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TeliaSonera said on Wednesday it will pay $115 million for a
batch of newly issued shares in Spotify as it expands its
partnership with the unlisted Stockholm-based business, that
provides free on-demand music or an advertisement-free service
for paying customers, valuing the company at about $8.2 billion.
TeliaSonera Chief Executive Johan Dennelind said the investment
was part of a strategy to solve what he called "the industry
puzzle", seeking new ways to grow in the face of stalling growth
for telecom operators in their core business.
Like many European peers, the Swedish telecom incumbent has had
a hard time growing revenue in its home market in the face of
fierce competition.
"We want to master the internet logic as well as we have
mastered the telecom logic," Dennelind said, pointing to faster
growth in online services than in traditional telecoms.
"We haven't been quick enough in the past. And this is a way for
us to take part in a company that has it as its DNA: innovation,
speed, ideas, launches and global competition."
He declined to say if Telia might boost its stake in future or
give details on what new services and offers the companies would
work on together as part of the expanded partnership.
Dennelind said Telia could decide to take further steps with
companies operating in what he called the border area between
the telecom, media and internet industries.
Spotify, which competes with Pandora Media Inc and Apple Inc's
Beats, said this year that it had reached 15 million subscribers
and 60 million active users.
The company, which last year increased revenue by 45 percent to
1.08 billion euros ($1.2 billion) and made a 165 million euros
operating loss, recently announced that it would soon provide
video content from musicians, news organizations and TV
networks.
Spotify does not disclose details about its ownership but
co-founders Daniel Ek and Martin Lorentzon have sold stakes in
the business and no longer own a majority.
(Reporting by Sven Nordenstam and Helena Soderpalm; Editing by
David Goodman and David Holmes)
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