Tele2 is to buy a majority share of Kazakhstan based mobile operator Neo (the trading name for Mobile Telecom-Service). The company is paying around SEK 550 million (US$77 million) for 51 percent of the shares and commit to a capital injection of around SEK 360 million (US$50.6 million) once the transaction has been finalized. The seller is Kazakhstan's dominant landline operator, KazakhTelecom who also owns a 49% stake in GSM Kazakhstan (Kcell), which is a far larger mobile network operator, in terms of subscriber base.

Tele2 also gets an option to buy the remaining 49% from the remaining shareholder, Asianet Holdings after 5 years from closing. AsiaNet Kazakhstan brought its 49% stake from KazakhTelecom in 2007 for US$8.7 million.

The mobile network will be relauched and Tele2 is targetting a market share of over 20% within four years. Neo should be able to reach EBITDA break-even within 2-3 years after commercial re-launch.

Harri Koponen, President and CEO, comments: "The acquisition of a mobile operation in Kazakhstan goes hand in hand with our ambition to carefully look for complementary assets in or close to our mobile footprint. Given the proximity of the Kazakhstan asset to other Tele2 operations, this acquisition should provide the potential of synergies deriving from the replication of our successful operational model."

Neo is the smallest of the country's three GSM networks, and estimates from the Mobile World put its subscriber base at just under 1.5 million at the end of Q3 '09. This represented a market share of 9.2%. The two other operators are Kazakhstan-Rumeli Telecom, controlled by Russia's Vimpelcom and GSM Kazakhstan (Kcell), which is controlled by TeliaSonera's Fintur Holding.