TeliaSonera profits beat expectations

TeliaSonera credited earnings from emerging markets and the Nordic-Baltic region for helping the Swedish-Finnish telecom operator beat fourth quarter net profits expectations when it presented its results on Wednesday.

TeliaSonera profits beat expectations

“We reported record high earnings for the fourth quarter and the full year,” TeliaSonera chief executive Lars Nyberg said in an earnings statement.

For the October to December quarter, the company saw its net profit jump 26 percent to 5.64 billion kronor ($674 million), while sales were up 13 percent year-on-year at 28.1 billion kronor.

Analysts had been expecting TeliaSonera’s net profit to rise just one percent and its sales to swell nine percent during the quarter, according to a poll conducted by Dow Jones Newswires.

For the full year 2008, the company saw both its net profit and its sales grow eight percent to 19 billion kronor and 103.6 billion kronor respectively.

Its operating profit meanwhile soared 10 percent to 28.6 billion kronor to 28.6 billion kronor.

Nyberg cautioned however that the company would feel the effects of the global economic crisis.

“We need to be prepared for a potentially drawn-out economic downturn that may affect consumer and corporate behavior,” he said.

This year, TeliaSonera expects its net sales, calculated in local currencies, to increase compared to 2008, but said currency fluctuations would likely increasingly influence its reported figures in Swedish kronor.

It said it planned to keep its cost base this year unchanged from the 33.8 billion it spent last year, while it aimed to maintain its 2008 earnings before interest, taxes, depreciation, and amortization (EBITDA) margin level this year.

The company’s strong position in the Nordic and Baltic countries sparked the interest of France Telecom last 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 ($43 billion).

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 this year.

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 a total of about three billion kronor, 1.6 billion of which was accounted for in 2008.

Following Wednesday’s announcement, TeliaSonera saw its share price jump 2.09 percent in midday trading on the Stockholm stock exchange, as the OMX30 index slipped 0.24 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.