TeliaSonera posts solid quarterly results

Swedish-Finnish telecommunications operator TeliaSonera, which recently snubbed a takover bid from France Telecom, reported strong second-quarter results on Thursday, but slightly missed analyst's expectations.

TeliaSonera posts solid quarterly results

“The overall market trends were essentially unchanged and we reported a satisfactory set of numbers for the second quarter,” TeliaSonera chief executive Lars Nyberg said in the earnings statement.

For the April to June period, the company posted a 7.8-percent jump in net profits to 4.1 billion kronor ($684 million) compared to the year-ago figure.

In the same quarter, TeliaSonera’s operating profit rose by 17.6 percent to 6.8 billion kronor while its earnings before interest, taxes, depreciation, and amortization, or EBITDA, grew 6.4 percent to eight billion kronor.

Net sales jumped 5.7 percent year-on-year to 25.3 billion kronor, while the company’s margins inched up to 31.6 percent from 31.4 percent a year earlier.

“For the first time in more than a year, we managed to increase our margins,” Nyberg said.

In the Euroasian region alone, TeliaSonera’s sales skyrocketed 16.6 percent, largely due to acquisitions it completed in Uzbekistan and Tajikistan, TeliaSonera said in its earnings statement.

The results nonetheless slightly missed analysts’ expectations of a net profit of 4.43 billion kronor and of sales of 25.59 billion, according to a poll conducted by the Dow Jones financial news agency.

At the end of June, TeliaSonera said it had 122.9 million customers, a 19.3 percent increase from a year earlier and up from 119.3 million at the end of March.

The group also stood by its previous outlook, reiterating that its “ambition for 2008 is to maintain the EBITDA margin level of 2007 (32.2 percent), excluding non-recurring items.”

It also said it expected its full-year net profit to be “somewhat higher that in 2007.”

For all of last year, the group reported a net profit of 20.29 billion kronor.

TeliaSonera, which traditionally has focused on fixed telephony, is currently restructuring with large investments in IP and mobile telephony services, as well as a string of cost-cutting measures set to be carried out by the end of 2009.

The company hopes to reduce annual costs by around five billion kronor

compared to its 2007 level.

The restructuring process, which includes some 2,900 job cuts across Sweden and Finland, is meanwhile expected to cost around four billion kronor, two thirds of which will be accounted for this year.

TeliaSonera is also focusing on activities abroad to compensate for a slowdown on its domestic market.

“TeliaSonera is a strong business, based on leading market positions in the Nordic and Baltic countries. We are also very well positioned in several emerging markets with high growth potential,” Nyberg said, adding that his company was continuing “to look for new investment opportunities.”

The company’s strong position sparked the interest of France Telecom earlier this year, but TeliaSonera, whose main shareholders are the Swedish and Finnish states, shot down the French telecom giant’s friendly offer to buy it for about €33 billion ($52 billion).

Following its report, TeliaSonera saw its stock price jump 3.28 percent to 44.10 kronor a share in midday trading on the Stockholm stock exchange, which on average slumped 1.28 percent.


‘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.