STOCKHOLM (Tele2 press service) — Tele2 AB (Tele2) has today given notice to exercise the put option stipulated in the joint venture (the JV) between Tele2 and Kazakhtelecom in Kazakhstan. By serving the put option notice to Kazakhtelecom, Tele2 has initiated the sale process.

In March 2016, Tele2 announced the completion of the JV with Kazakhtelecom in Kazakhstan. This became the start of an exceptionally successful cooperation which has created a quickly growing business with strong profitability.

The transaction between Kazakhtelecom, Telia Company and Fintur announced on December 12, in which Kazakhtelecom acquires control of Kcell, triggers the possibility for Tele2 to exercise its put option and sell its shares in the JV to Kazakhtelecom, as the JV agreement includes customary non-compete clauses. To initiate this process, Tele2 has today filed a put option notice to Kazakhtelecom.

Key developments during Q4 2018:

• December 11, the Kazakhstan Antimonopoly Agency announced an approval of Kazakhtelecom’s possibility to acquire Tele2’s shares in the JV, including remedies to promote continued competition.
• December 12Kazakhtelecom announced that it has signed an agreement to acquire Kcell.
• December 28, Tele2 served a put option notice to Kazakhtelecom to initiate the divestment of its shares in the JV.

Key financials
Tele2 owns 49% of the economic interest and 51% of the votes in the JV. The expected financial consideration to Tele2 will reflect a fully diluted economic interest of 31%, taking into account Asianet’s 18% earn-out, as previously communicated. A shareholder loan from Tele2 to the JV, currently KZT 87 bln (approximately SEK 2.1 bln, following continued repayments during the fourth quarter), is to be fully repaid at the time of closing.

For the period January to June 2018, the JV in Kazakhstan represented 9% of the revenue of the Tele2 Group, including Com Hem pro forma.

According to Tele2, the put option price is based on a fair market value principle and will be determined through an agreed valuation process, based on standard methodology, including independent third-party advisors.

Closing is expected in approximately six months. The JV (Tele2 Kazakhstan) will be reported separately under discontinued operations in the income statement, with a retrospective effect on previous periods.

The JV will continue with business as usual and Tele2 will continue to manage the JV until the transaction has been closed.