TeliaSonera reports profits leap to record in 2006

Swedish-Finnish telecom operator TeliaSonera, the biggest in northern Europe, reported record results for 2006 on Tuesday, boosted by growth in mobile telephony markets.

The group reported a 40.8-percent leap in net profit from the 2005 figure to 19.28 billion kronor (2.11 billion euros, 2.74 billion dollars). This included exceptional items of 1.7 billion kronor.

Sales climbed by 3.87 percent on the year to 91.06 billion.

In the last quarter — results for which were also released on Tuesday — the company reported a rise in net profit of 35.8 percent to 4.538 billion compared to 3.342 billion for the same period in 2005.

Sales in the quarter surged to 23.187 billion, up 1.35 percent from 22.876 billion in 2005. The figure however fell short of analysts’ expectations of 23.369 billion, according to a survey published by market research group SME Direkt.

Sales in the period were “driven by strong revenue growth in the international mobile and acquisitions in the home markets,” the company said.

2006 as a whole was “our best ever year financially, clearly showing our ability to perform in a demanding market,” chief executive Anders Igel said in the statement.

“There is more potential in the group to improve longer term,” he added.

Operating profit jumped 35.4 percent to 32.266 billion kronor. In the last quarter operating profit rose 9.4 percent to 7.766 billion, in line with analysts’ expectations.

In the mobile telephony unit, TeliaSonera increased sales for the year by 19 percent in Norway, nine percent in the Baltic states and five percent in Denmark.

However, in its main market Sweden, sales fell by one percent due to low prices even though volume growth remained “strong”. Sales also fell six percent in Finland.

“In fixed communications, demand for broadband services remained strong in all TeliaSonera markets,” the group said.

On December 31 2006, the group had 30.2 million customers — an increase of 20 percent in the year — in companies in which it held a majority stake, and 65.9 million customers in firms it held lesser stakes such as Russia’s MegaFon and Turkey’s Turkcell.

For 2007, the group said it expected sales to continue to grow and predicted it would reach its target of 100 billion kronor in two years with “maintained good profitability.”

“Net income for 2007 is estimated to be somewhat higher than in 2006,” the company said.

Meanwhile, TeliaSonera said it would propose for 2006 additional distributions to shareholders in excess of ordinary dividends to a total of 28.29 billion kronor, up from 15.71 billion in 2005.

The TeliaSonera share was down by 1.77 percent in midmorning trading on the Stockholm stock exchange, changing hands at 55.50 kronor.