Tele2 AB to increase stake in Levicom Broadband

TALLINN - Sweden's Tele2 AB will increase its holding in the Estonian telecommunications firm Levicom Broadband, which specializes in telephone, Internet and cable TV services, from 19.9 percent to 60 percent, the company has announced.

In connection with changes in the ownership structure, the management of the two companies – Swedish-owned Tele2 Esti and Levicom Broadband – will merge, Tele2 reported. Tele2 Eesti provides mobile phone services under the Q GSM and Tele2.Mobiil trademarks.

The nearly 40 percent stake in Levicom Broadband was sold to Tele2 by Levicom International Holding B.V.

The board chairman for the merged company, Ivar Lukk, said the aim of the merger of the two companies' management structures was maximum synergy and continued growth of the market share. "Merger of the two companies' structures will help achieve maximum cost effectiveness," Lukk said.

The merger would leave 25 people, or about one in 10 of the two company's present employees, without jobs, he stressed.

Commenting on Tele2's role in the merging company, Lukk said that it was a majority holding, which meant active control of the company and consolidation into Tele2 AB's financial results. Tele2 has invested money into the company before, and the deal's only added confidence to it, Lukk said.

Lukk said that growth in Tele2 AB's holding would mean no steep growth in investments.

Tele2 AB acquired its first holding in Ritabell, user of the Q GSM trademark, in 1998, paying $55 million for the 48 percent stake.

In January 1999, Tele2 AB bought 19.9 percent of Levicom Broadband and 90 percent of Levicom Cellular (Tele2 Estonia), which then owned Ritabell and paid a total of $58.6 million for the holdings.