Sweden’s Tele2 rebuffs Russian exit speculation

Swedish telecom major Tele2 AB has refuted Russian media reports carried yesterday hinting the company's possible sale of its Russian mobile services business to Russia's state-owned long-distance telephony provider Rostelecom.

''The management of Tele2 Russia is not holding any talks on the sale of its business,'' the company said in a statement.

Yesterday Russian business newspaper RBC Daily reported that Tele2 is in talks to sell its Russian telecom business if it fails to obtain frequencies in the government's long-delayed Long Term Evolution (LTE) spectrum auction.

Citing sources, RBC said that the value of the deal is expected to be in the range of $3.4-3.7 billion. It was believed that although Tele2 initially evaluated its Russian business at around $5 billion, it is now willing to make some sizable concessions.

Analysts estimated its price tag at approximately 5.6 times the company's earnings before interest, taxes, depreciation and ammortisation (EBITDA), compared to its peers in the field MTS, MegaFon and Vimpelcom, which are traded at 4.3-4.5 multiples.

Stockholm-based Tele2 is a major European telecom services provider with approximately 35 million customers in 11 countries. The company provides fixed and mobile services, broadband, data network and cable television services. In 2011, Tele2 reported revenue of $5.7 billion and its shares are listed on the Nasdaq OMX Stockholm.