EU clears Telia's $957 million Swedish TV deal with Bonnier

[November 12, 2019]  By Foo Yun Chee and Helena Soderpalm

BRUSSELS (Reuters) - Telia won conditional EU antitrust approval on Tuesday for its $957 million bid for Bonnier Broadcasting, a deal the Swedish telecoms firm hopes will help it better compete with the likes of Netflix and Amazon.

The European Commission said Telia had offered a series of concessions to address its concerns, including media plurality in Sweden and Finland, confirming a Reuters story on Sept. 2.

"This acquisition creates a strong Nordic player who can compete with international corporations who are very active in the Nordics," Telia chairman Marie Ehrling said in a statement.

Telia pledged to offer rivals fair, reasonable and non-discriminatory access to its free-to-air and basic pay TV channels, as well as to premium pay TV sports channels in Sweden and Finland, the EU competition enforcer said.

The company also agreed not to discriminate against rival telecom providers and TV distributors in the sale of TV advertising space on the merged entity's channels.

In addition, users will get access to the merged company's streaming services over the internet, namely its AVOD and SVOD services. The pledges are valid for 10 years.

Citi analysts said Bonnier's traditional linear viewing model - where programs are viewed at set times - was under pressure from the rise of video-on-demand services.

 

Telia sign is seen on a building in Vilnius, Lithuania March 30, 2019. REUTERS/Ints Kalnins

"Telia, itself, is in need to return the business to underlying growth. Given the investments required, dividend risk remains to the downside in our view," they said in a research note.

Telia, which expects the transaction to close on Dec. 2, said it still expected synergies from the deal from 2020, with a full run-rate of 600 million Swedish crowns ($61.8 million) in 2022.

It also expects integration costs of 400 million crowns in 2020-2021, and an impact on operational free cash flow in 2020 of around 500 million.

The deal is politically sensitive since the Swedish government - owner of 38.35% of Telia’s shares - already controls Sweden’s public service television network SVT.

Bonnier's brands include Sweden's biggest commercial broadcaster TV4, streaming service C More and Finland's MTV.

Telia last month appointed Allison Kirkby, the head of Danish telecoms company TDC, as its new chief executive to lead its continuing expansion in television.

(Reporting by Foo Yun Chee and Helena Soderpalm; Editing by Louise Heavens and Mark Potter)

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