By Jessica Hodgson
Swedish telecommunications firm TeliaSonera AB (TLSN.SK) has begun a process to sell its controlling stake in Spanish mobile phone unit Yoigo, people familiar with the matter said, as it seeks to shed non-core assets and as telecoms mergers heat up across Europe.
TeliaSonera has hired Deutsche Bank AG (DB) to advise it on the sale of Yoigo, Spain's fourth mobile network by market share, the people said. A spokesman for TeliaSonera declined to comment on the process but a person familiar with the matter said Yoigo was a non-core business which Teliasonera would be willing to sell if a good opportunity arose. Deutsche Bank declined to comment.
Another person said that a number of Europe's largest telecom operators would likely look at the asset, including Vodafone Group PLC (VOD) and France Telecom S.A. (FTE), the second and third-largest operators in the Spanish market respectively, who could buy Yoigo in order bulk up their own market share and to remove a competitor. Telefonica S.A. (TEF), the largest mobile operator in Spain, is unlikely to be interested in bidding due in part to its large debt, that person said. Yoigo has a share of approximately 6% of the Spanish mobile telecom market, significantly below that of its nearest competitor France Telecom, which has a share of well over 20%.
Low-cost operator Yoigo launched its service in 2006 and has benefited from the downturn in the Spanish economy as consumers seek cheap mobile connectivity. Spanish mobile phone operators have suffered from a customer exodus in recent months amid a fierce austerity program, the Spanish telecom watchdog said in June. But although Yoigo recently has recorded strong revenue growth, it is a low-margin business with low average revenues per user.
European telecom companies are reassessing their asset portfolios as they look for a mix that will allow them to maintain profitability as growth across the region flatlines. TeliaSonera, in particular, is looking to exit non-core markets.
This broader process has been given a new urgency by the arrival in Europe of Mexican billionaire Carlos Slim, whose America Movil SAB (AMX) now owns just under one third of Netherlands-based Royal KPN NV (KPN) and is seeking to use it as a beach-head to expand across Europe.
Although he is active in the region -- he also now has a minority stake in Telekom Austria (TKAGY) -- one person familiar with the Yoigo auction said it was unlikely Mr. Slim would participate.
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(Christopher Bjork in Madrid and Gustav Sandstrom in Sweden contributed to this article.)