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TELECOM

TeliaSonera sales slump as market shifts to data

Swedish-Finnish telecom operator TeliaSonera on Friday reported a first quarter decline in sales and profit amid strong competition and a drop in revenue from texting and traditional voice traffic.

TeliaSonera sales slump as market shifts to data

“Our industry continues to go through a period of change where traditional business models are being challenged by new customer behaviour,” chief executive Per-Arne Blomquist said in a statement.

Net profit fell 0.3 percent to 4.108 billion kronor (€482 million or $631 million) in the January to March period as revenue slumped 4.5 percent to 24.545 billion kronor.

Analysts polled by Dow Jones Newswires had expected profit to come in at 4.23 billion kronor on revenue of 25.15 billion.

Sales in mobility services, which includes mobile voice and data traffic, fell 5.1 percent while broadband services, including traditional landlines, declined 8.3 percent.

But Eurasia — comprising Russia, Turkey, six republics of the former Soviet Union and Nepal — was a bright spot, posting a 5.4 percent revenue gain.

The region “is crucial for the development of our business,” Blomquist told Swedish news agency TT.

TeliaSonera said it would manage costs “in a prudent way”, as it continued to implement cost cutting measures announced in the second half of last year that will see the group shed 2,000 employees, or seven percent of its workforce.

Full-year guidance was unchanged, with revenue forecast to be flat on the year.

Blomquist replaced Lars Nyberg at the helm in February after an external review ordered by the company directed “serious criticism” at shortcomings in the company’s Uzbekistan investment.

A corruption probe by the Swedish prosecution authority into the Uzbek deal was launched in September last year and is still ongoing.

On Thursday, TeliaSonera said it had commissioned a report from the law firm Norton Rose into all of its transactions in Eurasia. The findings will be submitted to the company at the end of this year.

Blomquist told TT the quarter had been “turbulent” but that the events “so far haven’t affected our business.”

Shares in TeliaSonera were down 1.91 percent in midday trading on the Stockholm bourse, where the main measure was 0.43 percent higher.

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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.