Tele2 pulls out of Irish market

SWEDISH telecoms operator Tele2 quit the Irish market yesterday when it offloaded its business here to The Carphone Warehouse group just a year after setting up.

The company, which had signed up just 36,000 residential phone customers in Ireland, sold its combined British and Irish operations for €12.6 million. It blamed the decision on unattractive conditions for new entrants in both markets.

“The decision to divest our UK and Ireland operations has not been taken lightly and is a result of thorough analysis of the market and our various options,” said Tele2 chief executive Lars-Johan Jarnheimer.

“The way the market for alternative operators in the UK and in Ireland looks today, we can get significantly better returns by reallocating its budget to other markets.”

The group’s British operations had also failed to set the market alight, recruiting just 188,000 customers over the last two years.

“As with every new country launch, Tele2’s aim in the UK and Ireland was to become one of the leading alternative operators by offering cheap and simple telecom services,” the company said.

“The next step for these businesses would be to add to their product portfolio by offering broadband services. However, the alternatives for offering broadband in the UK today do not meet Tele2’s long-term profitability requirements.”

The Carphone Warehouse, which is quoted on the London stock exchange and has operations in 10 countries, recently entered the landline market in Ireland with the launch of its TalkTalk service.

Tele2 customers will be transferred to the TalkTalk service in the coming weeks.

“The acquisition is consistent with the group’s strategy of building its customer base both organically and by selective acquisition.

“The Carphone Warehouse intends to migrate these customers unto its own network under the TalkTalk brand,” the company said. It added that the deal would be “marginally” positive for group earnings in the current financial year.

Tele2’s British and Irish operations recorded revenues of €52 million in the nine months to September but was heavily lossmaking, with losses before interest, tax, depreciation and amortisation totalling €19 million.