TeliaSonera's steady Q3 hit by writedowns

TeliaSonera’s steady Q3 hit by writedowns

17 OCT 2014

Nordic operator group TeliaSonera saw its profit fall, despite stable revenue during the third quarter of the year, as the impact of several writedowns took their toll.

Net sales in reported currency increased slightly year-on-year (0.2 per cent) to reach SEK25.46 billion ($3.56 billion). In local currencies net sales actually fell 2 per cent. Service revenue in local currencies fell 0.6 per cent.

However, net income for the third quarter fell 12.2 per cent to SEK4.07 billion, while operating income decreased by 5.9 per cent to reach SEK7.27 billion.

President and CEO of TeliaSonera, Johan Dennelind, said the consumer segment in Sweden remained “firm with positive service revenue growth” due to a move to data-centric pricing models and solid demand for high-speed fixed broadband. Net sales in Sweden for the period were SEK8.99 billion, up 1.1 per cent.

The company’s Finnish business returned to positive service revenue growth with improved profitability, despite the impact of reduced mobile termination rates and a difficult macroeconomic situation.

Profitability also improved in Spain as a result of lower subscriber acquisition costs for the Yoigo brand, and a higher contribution from data. Sales growth was hit by lower equipment sales, ending up down 25.3 per cent, at SEK1.79 billion.

TeliaSonera has previously said that it was reviewing its position in Spain, with the business remaining sub-scale.

Turning to Eurasia, Dennelind said “profitability remains solid and subscription growth accelerated, supported by positive net intake in all of our seven markets”. Net sales in the region were up 3.3 per cent at SEK5.47 billion.

Service revenue growth in Kazakhstan slowed but profitability improved due to lower costs. Changes are currently being made on a management level, as the company looks to strengthen governance and operational control in the market.

In September, the company announced a SEK600 million non-cash writedown for the quarter on its businesses in Kazakhstan. This was part of a total of SEK850 million of non-recurring costs in the third quarter.

The conduct of the company in Kazakhstan was criticised by an external review in 2012 which said it should have been more careful when acquiring its mobile licence in the country in 2007. The resulting fallout saw TeliaSonera CEO Lars Nyberg resign in February 2013.

The group’s outlook for the rest of 2014 was unchanged, with net sales in local currencies expected to be slightly below what was achieved in 2013. The CEO said the company aims to pay a dividend of at least SEK3 per share for the 2014 and 2015 fiscal years.

Dennelind repeated the company’s aim to equip itself for the “all data era” which will require investment in “new growth and savings initiatives”.

The company plans to invest up to SEK5 billion in 2015 and 2016 to drive further growth and improve competitiveness. This will go into accelerating the rollout of fibre in Sweden, launching new enterprise products, and upgrading data networks in Eurasia.

Its deal to acquire Tele2’s Norwegian operations for SEK5.1 billion, which is still undergoing an approval process, will add 2.7 million subscribers, increasing its market share to around 40 per cent in Norway.

Dennelind also noted sustainable cost savings can be achieved by exiting legacy structures and reducing complexity across the group.

The company plans to invest SEK2 billion in business transformation in 2015 and 2016, with the goal of achieving net savings with a yearly run rate of SEK2 billion during 2017.

Author

Tim Ferguson

Tim joined Mobile World Live in August 2011 and works across all channels, with a particular focus on apps. He came to the GSMA with five years of tech journalism experience, having started his career as a reporter... More

Read more

Related

Tags