Carrie Pawsey
TeliaSonera makes its move on Chess and Sense
TeliaSonera announced that it has entered into negotiations with shareholders of mobile virtual network operators (MVNOs) Chess and Sense in Norway, which combined have 310,000 mobile subscribers. TeliaSonera has signed a term sheet agreement with shareholders representing more than 90% of Vollvik Gruppen, which owns 100% of Chess and Sense. TeliaSonera already operates in Norway through NetCom, the second mobile network operator (MNO) in Norway, which has 37% market share. The only other MNO in the market is Telenor. Comment: NetCom has struggled to take market share from Telenor. It had gained 30% by March 2001, but has experienced little growth since then. Both Norwegian MNOs have embraced MVNOs, which has resulted in price wars at both the retail and wholesale level. Sense is best known as the first-ever MVNO - it was set up in 1996 before going into liquidation and reforming again in 2000. Together, Sense and Chess have approximately 7% market share. As far as NetCom gaining market share, some of these subscribers will be double counted, as Sense has dual airtime agreements with Telenor and NetCom. The subscribers are not all net additions, but some will move from being wholesale customers to directly-owned subscribers.MNOs acquiring successful MVNOs is nothing new. As we have seen in Denmark, with Telmore and CBB Mobil being acquired by TDC and Sonofon, respectively. We believe this consolidation will continue in developed MVNO markets, particularly in Scandinavia.The agreed share price gives Vollvik Gruppen an acquisition value of around NKr1.8bn, which equates to a cost of €740 per subscriber. This seems rather high compared to the €88 per subscriber paid by TDC for Telmore in 2004, but perhaps this is an indication of the perceived increased in the value of MVNOs. Still, it's not quite as much as the €1,000 per subscriber that TeliaSonera paid for Orange Denmark last year, although it did purchased the physical assets of the MNO, and not just a virtual player.
