Telenor sells 30% stake in Norwegian fiber company for $1bn

Telenor has agreed to sell a 30% stake in its Norwegian fiber broadband arm for 10.8 billion kroner ($1.0 billion) to a consortium led by US investment firm KKR and pension company Oslo Pensjonsforsikring.

30% of Telenor’s proceeds will be used to buy back shares, the company said.

Telenor shares recently traded at a 10-year low on weak growth and declining inflation margins, but they jumped 4.4% in early trading.

“This transaction highlights the value in our infrastructure, strengthens our financial position, and unlocks capital to support continued high fiber roll-out in Norway,” Chief Financial Officer Tone Hegland Bachke said in a statement.

The recently formed Telenor Fiber AS, which owns the company’s passive fiber optic assets in Norway, including about 130 000 km (81 000 miles) of cables connecting more than 560 000 homes, will continue to be owned by Telenor.

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The deal, which is scheduled to close early next year, prices a unit of fiber 21 times last year’s estimated earnings before interest, taxes, depreciation, and amortization (EBITDA) of 1.7 billion kroons, Telenor reports.

Telenor controls both all activities and processes in the company.

The statement also says that Telenor has undertaken an extensive consultation process with the relevant government authorities, who expressed a common view that the transaction protects particularly important security aspects and regulatory requirements.

Telenor is the market leader in Norway with over 50% of national subscribers on the network. It has good coverage and speed across the country. Its main shareholder is the government of Norway which owns 54% of the shares. The company’s shares are traded on the Oslo Stock Exchange and NASDAQ.