Results lead to disappointment at Telia

Swedish-Finnish telecom group TeliaSonera, the largest in northern Europe, reported a fall in fourth quarter underlying earnings Friday that it attributed to weakness in its Swedish fixed-line

business and Finnish mobile operations.

The company said earnings before consideration of interest, taxes, depreciation and amortization came to 7.098 billion kronor in the final three months of 2005 from 7.457 billion in

the same period of 2004.

Average market forecasts had been for earnings to reach 7.559 billion kronor in the fourth quarter.

The news depressed TeliaSonera shares, which were down 5.67 percent in mid-morning trade at 41.60 kronor on a slightly weaker Stockholm market.

Sales increased 7.6 percent in the quarter to 22.876 billion kronor and chief executive Anders Igel said he expected improved results in 2006.

“This year I believe we will show continued sales growth, improved profits and strong cash flow,” he predicted.

In its home Nordic markets, TeliaSonera foresaw movement from fixed voice to mobile and Internet protocol-based services continuing in 2006, although it added that “competition in all product areas will remain strong in the home markets.”

At TeliaSonera’s Swedish business, fourth quarter sales fell 4.7 percent to 9.804 billion kronor and underlying earnings slipped 12 percent to 3.644 billion kronor.

The company said the reduced sales and increased costs of 400 million kronor from storm damage weakened its margin despite the positive effect of a restructuring program, which is going according to plan and is expected to reduce annual costs by four to five billion kronor by 2008.

In Finland, sales fell 12.2 percent to four billion kronor, with underlying earnings plunging 45 percent to 758 million kronor, affected by lower price levels and declining sales at the wholesale level.



‘Rotten’ business claims at Nordic TeliaSonera

Swedish-Finnish telecom operator TeliaSonera has been accused of “rotten” business dealings in Azerbaijan, following a separate bribery scandal in Uzbekistan.

'Rotten’ business claims at Nordic TeliaSonera
A TeliaSonera conference in Stockholm last year. Photo: TT

Folksam, which is one of the largest insurance companies in Sweden, has accused the firm of “systematic cheating”, after it emerged that TeliaSonera’s subsidiary in Azerbaijan had ties with the family of Ilham Aliyev, the Arab nation’s leader.

It has been claimed that the dictator’s daughters were shareholders of TeliaSonera's subsidiary Azertel, via a connected company based in Panama.

“It is distressing that in a large Swedish company…people thought that cheating would pay off in the long run,” Carina Lundberg Markow, one of Folksam’s managers told the TT news agency on Wednesday.

She criticized TeliaSonera for failing to act “in an honest and open way” when entering new markets.

“Instead, they choose to pay for success,” she added.

TeliaSonera is one of the biggest telecom operators in the Nordic and Baltic countries and also operates in several emerging markets in Eurasia including Russia and Turkey, as well as Spain. The Swedish state owns 37.3 percent of the company.

Swedish prosecutor Gunnar Stetler is already investigating claims of unethical business practices in Uzbekistan and told TT he had also been given new information concerning potential bribery in Azerbaijan.

The company has voluntarily cooperated with the investigation, handing over what Stetler describes as “extensive information” about “the terms and conditions in Eurasian countries”.

Stetler said he was unable to discuss how he had responded to the information. But calls are growing for TeliaSonera to release a public report about its business dealings.

“Now it is extremely important to create transparency,” said Lundberg Markow.

“This shows the importance of having a set of values when doing business in complex markets or countries,” she added.

TeliaSonera and Norwegian rival Telenor recently merged their operations in Denmark, while the telecoms giant last year purchased rival Tele2's Norwegian division for 5.1 kronor.