TeliaSonera announces first-quarter profit drop

Stockholm-listed telecom operator TeliaSonera on Wednesday said profits had fallen in the first quarter, but hoped offering customers more data solutions in the future would turn things around.

TeliaSonera announces first-quarter profit drop
TeliaSonera CEO Johan Dennelind. File photo: TT

Swedish-Finnish telecom operator TeliaSonera pinned falling profits in the first quarter on lower-margin equipment sales. The company also blamed falling sales on "lower termination fees", which telecom operators charge each other for calls on their networks.

Net profit was down by 4 percent compared to the level a year earlier to 3.95 billion kronor ($600 million), slightly below the 4-billion-kronor expectations by analysts polled by Dow Jones Newswires.

"Our markets continue to be characterized by a changing customer behaviour and an evolving convergence trend," chief executive Johan Dennelind said in a statement.

While sales were down, profits from billing customers went up in the Nordic region by 3 percent, the company said. 

"Solid demand for data services compensated for slower growth in voice and messaging," the company stated. "We see further positive effects from our data-centric price models, which are now introduced in all Nordic markets."

"We stay focused on upgrading our customers' internet experience through further investments in 4G and fiber," Dennelind added. "In Sweden, our 4G coverage has approached 90 percent of population and we remain committed to reach 99 percent by the end of this year."

As its European markets stagnated, TeliaSonera has expanded to several countries in Central Asia including Kazakhstan, Uzbekistan, Azerbaijan, and Georgia. To combat the downturn, the company said the region would be key to future successes.

"(We will) take Eurasia to the next level by monetizing on the data opportunity," Dennelind said. 

Overall, TeliaSonera revenue for the period dropped by 2.4 percent to 23.97 billion kronor, slightly below analysts forecasts of 24.21 billion kronor. The group kept its outlook for 2014 unchanged.

"Net sales in local currencies, excluding acquisitions and disposals, are expected to be around the same level as in 2013," the company said. "Currency fluctuations may have a material impact on reported figures in Swedish krona." 

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‘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.