Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to today's divestment of Kcell conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by a question-and-answer session. At which time, if you wish to ask a question, you will need to press star followed by one on your telephone and wait for your name to be announced. I must advise you that this conference is being recorded today, Wednesday, the 12th of December 2018. I would now like to hand the conference over to your speaker today, Mr. Johan Dennelind, Chief Executive Officer and President. Please go ahead, sir.
Thank you very much. Good afternoon, everyone. Thanks for calling in. It is good to speak to you again so shortly after our last call regarding Uzbekistan. We are going to take you through our divestment of Kcell and also our situation in Fintur. I have with me Christian Luiga and Jonas Svensson as the last time.
As I am on a fairly fragile line, I will only do a brief intro and then stay muted and be back for Q&A. If I just then take context around our exit process in Eurasia overall. This divestment signing today on Kcell and also on our agreement with Turkcell regarding Fintur. We have taken a big step to finally conclude our Eurasia adventure. We have, before this announcement today, obviously sold and announced five exits. We have also exited MegaFon and sold our direct stake in Turkcell.
We also have talked a lot about our ethics and compliance implementation over the years, which we believe is a well-functioning program in all our respective markets. We also briefly told you about the settlement regarding Uzbekistan last time we spoke, which has also been a significant part of the cleanup in the region.
Today's announcement is an important one, obviously. The biggest company that we have in the portfolio and has been with us for a long time. We now have reached agreement to divest Kcell with cash proceeds of around SEK 4.1 billion, or our share being SEK 2.9. We also decided to dismantle Fintur and agree with Turkcell how to do that, and we will tell you a bit more about that. With that, I think it is more safe for me to hand over to Christian, and then I will stay muted and come back for Q&A. Thank you.
Thank you very much, Johan. I'll will go through the transaction highlights and the financials, which you will find in the presentation in the coming pages. Starting with the Kcell transaction, this is a company we have owned 24% direct ownership in, and we have also via Fintur Holding, which is a company we partly own with Turkcell.
They own 41.45%, and we the rest. We have, through that company, owned 51% ownership in Kcell. So in total, 75% of the company has then today been signed to be sold to Kazakhtelecom for $446 million, which equals an enterprise value of $771 million and EBITDA of 5 x. This means the $446 million, 75% means that Telia will get $326 million of this money, and the rest will go then to Turkcell.
When we go for closing, which we expect to happen already this year, that is based on that the transaction has already been approved by the competition authority. If we then move into our other transaction that we announced today, is where we have decided to dissolve our Fintur partnership with Turkcell. With that, we will then split the cash which we have in this commonly owned company.
We have agreed to take over the other asset, which is the Moldova business, a small company representing 0.6% of Telia's total EBITDA. We will take that over and handle that within Telia. With this, we can then close Fintur and bring back that cash from Fintur to both Turkcell and Telia. We do that by splitting the cash in a way where we proportionally divide it, and then Telia pays 95% on the cash value that Turkcell part is.
That means if we base it on the current situation, that Fintur has SEK 6.1 billion in cash per end of November. That would mean that we keep SEK 3.7 billion of that proportionate part, plus we will get our part of the Kcell transaction that I just went through, the SEK 2.9 billion or the $326 million. Those are the transaction highlights from this. Fintur closing is expected to happen in the beginning of 2019, when we have closed the Kcell transaction, and we have concluded on some other administrative matters. Over to the impact on the net income. If we start with the Kcell transaction.
On the Kcell transaction itself, Telia will have a capital gain of SEK 1.1 billion, and that means that we have a lower book value in the Telia books as for today, than we got at the final purchase price. Then we have a recycling of FX effects that will not hit the equity, but it will have an impact on net income, whereby we have to recognize the previous FX effects over net income, but it doesn't have an impact on the book value or equity.
Those are - SEK 0.9 billion. In total, a positive effect from this transaction of SEK 0.2 billion on the net income in Q4, assuming we get to closure in time, which we expect. The Fintur transaction is not expected to have any impact on the result, and it's not a sale, it's actually an acquisition.
If we go to the impact on the net debt and leverage, we have in the presentation we sent out also included Ucell to just make sure you get the full picture of the last two weeks' transactions. We can see that based on the quarter three pro forma numbers, the total effect of the Ucell transaction, the Kcell transaction, and the Fintur transaction will be zero on net debt to EBITDA, whereby Ucell had a slightly negative impact by increasing net debt to EBITDA with 0.1, and Kcell will have a corresponding positive effect on net debt to EBITDA by taking it down with 0.1, and Fintur net will not have any effect. In total, these ending transactions will not impact net debt to EBITDA. With that, I leave to Jonas to take us through the structure and the other parts.
Yes. I will briefly go through and explain the structure. You can see in the presentation sent out, as Christian already said, this is a transaction where Telia and Turkcell sell its combined 75% stake in Kcell to Kazakhtelecom. Before that, it was a structure where Telia both had a direct stake and our indirect stake through Fintur. Both of those are sold, as seen in a fairly straightforward transaction to Kazakhtelecom, meaning that after this deal has closed, hopefully during this month, the situation will be that Kazakhtelecom will own 75% of Kcell and the remaining 25% will still, as it is today, be a free float listed both locally and on the London Stock Exchange.
In addition, the very simple organizational chart at the bottom of the slide here shows that after the closing of the Fintur transaction, Fintur will be a wholly owned company of Telia Company AB, and before that, it was owned to 58.5% or so by us. Moving on. Let me say a few words about the compliance review and the compliance work in Kcell, which is similar to what we talked about last week for the transaction we discussed then. During the years, we in Telia, including in Kcell, have spent significant resources and focus on building up a world-class compliance system. That has been done through the leadership of Telia, but also focusing on building independently working functions in all our subsidiaries.
I will, on the next slide, go through a little bit more on the details and examples on what we have done more specifically in Kcell there. For these transactions that we have carried out now, we have also conducted so-called human rights impact assessment of all our operations in Eurasia, including in Kazakhstan. The learnings from that, which we did together with external experts, have been taken into account during the entire divestment process. As a natural part of our divestment processes, we conduct deep and thorough due diligence processes with KYC and background checks of all parties that are involved in the transactions.
We use both our own internal expertise that we have trained during the years for this, but also supplemented with international reputable experts in this field to ensure that we do in-depth controls, not just of the actual counterparties, but also taking one or sometimes even two and three steps more, looking into the ownership chain behind our counterparties to make sure that all entities involved in this are who we think they are and meet all our requirements for transactions, which is the case also in this event. Of course, the normal checks and controls for source of funds and flow of funds have been and will be conducted before closing occurs when actual money will be transferred.
Finally then, if I may round off a little bit then about some more concrete examples on the ethic and compliance work and improvements that have been in place during the years in order to ensure that Kcell has an ethic and compliance operation and function that is designed not just to be a well-integrated part of Telia Company's function, but also able to function on an independent basis since we have been preparing for this moment for some years now.
We have done significant training, both in-house but also using external training for that, to train and certify officers working in Kcell with these matters. We have also ensured that all employees in Kcell have taken part in anti-bribery and corruption training, as well as several other related trainings such as ethical dilemma training and so on.
With that, we have also ensured that Kcell have introduced the same way of working with suppliers, including other business partners, to make sure that there is a structured way of vetting all such business partners to do KYCs and to control that they also, in their turn, live up to our requirements. The speak-up line that we established throughout the entire Telia Company footprint is also introduced in Kcell and is in place there. As I mentioned a few minutes ago, we did conduct the human rights impact assessment for all our operations, including Kcell, and the learnings there have been used not just by Telia in this transaction, but also for training and education in Kcell. Yes. That was what I had.
Okay. We hand over to questions operator.
Thank you. If you wish to ask a question, please press star followed by one on your phone and wait for your name to be announced. If you wish to withdraw your question, please press the hash key. Once again, please press star one if you have a question. The first question comes from the line of Stefan Gauffin. Your line is open.
Yes, hello. I j ust have a question relating to your view on the balance sheet following these transactions. I mean, now you're more or less done with the exits from Eurasia, and you have a pending deal with Bonnier Broadcasting. Also reflecting on the last spectrum auction and also upcoming spectrum auctions the coming year. What's your view on the balance sheet? Do you still have room to maneuver, et cetera?
Thank you, Stefan. Christian here. Nothing has really changed. We've had a spectrum auction that has just completed, we don't think there's been any significant deviations to any expectation on that. Today we announced a deal where we also say that the impact on net debt to EBITDA is zero, and we have indicated that it should be marginal, plus or minus, over the last half year, actually, in the discussions to the market. I don't have any other forward-looking statements than that.
Okay, fair enough.
Thank you. Once more, please press star one if you have a question. The next question comes from the line of Siy i He. Your line is open.
Hello. Hi. Thank you for taking the questions. Congratulations about the disposal. I just have a quick question, please. I was wondering if you can give us some update on your thoughts about the indirect shareholdings in Turkcell and also with the Eurasia assets. Just remind us how much it needs to be paid to the Dutch court. Thank you very much.
I'm not really sure I understand the question properly. I think it's two questions. First of all, Christian here again. The first question is the situation with our indirect stake in Turkcell. We have said that we look into how we can take that journey into another situation with Turkcell. It's an indirect shareholding together with two other parties.
That's a discussion that is ongoing. It's complicated. We have sort of no indication or news on that. The second question, I think, is on the remaining part of the DOJ settlement, which has been with both the DOJ and the Dutch authorities. It doesn't say who should get the money. That is $208 million that is to be paid. That would be paid, we believe, within the next couple of quarters.
Thank you very much.
Yeah.
Thank you once more. Please press star followed by one on your phone if you have a question. There are no questions at this time, but once more, please press star one if you have a question.
All right. I think that concludes the call. Very clear presentations, obviously. No questions. We thank you for dialing in and have an opportunity to at least hear from us about this final big step towards closing the Eurasia chapter. We, as Christian and Jonas highlighted, will hopefully close this transaction during the year, and then fully also close the Fintur early next year. We'll speak to you soon again, if not earlier, then in the Q4 presentation end of January. Thank you very much. Bye-bye.
Thank you.
Thank you. This does conclude the conference for today. Thank you for participating, and you may disconnect.