with the sale of its stake in Azercell.

The purchaser of the 51.3% stake in the company is a company wholly owned by the government of Azerbaijan – just as, in January, Telia’s interest in Kcell was bought by the government of Kazakhstan.

Johan Dennelind, Telia Company’s CEO, said the deal was “satisfying”. He added: “This is the fourth divestment in our effort to, over time, leave Eurasia and focus on the Nordic and Baltic regions within the framework of our New Generation Telco strategy.”

Government-owned Azerbaijan International Telecom will pay €222 million for the stake, which was owned by Fintur Holdings, a joint investment company of Telia and Turkcell.

This “implies an equity value of €432 million for 100% of Azercell and an enterprise value of €197 million on a cash and debt-free basis,” said Telia, which added: “In addition to the impairment of SEK 2.6 billion [€255 million] recognised in December 2017, accumulated foreign exchange losses of SEK 3.0 billion [€295 million] will be reclassified to net income from discontinued operations, but will have no material effect on group equity.”

There is no need for Telia to wait for regulatory approval. As it is selling to the government, “the transaction is not subject to any conditions, such as regulatory or competition approvals, and has been completed”, the company said.

Azercell, which began operations in 1996, has 4.5 million customers. It was owned through a Turkish company, Azertel Telekomünikasyon ve Yatırım Dış Ticaret, which was itself owned by Fintur, in which Telia has 58.55% and Turkcell 41.45%. The company says it is the largest taxpayer in Azerbaijan’s non-oil sector.

Fintur was also the owner of 51% of Kcell in Kazakhstan, the sale of which was agreed in January. State-controlled Kazakhtelecom was expected to pay between $600 million and twice that. However that sale has not yet been completed, as the Kazakhstan competition regulator has asked for more information. Kazakhtelecom also runs the local operation of Tele2 as well as its own mobile unit Altel.

In February Telia agreed to transfer its interests in fibre carrier Kaztranscom to a Dubai-registered company Amun Services.

These are just the latest in a series of sales by Telia after it was hit by a bribery scandal: the company, under previous management, paid $330 million to a relative of the then president of Uzbekistan a decade ago to acquire a mobile licence. Last year it paid a fine of $965 million to US, Dutch and Swedish authorities, but the company had already decided to pull out of the region.

In September 2017 it sold off its last directly owned stake in Turkcell – just 7% – for $514 million. The following month it sold its 25.2% stake in Russia’s MegaFon in two stages, raising the equivalent of $1.39 billion.

And in January this year Telia and Turkcell sold their interest in Georgia’s Geocell to fixed-line operator Silknet for just $153 million.