TeliaSonera Misses Estimates as Europe Lags Behind Asia
April 19, 2011, 7:30 AM EDTBy Diana ben-Aaron
(Updates with CEO comments starting in eighth paragraph.)
April 19 (Bloomberg) -- TeliaSonera AB reported first- quarter sales and profit that missed estimates and lowered its full-year revenue forecast as European markets lagged behind growth in central Asia.
Net income fell 1.6 percent to 4.65 billion kronor ($736 million), from 4.72 billion kronor a year earlier, Stockholm- based TeliaSonera said in a statement today. Revenue slipped 5.6 percent to 24.7 billion kronor. The average estimates of analysts surveyed by Bloomberg were for profit of 4.81 billion kronor and sales of 25.4 billion kronor.
TeliaSonera is encountering tougher competition in its home Nordic markets as rivals including Tele2 AB and Elisa Oyj step up sales of smartphones and data packages. Lower handset revenue and higher regulatory charges contributed to slippage in the region, the company said. Central Asia sales gained 9.2 percent, driven by Kazakhstan and Uzbekistan.
“Revenue weakness extended across all units with the exception of Norway and Eurasia, which was merely in line,” Ulrich Rathe, a London-based analyst at Jefferies International Ltd., wrote in a note. “The major contributors to the group revenue shortfall were fixed wholesale and ‘other,’ both contributing 81 percent to the miss. Both units are areas of low visibility and minor contributors to value.”
Shares Fall
TeliaSonera shares declined as much as 2.8 percent to 48.36 kronor, and traded 1.4 percent lower at 49.07 kronor as of 1:26 p.m. in Stockholm.
TeliaSonera said it expects net sales growth in local currencies and without acquisitions to be about 3 percent this year, down from an earlier forecast of 4 percent.
The company has said it is willing to expand by consolidating in its markets and has bid for Polkomtel SA, the second-largest mobile company in Poland, which adjoins its Baltic operations. Five companies or groups were bidding, Polkomtel Deputy Chief Executive Officer Krzysztof Kilian said on April 6. Polkomtel may go for more than $5 billion, based on the valuation of a 2008 stake sale by Denmark’s TDC A/S.
“There are many bidders, which means the price is probably going to be not cheap,” Chief Executive Officer Lars Nyberg said in an interview. “I don’t think Polkomtel is strategically necessary for us but if we can get it for a decent price and we believe that we can improve that business then maybe we have a case. But we are not there yet, not at all.”
Turkcell Plans
TeliaSonera aims to stick with Turkcell Iletisim Hizmetleri AS, the Turkish operator in which it holds a 38 percent stake and is now trying to get more independent directors appointed to the board, Nyberg said.
“If you as the biggest owner consider leaving because a company is going through some difficulties, you are then more of short-term investor,” Nyberg said. “TeliaSonera is a telecom operator, we love this asset and we intend to keep it.”
TeliaSonera never planned to merge Turkcell with Russian operator OAO MegaFon, in which it also holds a stake, Nyberg added.
A 2009 plan to combine TeliaSonera’s holdings in the two companies with those Russia’s Alfa Group to simplify governance, without combining operations, has been delayed by conflicts over shares in Turkcell. Nyberg wouldn’t speculate on the outcome of Turkcell’s annual investor meeting scheduled for April 21.
--Editors: Jerrold Colten, Robert Valpuesta.
To contact the reporter on this story: Diana ben-Aaron in Helsinki at dbenaaron1@bloomberg.net
To contact the editor responsible for this story: Vidya Root in Paris at vroot@bloomberg.net
