Spotify raises $115 million in share sale

Reuters News
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Posted: Jun 10, 2015 3:07 AM

STOCKHOLM (Reuters) - Sweden's largest telecom operator TeliaSonera <TLSN.ST> is buying a 1.4 percent stake in music streaming service Spotify, hoping to grab a slice of the fast growth and speedy innovation typical of online companies.

TeliaSonera said on Wednesday it will pay $115 million for a batch of newly issued shares in Spotify as it expands its partnership with the unlisted Stockholm-based business, that provides free on-demand music or an advertisement-free service for paying customers, valuing the company at about $8.2 billion.

TeliaSonera Chief Executive Johan Dennelind said the investment was part of a strategy to solve what he called "the industry puzzle", seeking new ways to grow in the face of stalling growth for telecom operators in their core business.

Like many European peers, the Swedish telecom incumbent has had a hard time growing revenue in its home market in the face of fierce competition.

"We want to master the internet logic as well as we have mastered the telecom logic," Dennelind said, pointing to faster growth in online services than in traditional telecoms.

"We haven't been quick enough in the past. And this is a way for us to take part in a company that has it as its DNA: innovation, speed, ideas, launches and global competition."

He declined to say if Telia might boost its stake in future or give details on what new services and offers the companies would work on together as part of the expanded partnership.

Dennelind said Telia could decide to take further steps with companies operating in what he called the border area between the telecom, media and internet industries.

Spotify, which competes with Pandora Media Inc <P.N> and Apple Inc's <AAPL.O> Beats, said this year that it had reached 15 million subscribers and 60 million active users.

The company, which last year increased revenue by 45 percent to 1.08 billion euros ($1.2 billion) and made a 165 million euros operating loss, recently announced that it would soon provide video content from musicians, news organizations and TV networks.

Spotify does not disclose details about its ownership but co-founders Daniel Ek and Martin Lorentzon have sold stakes in the business and no longer own a majority.

(Reporting by Sven Nordenstam and Helena Soderpalm; Editing by David Goodman and David Holmes)