TeliaSonera AB (TLSN), Sweden’s largest phone operator, reported profit that missed analyst estimates as mobile and broadband sales slipped amid price pressure and slow economic growth. The stock fell the most in almost 10 months.
Fourth-quarter net income fell to 2.19 billion kronor ($338 million), the Stockholm-based carrier said in a statement today. Analysts on average were projecting profit of 3.07 billion kronor, according to data compiled by Bloomberg. Sales fell 2.1 percent to 26.5 billion kronor, beating the average estimate of 26.2 billion kronor.
TeliaSonera has expanded in Turkey, Russia and several former Soviet Union countries to offset slowing sales in its home market as competition and lower fees hurt prices. The government-controlled company is also cutting jobs and focusing more on data revenue to boost profitability. In the fourth quarter, mobile sales were hit by lower regulated termination fees, the company said today.
“Overall performance was impacted by modest economic growth, regulatory effects and rapidly changing customer behavior,” Chief Executive Officer Johan Dennelind said in the statement. “We need to improve our competitive position going forward, particularly within the enterprise area.”
TeliaSonera fell as much as 4.6 percent in Stockholm, the steepest intraday decline since April 4, and the stock retreated 3.5 percent at 10:45 a.m. local time to 48.40 kronor. The shares have slipped 9.5 percent this year, giving the former Swedish telephone monopoly a market value of 210 billion kronor.
“The fourth-quarter report was soft on all accounts,” Nordea Bank AB said in a note to clients. “Subscriber intake was weak, and while sales beat expectations, the mix effect was poor.”
Mobile sales fell 2.5 percent in local currencies in the quarter, excluding acquisitions and disposals. In the Swedish currency they dropped 2.3 percent to 12.8 billion kronor. Termination fees lowered sales by 3.5 percent, compared with a year earlier. In broadband, sales fell 1.7 percent in local currencies and 3.9 percent in kronor, affected by price pressure in the business-to-business segment and a decline in demand for fixed-line services.
Sweden’s government last month cut its growth forecast for this year, predicting a slower rebound in exports as it plans an income-tax reduction to stimulate growth ahead of September elections. The central bank lowered its main lending rate to 0.75 percent from 1 percent to boost demand after consumer prices unexpectedly fell in November.
Even as consumers increasingly use mobile devices to view video, listen to music and browse the Web, falling prices in TeliaSonera’s home Nordic markets have meant rising demand isn’t translating to sales growth.
TeliaSonera forecast 2014 sales in local currencies and excluding acquisitions and disposals to be at the same level as last year. It predicted that the margin on adjusted earnings before interest, taxes, depreciation and amortization will be level with the 35 percent it had in 2013.
Adjusted earnings before interest, taxes, depreciation and amortization fell 3 percent to 8.73 billion kronor. Ebitda as a percentage of sales narrowed to 32.9 percent from 33.3 percent. TeliaSonera said fourth-quarter operating profit was hurt by 2.52 billion in one-time costs stemming from job cuts and writedowns in Denmark and Lithuania.
TeliaSonera proposed a dividend of 3 kronor a share, compared with 2.85 kronor a year earlier.
To contact the reporter on this story: Adam Ewing in Stockholm at firstname.lastname@example.org