Tele2, Com Hem combining forces to create integrated connectivity provider

Tele2 Group, and Com Hem Holding AB, has jointly announced that the Board of Directors of Tele2 AB (publ) (“Tele2”) and the Board of Directors of Com Hem Holding AB (publ) (“Com Hem”) have agreed on a combination of Tele2 and Com Hem through a statutory merger in accordance with the Swedish Companies Act (the “Merger”), creating a leading integrated connectivity provider referred to below as the “Combined Company” or “Enlarged Tele2”.

The Merger will be implemented by Tele2 absorbing Com Hem.

On January 9, 2018, the Board of Directors of Tele2 and the Board of Directors of Com Hem (together the “Boards”) have entered into a merger agreement and agreed on a joint merger plan (respectively the “Merger Agreement” and the “Merger Plan”)[1], pursuant to which Tele2 and Com Hem have agreed to combine their business operations through the Merger.

Combination of two highly complementary businesses
—Creating a leading integrated operator by combining an award-winning mobile network with the fastest national fixed network and the widest range of content in the market

Superior customer offering meeting the demands of tomorrow
—Enhanced growth capitalizing on increased fixed and mobile data consumption, underpinned by accelerated video demand, by offering a full range of complementary and ubiquitous high-quality connectivity and digital services

—Well positioned to act as a customer champion in an integrated world to further improve customer satisfaction and loyalty

Tele2 and Com Hem will distribute stated ordinary dividends for 2017 to their respective shareholders in the amount of SEK 4 per share for Tele2 shareholders and SEK 6 per share for Com Hem shareholders. In addition, Com Hem has an existing share buyback program which ends no later than March 20, 2018.

The completion of the Merger is subject to, inter alia, approval by the shareholders of each of Tele2 and Com Hem at their respective Extraordinary General Meetings (each, an “EGM”), which are currently expected to be held in H2 2018 as well as approval from the relevant competition authorities.

Over the last few years, Tele2 and Com Hem have undertaken a period of active strategic development and continued long-term investment in their networks with the goal of better positioning the respective companies for the future, while simultaneously generating substantial value creation for their respective shareholder bases.

The combination of Tele2 and Com Hem is a natural next step for both companies and will create a leading integrated connectivity provider in the Swedish telecommunications market by combining an award-winning mobile network with the fastest national fixed network and the widest range of content in the market.

Therefore, Enlarged Tele2 will be well equipped to meet the evolving customer needs for seamless connectivity and digital services. Digitalization affects nearly every aspect of society and the Merger will further contribute to a better digital quality of life for Swedish individuals, households and businesses through a full range of complementary and ubiquitous high-quality connectivity and digital services.

Enlarged Tele2 will be the second largest mobile telephony and fixed broadband provider in Sweden and the market leader in digital TV with the ability to offer powerful customer solutions and capitalize on the increasing fixed and mobile data consumption underpinned by accelerated video demand. This will not only lead to improved customer experience and loyalty but also position the company for enhanced growth by meeting untapped customer demand for a full range of digital services and high-quality connectivity, no matter where or when the customer needs it.

This combination will strengthen and broaden the Swedish operations, for the Combined Company, vis-à-vis the two companies separately. This is in line with both Tele2’s purpose to fearlessly liberate people to live a more connected life as well as Com Hem’s overarching strategy of unleashing the power of Swedish homes and small businesses for the best possible digital quality of life.

Anders Nilsson will become CEO of Tele2 following completion of the Merger and will assume leadership of the Tele2 management team at this point in order to deliver on integrating the two companies and to deliver on the strategic objectives. It is expected that upon completion of the Merger, Andrew Barron currently Chairman of Com Hem along with at least one additional Com Hem Board Director will join the Board of Directors of Tele2, which will be chaired by Tele2’s proposed new Chairman Georgi Ganev.

Mike Parton, Chairman of the Board of Directors of Tele2, explained, “We are delighted to have reached agreement to combine two great Nordic companies to create a leading integrated connectivity provider in the Swedish market. I take great pride in the outstanding returns Tele2 has delivered to its shareholders over the past years and the value we have delivered to our customers. I am excited for the future of the Combined Company which we are confident will create significant value for Swedish individuals, households, businesses and of course our investors.”

Mike Parton continues: "Allison Kirkby has led Tele2 through a challenging period with great energy and commitment. She has successfully reshaped the business and the strategy of the group and prepared it for the Merger which we announce today. The financial performance and shareholder returns generated have been outstanding and speak volumes for the quality of her leadership. We as a Board would like to thank her for everything she has done for the Tele2 group and especially for her pivotal role in laying solid foundations from which Enlarged Tele2 can prosper.”

Allison Kirkby, CEO of Tele2, said, "This transaction will strengthen and diversify the Combined Company’s Swedish operations while increasing the long-term cash flow resilience. Enlarged Tele2 will be able to provide a wide range of complementary connectivity and digital services; a base that makes us well positioned to act as a customer champion in an increasingly integrated world. This transaction will make Tele2 stronger, more diversified in its home market, and better equipped to fearlessly liberate people to live a more connected life.”

Anders Nilsson, CEO of Com Hem, said, “Merging is the best possible next step for both companies as it will enable us to meet the demands of tomorrow and unleash the power for the best possible digital quality of life in Sweden. I am proud of the progress we have made during the last few years in improving our products and services leading to increased customer satisfaction, expanding our footprint while delivering on all our financial targets. The transaction will create significant benefits to Swedish individuals, households, businesses and to the shareholders of Tele2 and Com Hem."