NENT AND TELENOR TO MERGE VIASAT CONSUMER AND CANAL DIGITAL

Nordic Entertainment Group (NENT Group) has entered into an agreement with Telenor Group to combine its Viasat Consumer (satellite pay-TV and broadband-TV operations) with Canal Digital (satellite pay-TV). The combination will result in the parties each holding 50% of the shares of the new joint venture company and is expected to create substantial synergies and shareholder value, as well as provide an enhanced proposition for customers.

The combination generates a scale Nordic player with combined net sales of approximately SEK 7.6 billion and 1,257 million subscribers at the end of June 30, 2019. The merger is expected to yield annual cost synergies of approximately SEK 650 million, with full effect from 2022. Furthermore, there are expected to be substantial sales synergies arising primarily from Viaplay upsell opportunities and reduced churn in the joint entity.

Integration and other related costs are expected to total approximately SEK 900 million, and will be reported in the new joint venture, which will be known as an associated company in NENT Group and Telenor, and is expected to distribute available cash to its shareholders. The combination is subject to EU regulatory approval and expected to be completed during the first half of 2020.

The rationale behind a consolidation in the Nordic satellite-TV segment has been clear for a long time. It will provide a simpler and more complete content offering, create substantial revenue and cost synergies, and enable sustained investment to stay competitive. The parties agree that an independent joint venture is the strategically preferred route to capture the synergies and create shareholder value. It will operate on an arm’s length basis from both companies, and will be an open platform providing content from multiple providers.

Anders Jensen, President and CEO at NENT Group, said: “We are very happy to announce this game-changing joint venture with Telenor. Combining Viasat Consumer and Canal Digital makes perfect sense. We are creating a large-scale TV operator that will create sustainable value for customers and owners, and be able to compete with large scale regional and local competitors. We have achieved complete alignment of interest through a 50/50 joint venture structure and a shared vision for brands, products and how to provide an even better consumer experience. This deal will drive significant shareholder value and it fits perfectly with our strategy to focus on the substantial opportunity we see in the fast-growing streaming sector. The new joint venture will be a major distribution partner for both our Viasat channels and Viaplay”.

Jørgen C. Arentz Rostrup, CFO of Telenor Group, declared: “The joint venture will combine the respective strengths of Canal Digital and Viasat Consumer, leveraging synergies for the benefits of our customers and shareholders. There is a compelling business rationale behind combining the DTH operations of Canal Digital and Viasat Consumer, with large synergies to be captured within areas including transponder capacity, IT and operating expenditure. The joint venture will use Telenor Satellite’s services on 1°West for DTH transmission, representing a solid foundation for Telenor Satellite’s broadcast operations”.