Danish telecom groupTDC sells Swiss offshoot Sunrise for €2.5 billion

Danish telecom group TDC said on Friday it had agreed to sell its Swiss offshoot Sunrise to private equity firm CVC Capital Partners for 3.3 billion Swiss francs (€2.5 billion).

“Today CVC and TDC have signed an agreement on selling TDC’s Swiss subsidiary Sunrise to the private equity firm CVC,” TDC said in a statement.

It added that “the completion of the transaction is expected to occur in the fourth quarter of 2010, once approvals have been obtained from the Swiss competition and relevant regulatory authorities.”

Up until just a few months ago, TDC had been planning to merge Sunrise with France Telecom’s Orange’s Swiss business.

It abandoned the plans in June following a veto by the Swiss Competition Commission (COMCO) a few months earlier on the grounds that a merged company would have taken a dominant position in the mobile telephone market alongside top Swiss telecoms provider Swisscom, leaving the country with just two networks.

Friday’s announced “transaction, which values Sunrise at an enterprise value of 3.3 billion Swiss francs, demonstrates CVC’s commitment to expand its activities in the telecommunications sector and enables Sunrise to pursue its challenger strategy on the Swiss market,” TDC said in its statement.

In a separate statement sent to the Copenhagen stock exchange, the Danish company said the sale would be conducted “on a cash and debt free basis” and that it was estimated to lead to “a gain of approximately 650 Danish kroner (€87.2 million) after tax.”

TDC, which is owned by five international private equity firms, said its divestment from Sunrise would negatively impact its guidance for 2010.

The company said it now expected revenues for the year to be flat compared to 2009, down from its previous forecast of one to three per cent growth.

“Sunrise has gone through a very positive development in recent years. This is reflected in the deal we have signed,” TDC chief executive officer Henrik Poulsen said in the company statement.

“A divestment (from Sunrise) is a natural next step in our wish to focus TDC as a Nordic communications company. I am glad we have found a strong future owner to ensure that Sunrise will continue the positive development,” he added.