Agreement Between Owners Finalised for Merger of Telenor and Telia
Fornebu
8 minute read
"I am pleased that the agreements between the owners have now been finalised for the merger of Telenor and Telia. Now we will be devoting all our energy to creating an international and expansive telecommunications company. With the strong position we enjoy on our home markets as our point of departure, our ambition is to become a leading actor in Europe and globally in areas where the new company will have unique competence."
These are the words of Tormod Hermansen, the future president and CEO of the merged Telenor/Telia, in a comment on the signing of the final agreements for a merger of the companies.
The key business strategies for the new company can be summed up by the following three goals:
- To utilise the company's world leading competence, primarily in the areas of mobile communication, satellites and the Internet, for international expansion, primarily in Europe, but also globally.
- To increase the profitability of the established Scandinavian activities through further development and continued efficiency improvement.
- To develop the company's international business activities, primarily in the Baltic region and the rest of Europe.
The new company's initial organisation and business areas are being presented in connection with the signing of the agreement between the owners. The corporate board, corporate management and other top executives in the new company will also be presented (see enclosure).
Three items in particular will be given a great deal of attention in our ensuing integration work during the coming months:
- Consideration of the merger by the Norwegian Storting, Swedish Riksdag and European Union.
- Owners' preparations for the new company's stock exchange introduction. The introduction will be carried no later than the end of the year 2000.
- Detailed planning of the new business areas. The primary challenges will be to create the maximum degree of commercial muscle and to ensure that the synergy benefits from the merger of the two companies can be realised.
The content of the agreements is in line with the letter of intent signed by the owners on 20 January this year. In addition to the merger of Telenor and Telia, the agreement also entails a stock exchange listing of the new company. The Swedish state will own 60 per cent of the shares and the Norwegian state will own 40 per cent at the start. The owners will in time gradually reduce their ownership stakes to 33.4 per cent each initially.
The agreement must be approved by the Storting and Riksdag. The national assemblies will consider the agreement this spring.
A merger of Telenor and Telia must also be approved by the EU Commission. A formal application will be submitted to the EU Commission shortly. The initial deliberation by the EU is expected to last a month. The EU may thereafter either approve the merger or decide to postpone making a decision for up to four months.
Until the merger has been approved by all the involved parties, Telenor and Telia are still competitors just as they were before the merger plans were made public.
Comments:
Jan Stenberg, future board chairman of the new company:
- The planning work carried out by the companies after the merger plans were made public in January have further underscored that our ambitions have been industrially correct. Now our primary task will be to make plans so that we can realise the potential synergies and thereby create greater value for the owners.
Tormod Hermansen, future president and CEO of the new company:
- Two aspects are key to our ensuing work. We will create value for our owners through efficient operations and the exploitation of economies of scale. In addition, our goal is still to offer our customers high quality products and services at low prices.
- By combining our two companies, we will increase our ability to be on the offensive and take advantage of the opportunities offered by the rapid development of the telecommunications industry. Telenor and Telia will be a very powerful combination, and both our customers and owners will benefit from this.
Jan-Ã ke Kark, future deputy chief executive of the new company:
- We will create a leading European spearhead in the expansive telecommunications industry. The new company will have a strong international orientation, and I expect that half of the company's revenues will come from activities outside Norway and Sweden in five years.
- Our ability to innovate will be a key factor. The two companies already have research and development that is internationally advanced. Our ambition is to further enhance our position. An intense focus on innovation, especially in future oriented areas such as mobile, satellite and Internet services, will be of great importance to the new company.
- To utilise the company's world leading competence, primarily in the areas of mobile communication, satellites and the Internet, for international expansion, primarily in Europe, but also globally.
- To increase the profitability of the established Scandinavian activities through further development and continued efficiency improvement.
- To develop the company's international business activities, primarily in the Baltic region and the rest of Europe.
The new company's initial organisation and business areas are being presented in connection with the signing of the agreement between the owners. The corporate board, corporate management and other top executives in the new company will also be presented (see enclosure).
Three items in particular will be given a great deal of attention in our ensuing integration work during the coming months:
- Consideration of the merger by the Norwegian Storting, Swedish Riksdag and European Union.
- Owners' preparations for the new company's stock exchange introduction. The introduction will be carried no later than the end of the year 2000.
- Detailed planning of the new business areas. The primary challenges will be to create the maximum degree of commercial muscle and to ensure that the synergy benefits from the merger of the two companies can be realised.
The content of the agreements is in line with the letter of intent signed by the owners on 20 January this year. In addition to the merger of Telenor and Telia, the agreement also entails a stock exchange listing of the new company. The Swedish state will own 60 per cent of the shares and the Norwegian state will own 40 per cent at the start. The owners will in time gradually reduce their ownership stakes to 33.4 per cent each initially.
The agreement must be approved by the Storting and Riksdag. The national assemblies will consider the agreement this spring.
A merger of Telenor and Telia must also be approved by the EU Commission. A formal application will be submitted to the EU Commission shortly. The initial deliberation by the EU is expected to last a month. The EU may thereafter either approve the merger or decide to postpone making a decision for up to four months.
Until the merger has been approved by all the involved parties, Telenor and Telia are still competitors just as they were before the merger plans were made public.
Comments:
Jan Stenberg, future board chairman of the new company:
- The planning work carried out by the companies after the merger plans were made public in January have further underscored that our ambitions have been industrially correct. Now our primary task will be to make plans so that we can realise the potential synergies and thereby create greater value for the owners.
Tormod Hermansen, future president and CEO of the new company:
- Two aspects are key to our ensuing work. We will create value for our owners through efficient operations and the exploitation of economies of scale. In addition, our goal is still to offer our customers high quality products and services at low prices.
- By combining our two companies, we will increase our ability to be on the offensive and take advantage of the opportunities offered by the rapid development of the telecommunications industry. Telenor and Telia will be a very powerful combination, and both our customers and owners will benefit from this.
Jan-Ã ke Kark, future deputy chief executive of the new company:
- We will create a leading European spearhead in the expansive telecommunications industry. The new company will have a strong international orientation, and I expect that half of the company's revenues will come from activities outside Norway and Sweden in five years.
- Our ability to innovate will be a key factor. The two companies already have research and development that is internationally advanced. Our ambition is to further enhance our position. An intense focus on innovation, especially in future oriented areas such as mobile, satellite and Internet services, will be of great importance to the new company.