The Swedish telecommunications company has been on the news lately pertaining to business practises in Central Asia, Uzbekistan in particular, and CEO Lars Nyberg has taken a lot of heat on the matter. Yesterday he did however get the dreaded stamp of approval from the Board. The strategy to focus on Nordic and Baltic matters as well as to further strengthen operations in Central Asia was affirmed. Board took the responsibility for investments made and forthcoming in markets such as Uzbekistan, Tajikistan and Kazakhstan. Regarding future investments, TeliaSonera is looking into possibly starting operations in Myanmar but a sure-fire decision is maybe years away.
In an unusual start to an interim report presentation today, Nyberg started commenting on the recent speculations and accusations against the company. He insisted that TeliaSonera has zero tolerance for corruption and bribery and reiterated his stance that the company did not bribe anyone or participate in money laundering. Investigations in Uzbekistan are ongoing, both by the Board of Directors and prosecutor. He also furthermore said claims made about TeliaSonera’s operations in Nepal in Swedish press last week were factually wrong.
Regarding financial performance, revenue was flat with net sales of 25.84 billion SEK and there a 4% EBITDA decrease. Margin was down in all business areas, with EBITDA margin now down to 35% and likely slipping slightly below that in Q4. Net income of 4.8 billion and earnings per share of 1.11 SEK were almost level with comparison period on better performance from associated firms. Free cash flow was down to 3.8 billion SEK. Outlook for the full-year was maintained at 0-1% sales growth and 35% EBITDA. Markets weren’t terribly happy about the news and the stock has been in the red for the entire day.
Growth in the industry is non-existent; Broadband Services continues a steady decline and Mobility Services has been growing for the longest time but the advance seems to have now stopped. Billed voice revenue is declining and data traffic monetizing has not yet succeeded. TeliaSonera obviously wants to change that. Nyberg predicts that a flat voice fee meaning you pay a certain lump sum for calls much like one already offered in the United States will be introduced in the Nordic markets but that there will be higher data bills for heavy data users in the future. Nyberg called the new Mobility Services head Tero Kivisaari as the best person he has worked with.
Since there is unlikely to be any industry growth within the next couple of years, improvements need to be made on the cost side with wages still going up. The estimate is that about 7% of the workforce will be cut company-wide in the next two years with the aim to save around 2 billion Swedish kroner per year. The actual personnel cuts could be announced after a few months but those could well be in the several hundreds in all the Nordic markets.
MegaFon intends to proceed with IPO and plans for a KCell IPO continue. The company wants to maintain conservative leverage numbers and these transactions should help with that. TeliaSonera has also made up its mind about divesting Spanish operator Yoigo that is performing rather well.
No comments:
Post a Comment