TeliaSonera: Creating Shareholder Value in the East
What message does that send to the arch-nemesis of Scandinavian telcos? To me it means: “Offer us a good price and Russia, Turkey, Kazakhstan, Azerbaijan, Georgia and Moldova is yours”
The analysts seem to have missed the point completely with questions about how long TeliaSonera will wait until they exit if they don’t have operational control. Altimo will basically look at price that the Eastern properties are valued by analysts, add a premium to create “value” for shareholders and decide whether or not to make an offer.
The real question for TeliaSonera would have been: “Why the change of mind?”
The standard off the cuff answer would have been the “We are continually looking at opportunities to create shareholder value”. Anders Igel could have given Arun Sarin a ring for lessons in positive spin in the sale of mobile properties. I think the lack of enthusiasm in the conference call for the statement signifies this isn't really the answer.
However, the Anders Igel guard momentarily slipped during the conference call when he mentioned the Russian market was reaching a plateau and Turkey was about to enter a phase of increased competition. In other words, Teliasonera don’t see much growth going forward. However, if TeliaSonera manage to acquire increasing control and equity ownership in phases, the impetus for earnings is potentially huge and in a single blow would solve all the problems with stagnation in Scandinavia.
I feel the real answer may be that Anders Igel is under severe political pressure. The new Swedish government has expressed a desire of selling its 45.3% stake in Teliasonera. Realistically the government will want to maximise the price achieved for the stake and that means making sure the assets are valued by the market at a “correct price” before the placing of their holding. If the Teliasonera don’t want to play ball, the government could threaten a doomsday scenario for the management of merging assets with Altimo and then disposing of the smaller stake. Altimo have continually suggested that they are looking for a Western partner.
The Teliasonera board may have chosen the least worst scenario and decided to dispose of Eastern assets.
There could be a twist in the tale: Altimo could get together with whoever actually owns Megafon and decide that they didn’t get where they are today by paying anywhere near market rates for assets. A years worth of depressed earnings at Turkcell and Megafon will destroy the market value for the assets and therefore they can ultimately collude to acquire the assets at bargain basement prices.
Teliasonera looks tired of fighting for its Eastern assets, I suspect that Altimo doesn’t think the time is right yet to move in for the kill.
The analysts seem to have missed the point completely with questions about how long TeliaSonera will wait until they exit if they don’t have operational control. Altimo will basically look at price that the Eastern properties are valued by analysts, add a premium to create “value” for shareholders and decide whether or not to make an offer.
The real question for TeliaSonera would have been: “Why the change of mind?”
The standard off the cuff answer would have been the “We are continually looking at opportunities to create shareholder value”. Anders Igel could have given Arun Sarin a ring for lessons in positive spin in the sale of mobile properties. I think the lack of enthusiasm in the conference call for the statement signifies this isn't really the answer.
However, the Anders Igel guard momentarily slipped during the conference call when he mentioned the Russian market was reaching a plateau and Turkey was about to enter a phase of increased competition. In other words, Teliasonera don’t see much growth going forward. However, if TeliaSonera manage to acquire increasing control and equity ownership in phases, the impetus for earnings is potentially huge and in a single blow would solve all the problems with stagnation in Scandinavia.
I feel the real answer may be that Anders Igel is under severe political pressure. The new Swedish government has expressed a desire of selling its 45.3% stake in Teliasonera. Realistically the government will want to maximise the price achieved for the stake and that means making sure the assets are valued by the market at a “correct price” before the placing of their holding. If the Teliasonera don’t want to play ball, the government could threaten a doomsday scenario for the management of merging assets with Altimo and then disposing of the smaller stake. Altimo have continually suggested that they are looking for a Western partner.
The Teliasonera board may have chosen the least worst scenario and decided to dispose of Eastern assets.
There could be a twist in the tale: Altimo could get together with whoever actually owns Megafon and decide that they didn’t get where they are today by paying anywhere near market rates for assets. A years worth of depressed earnings at Turkcell and Megafon will destroy the market value for the assets and therefore they can ultimately collude to acquire the assets at bargain basement prices.
Teliasonera looks tired of fighting for its Eastern assets, I suspect that Altimo doesn’t think the time is right yet to move in for the kill.
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