TeliaSonera Q1 earnings lower than expected

(AFX) TeliaSonera AB said first quarter EBITDA excluding non recurring items fell to 6.9 billion kronor from 7.2 billion a year earlier, hit by lower margins amid increasing price competition in Sweden and Finland. The result was below average market expectations of 7.45 billion kronor, as recorded by SME Direkt.

EBITDA margin excluding non recurring items dropped sharply to 33.1 percent from 36.4 percent. The company warned the competitive environment in Sweden and Finland will will hit its EBITDA going forward.

“The competitive environment in Sweden and Finland is intensifying faster than anticipated. This will continue to have a negative impact on EBITDA margins and operating income excluding non-recurring items for the rest of the year. The other elements in the outlook remain as stated in the full-year report 2004,” said TeliaSonera.

First quarter sales rose slightly to 20.8 billion kronor from 19.77 billion a year earlier.

TeliaSonera said the drop in earnings was chiefly due to the company’s Finnish operations.

“The mobile market in Finland was characterized by aggressive competition resulting in strong price erosion and high churn. To defend its customer base, Sonera met the competition with reduced prices, which led to price erosion of 20 percent year on year,” the company said.

The company said its cost reductions are to continue. “Market realities in Sweden and Finland emphasize the need for the restructuring programs already initiated,” it said.

The company’s International Mobile unit in Eurasia reported strong growth.

“Both the majority-owned operations in Eurasia and the associated companies in Russia and in Turkey showed strong sales and earnings growth, which led to a robust improvement in operating income year on year.”

The company also announced the departure of its Finnish president Anni Vepsaelaeinen and appointed Esa Korvenmaa as an acting president for TeliaSonera Finland.


‘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.