Nordic-based operator group TeliaSonera has reported increased profit for the second quarter of 2012, boosted by a deal to sell part of its stake in Russian operator MegaFon. However, the news was dampened by the company cutting its full-year growth forecasts amid a warning from CEO Lars Nyberg that operators need to fight to secure "future profitability."
TeliaSonera sold all of its shares in MegaFon shareholder Telecominvest to AF Telecom in April but still holds a stake in the operator. Following the resolution of a governance dispute concerning MegaFon, it received an SEK11.7 billion (US$1.7 billion) dividend net of taxes. It made a net capital gain of SEK3 billion from the MegaFon transaction.
TeliaSonera president and CEO Lars Nyberg said that with the group having only invested SEK1.2 billion in MegaFon since 1994, the engagement with the Russian operator "is a true success story."
TeliaSonera’s net income attributable to the owners of the parent company for the second quarter increased by 10 percent to hit SEK4.2 billion during the period. This was despite the company facing impairment charges of around SEK3 billion within its Mobility Services division.
Net sales increased by 1.1 percent to hit SEK26.3 billion. EBITDA fell by 2 percent to SEK9 billion, with the margin at 34.3 percent.
The number of subscriptions across the group rose by 1.4 million in consolidated companies and by 0.8 million in associated companies, bringing total subscriptions to 174.6 million.
Despite the positive second quarter, net income decreased by 4.1 percent to SEK8.2 billion for the first half of 2012. Net sales in reported currency rose by 2.3 percent (SEK52 billion).
TeliaSonera president and CEO Lars Nyberg said the double-digit growth seen in Eurasia was “satisfying” with growth in markets such as Nepal and Kazakhstan helping to reduce the group’s dependency on a single market.
Nyberg added that the “deadlock” with Turkcell, in which TeliaSonera has a stake, continues to be an issue, with the EGM having been postponed due to a spat between fellow shareholders Altimo and Cukurova Holding.
Nyberg added that operators, including TeliaSonera, "need to change their business models, address their structural cost base and review their way of working to secure future profitability." With that in mind, the company downgraded its outlook for 2012, with organic sales expected to be within the 0-1 percent growth range (compared to a previous forecast of 1-2 percent growth). The operator also forecast an adjusted EBITDA margin slightly lower over the full year, after earlier expecting a stable result.