NENT Group and Telenor Group announce merger of Viasat and Canal Digital

Left-right: Anders Jensen, NENT Group president and CEO; Jørgen C. Arentz Rostrup Telenor Group CFO

NENT Group and Telenor Group have announced an agreement to combine the former’s Viasat Consumer with the latter’s Canal Digital.

Viasat Consumer is NENT’s satellite pay TV and broadband TV operations, while Canal Digital is Telenor’s satellite pay TV offer.

In a statement, the companies describe the rationale behind the consolidation as providing “a simpler and more complete content offering” that will “create substantial revenue and cost synergies, and enable sustained investment to stay competitive.” 

The statement goes on to say that Nent and Telenor agreed upon an independent joint venture as “the strategically preferred route to capture the synergies and create shareholder value.” The new venture will operate “on an arm’s length basis from both companies”, and will provide content from multiple providers.

The deal will see each party hold 50% of the shares of the new joint venture company, which has combined net sales of approximately SEK7.6 billion (€710 million) and 1.257 million subscribers, as of June 30, 2019. 

Expected cost synergies are expected to be SEK650 million (€60.5 million) from 2022, with sales synergies expected to arise from Viaplay upsell opportunities and reduced churn.

Integration and other related costs are expected to total approximately SEK900 million (€83.8 million), and will be reported in the new joint venture.

The move should prove as a positive step for NENT Group, which had previously voiced anxieties over how necessary pricing adjustments would affect subscriber numbers.

Anders Jensen, NENT Group president and CEO said: “We are very happy to announce this game-changing joint venture with Telenor. Combining Viasat Consumer and Canal Digital makes perfect sense. We are creating a large-scale TV operator that will create sustainable value for customers and owners, and be able to compete with large scale regional and local competitors. We have achieved complete alignment of interest through a 50/50 joint venture structure and a shared vision for brands, products and how to provide an even better consumer experience. 

“This deal will drive significant shareholder value and it fits perfectly with our strategy to focus on the substantial opportunities we see in the fast-growing streaming sector. The new joint venture will be a major distribution partner for both our Viasat channels and Viaplay.”

Jørgen C. Arentz Rostrup, Telenor Group CFO said: “The joint venture will combine the respective strengths of Canal Digital and Viasat Consumer, leveraging synergies for the benefit of our customers and shareholders. There is a compelling business rationale behind combining the DTH operations of Canal Digital and Viasat Consumer, with large synergies to be captured within areas including transponder capacity, IT and operating expenditure. The joint venture will use Telenor Satellite’s services on 1°West for DTH transmission, representing a solid foundation for Telenor Satellite’s broadcast operations.”

Headquartered in Stockholm and Oslo, the venture’s board will have equal representation from Telenor and NENT Group, with a rotating chairmanship. The CEO will be Bjørn Ivar Moen (currently CEO of Canal Digital and Telenor Broadcast), and the CFO and head of operations will be Jonas Gustafsson (currently CEO of Viasat Consumer). 

Other key management positions will be jointly appointed and announced prior to the completion of the transaction.

Speaking to Digital TV Europe, Max Signorelli, research analyst, media and entertainment at IHS Markit said that the move will be positive in the face of threats from international streamers like Netflix, but suggested there is still more to be done. 

Signorelli said: “If approved, this new joint venture will allow NENT and Telenor to fight for a larger share of the very mature pay TV and OTT markets in the Nordics. Telenor’s strong Canal Digital pay TV offerings and Viasat’s OTT Viaplay offerings combined under one roof will likely enhance the value of each other but there is still a gap between this new entity and the market leaders. Especially on OTT, where both Netflix and HBO have some of the largest subscriber bases in the region.”