TeliaSonera reviews Spanish operation amid sales and profit drop

TeliaSonera reviews Spanish operation amid sales and profit drop

17 JUL 2014

Nordic operator group TeliaSonera saw a drop in sales and profit for the second quarter of the year, as its Yoigo business in Spain continued to be a cause for concern.

The company said it is reviewing its position in Spain as the business remains sub-scale with a 7 per cent market share, although margins did recover in the second quarter. Yoigo saw net sales fall 19.3 per cent year on year, despite subscriptions increasing by 5.4 per cent.

Mobile service revenue fell 10.9 per cent while equipment sales almost halved to SEK385 million. Despite the issues, EBITDA margin improved by 11 per cent, due to a fall in low-margin handset sales and reduced subsidies.

The issues in Spain contributed to the group revising its net sales forecast for the current year to be slightly below that of 2013. EBITDA and CAPEX remain the same.

Overall, second quarter net sales in reported currency fell 1.2 per cent to SEK25.0 billion, while net income decreased by 12.1 per cent to SEK3.55 billion.

TeliaSonera president and CEO Johan Dennelind (pictured) said net sales “continued to be affected by lower equipment sales, while group service revenues were stable”.

According to Dennelind, the Q2 results are the first since the company moved to a country-based operating model in April. He said that TeliaSonera’s strategic framework has the clear aim of enhancing core operations and to “explore opportunities in closely related areas”.

Demand for mobile data remains strong, according to the company’s chief, making it important to monetise these services. The firm said it is developing its data-centric pricing with customers migrating to these new plans.

In Eurasia, where the group was caught up in controversy over its earlier conduct in Uzbekistan, Dennelind said the new management team has “increased focus on governance, control and new business initiatives”. Net sales for the region in local currencies increased 6.7 per cent, although it fell 3 per cent when measured in reported currency.

The company said it continued to increase anti-corruption awareness in the region during the second quarter as it looks to create “a long term sustainable business” in the region.

Eurasia delivered strong profitability with solid development in Kazakhstan and Nepal. Organic revenue growth was 7 per cent, fuelled by a 35 per cent increase in data revenue, which accounts for 14 per cent of total sales in the region.

In Europe, the company’s net sales decreased 6.6 per cent. More positively, the number of subscriptions increased while churn decreased in all Nordic markets. Dennelind said the operator’s priority is to improve its competitive position in its Nordic and Baltic markets.

Following the close of Q2, TeliaSonera announced in July that it would acquire Tele2’s Norwegian operations, which Dennelind said was “a great strategic fit and will reinforce our number-two position in the country, enhance our customer offerings and generate significant cost synergies”.

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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

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