TeliaSonera AB (TLSN), Sweden’s biggest phone company, plans to cut 2,000 jobs after reporting third- quarter earnings that missed analysts’ estimates as increased competition caused slowing sales in the Nordic region.
The reductions, equivalent to 7 percent of the workforce, are aimed at lowering costs by 2 billion kronor ($304 million) in the next two years. Earnings excluding interest, taxes, depreciation, amortization and one-time items dropped 6.3 percent to 9.26 billion kronor, the Stockholm-based company said in a statement today. Analysts predicted 9.42 billion kronor on average in a Bloomberg survey.
TeliaSonera, which made more than 60 percent of its revenue in Nordic countries last year, is facing slowing growth in its home markets and increasing competition for mobile services. Earnings are still bolstered by double-digit growth in the Eurasia unit, which includes mobile operations in Turkey, Russia and several former Soviet Union countries.
TeliaSonera must “speed up the implementation of a new, sustainable business model to defend our revenues and deal with the increasing challenges that this industry is facing,” Chief Executive Officer Lars Nyberg said in the statement.
Even before the job cuts unveiled today the Stockholm-based carrier is one of the most efficient operators in Europe. Its reported sales per employee of $566,369 for 2011 is more than 60 percent higher than the $347,332 at German rival Deutsche Telekom AG and almost 50 percent higher than the $380,854 of sales for each worker at France Telecom SA. (FTE)
The job cuts were “unexpected, but should be seen as a positive” as it “increases chances of maintaining profitability,” Lars Soederfjell, a Stockholm-based analyst at Aalandsbanken, said in an e-mail.
Sales fell 3.2 percent to 25.8 billion kronor, compared with an average estimate of 26.1 billion kronor. Net income declined 1.2 percent to 4.8 billion kronor, or 1.11 kronor a share, from 4.86 billion kronor, or 1.12 kronor, a year earlier.
The company maintained its 2012 earnings forecast, saying adjusted Ebitda margin for the year will be about 35 percent.
TeliaSonera plans to reduce its 35.6 percent stake in OAO MegaFon as part of the Russian mobile operator’s planned initial public offering. MegaFon should trade at a fair value of about $12 billion to $16 billion, analysts at banks involved in the IPO said in notes to investors.
TeliaSonera shares, which have declined 3 percent this year, traded 1.6 percent lower at 45.38 kronor at 9:25 a.m. in Stockholm.
To contact the reporter on this story: Adam Ewing in Stockholm at firstname.lastname@example.org