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TELIASONERA

Charges dent TeliaSonera profits

TeliaSonera has posted third quarter results that were lower than last year, but the Swedish-Finnish telecommunications operator's profits were higher than forecast.

For the July to September period, the company posted a net profit of 4.77 billion kronor ($598 million), down 12 percent from the 5.39 billion it reported for the year-ago quarter, it said in its earnings statement.

The lower earnings owed largely to one-time charges, but the company partially beat expectations and maintained its full-year outlook.

Its sales meanwhile rose four percent to 25.81 billion kronor, from 23.9 billion in the third quarter of 2007.

While TeliaSonera’s net profit fell short of analyst expectations of 4.90 billion kronor for the quarter, its sales figure beat predictions that it would rake in 25.79 billion, according to a poll by the Dow Jones Newswire.

“This is a stable report. It is a little better than expected,” Glitnir analyst Anders Elgemyr told Swedish public radio.

Investors too appeared pleased with the report.

Following the announcement, the price of shares in TeliaSonera jumped 4.40 percent in early afternoon trading, as the overall Stockholm OMX30 index swelled 2.71 percent.

The lower net profit came “mainly as a result of lower income from associated companies, higher non-recurring expenses and higher negative net financial items,” the company said.

TeliaSonera said also said it remained largely unscathed from the ongoing worldwide financial crisis.

“We are in a period of global financial turmoil and it is very difficult to project how long it will last. However, TeliaSonera has a strong balance sheet and operates in a relatively non-cyclical industry,” company chief executive Lars Nyberg said in the earnings statement.

“Therefore, we see no immediate effects of changing customer behaviour in our operations,” he added.

The company could thereby maintain its outlook for 2008, it said, adding that its net profit this year should be “somewhat higher than in 2007,” when it raked in 20.29 billion kronor.

It also said it expected margins to remain unchanged from last year’s 32.2 percent.

“We continue investing in high quality networks and new services that improve the productivity and flexibility of our customers, and continue looking for new investment opportunities,” Nyberg said.

During the third quarter, TeliaSonera, which has established a presence in a number of emerging markets including Georgia, Moldova and Kazakhstan, purchased controlling interests in two Cambodian operators, Spice Nepal and Applifone, for about 3.2 billion kronor.

The company’s strong position in the Nordic and Baltic countries 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 euros.

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

‘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.