Telia posts SEK8.8bn Q3 net loss on Uzbek settlement proposal

21 Oct 2016

Sweden’s Telia Company has released its financial results for the third quarter ending 30 September 2016. Consolidated revenues fell by 0.9% year-on-year to SEK21.524 billion (USD2.432 billion) in Q3 2016, of which service revenues dropped by 0.7% to SEK18.413 billion. Quarterly EBITDA excluding non-recurring items declined by 1.5% to SEK6.850 billion, whilst total net loss attributable to owners of the parent company reached SEK8.810 billion, compared to a net profit of SEK4.589 billion in the corresponding three-month period of 2015. Net income from continuing operations saw a moderate increase, however, up 0.4% from SEK3.586 billion in July-September 2015 to SEK3.600 billion a year later. Third-quarter 2016 CAPEX excluding licence/spectrum fees was raised by 16.4% y-o-y to SEK3.647 billion.

Explaining the huge plunge in profitability, the group booked a third-quarter provision of SEK12.5 billion related to the US and Dutch authorities’ settlement proposal, announced in September, as a consequence of corruption allegations surrounding Telia’s entry and operations in Uzbekistan. CEO Johan Dennelind clarified: ‘We have been aware of the US and Dutch interest since March 2014, and have from the beginning cooperated with all authorities. Our discussions with relevant authorities continue with the goal of achieving a resolution that will be in the best interest of our shareholders. It is at present not possible to make a certain assessment on the final outcome or time for resolution, but we believe we are approaching the end of these investigations.’

In Sweden, net sales increased by 0.6% year-on-year in Q3 2016 to SEK9.181 billion (from SEK9.122 billion in 3Q15), whilst in the rest of Europe Telia reported that net sales in local currencies, excluding acquisitions and disposals, declined by 1.2%, while in reported currency the rest-of-Europe net sales figure declined 0.7% to SEK11.042 billion (from SEK11.119 billion a year earlier). The number of subscriptions across the group’s reported consolidated subsidiaries decreased on a net basis by 400,000 to 26.9 million in the twelve months ending 30 September 2016, whilst during the July-September quarter the total subscriptions increased by 54,000. Former segment region Eurasia is classified as held for sale and discontinued operations, whilst the Yoigo mobile business in Spain and the Sergel companies are reported as assets held for sale.

Earlier this month Telia finalised the divestment of Yoigo in Spain to Masmovil, in line with its ambition to increase focus on the Nordic and Baltic region. Telia also recently announced the sale of its 60% stake in Tajikistan operator Tcell to Aga Kahn Foundation for Economic Development (AKFED), which CEO Dennelind notes ‘now takes full control of the unit’. He added: ‘We are in a process of divesting our shareholding in Fintur Holdings as part of the ambition to reduce our presence in Eurasia over time. One potential buyer has been the minority owner in Fintur Holdings, Turkcell, who publicly disclosed their interest earlier this year. After many months, we have now reached a point where we will together with Turkcell explore a joint divestment of Fintur Holdings. This will most likely happen in 2017.’

Sweden,Telia Company,

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