Taking a 350 million Euro hit in terms of capital loss, and writing off goodwill in the process sounds like commercial disaster, but Sweden’s Tele2 telecoms groups says it is well pleased with the sale of its French operations to Vivendi-owned SFR. SFR is paying around 350 million euros cash for Tele2 France, which comes debt-free. The market also liked the result, as the price was 10 percent more than expected.
Tele2 is strong in Europe, but has been struggling in the ultra-competitive French environment, part of the southern european market where there is a crowd of rivals. Tele2’s shares rose on the news of the deal by nearly two percent, outperforming the rest of the Stockholm market. The sale is subject to confirmation by the French Competition authority.
Tele2 says shedding its French operations will free up capital and management resources it can better use elsewhere in markets where it is stronger, and adds the sale has given it an idea of the value of its business throughout Europe. Most of Tele2’s French employees will transfer to SFR.