NetCom AB to purchase Societe Europeenne de Com. for 11.22 times revenue

Weekly Corporate Growth Report, Jul 31, 2000

The Deal: NetCom AB, Sweden's second largest phone company, agreed to purchase the rest of Societe Europeenne de Communication that it does not already own to value the company at $3.5 billion. NetCom will give one Class B share for every 11.5 shares of S.E.C. Societe Europeenne has proven to be an unprofitable operation.

Discussion: Societe Europeenne de Communication's principal subsidiary, Tele2 Europe, resells long-distance and international phone service to residential and business customers in Germany, the Netherlands and Switzerland and has licenses to operate in Austria, France, and Italy. Other subsidiaries include Transcom, which runs call centers, Tango, a mobile phone operator in Luxembourg and 3C, which operates credit-card payphones and Internet terminals.

NetCom AB's Tele2 units, competing against Scandinavia's former monopolies, provide wireline phone service to almost 1.5 million customers and Internet access to more than 860,000 in Denmark, Norway, and Sweden. Additionally, NetCom provides mobile phone service to 1.5 million customers and cable TV to 300,000 in Sweden. The firm owns 25 percent of NetCom ASA, a mobile phone operator with more than 700,000 customers in Norway. Subsidiaries NatTeknik and Datametrix design, install, and maintain call center systems, networks and mobile infrastructure.