TeliaSonera Q1 earnings lower than expected

(AFX) TeliaSonera AB said first quarter EBITDA excluding non recurring items fell to 6.9 billion kronor from 7.2 billion a year earlier, hit by lower margins amid increasing price competition in Sweden and Finland. The result was below average market expectations of 7.45 billion kronor, as recorded by SME Direkt.

EBITDA margin excluding non recurring items dropped sharply to 33.1 percent from 36.4 percent. The company warned the competitive environment in Sweden and Finland will will hit its EBITDA going forward.

“The competitive environment in Sweden and Finland is intensifying faster than anticipated. This will continue to have a negative impact on EBITDA margins and operating income excluding non-recurring items for the rest of the year. The other elements in the outlook remain as stated in the full-year report 2004,” said TeliaSonera.

First quarter sales rose slightly to 20.8 billion kronor from 19.77 billion a year earlier.

TeliaSonera said the drop in earnings was chiefly due to the company’s Finnish operations.

“The mobile market in Finland was characterized by aggressive competition resulting in strong price erosion and high churn. To defend its customer base, Sonera met the competition with reduced prices, which led to price erosion of 20 percent year on year,” the company said.

The company said its cost reductions are to continue. “Market realities in Sweden and Finland emphasize the need for the restructuring programs already initiated,” it said.

The company’s International Mobile unit in Eurasia reported strong growth.

“Both the majority-owned operations in Eurasia and the associated companies in Russia and in Turkey showed strong sales and earnings growth, which led to a robust improvement in operating income year on year.”

The company also announced the departure of its Finnish president Anni Vepsaelaeinen and appointed Esa Korvenmaa as an acting president for TeliaSonera Finland.