TeliaSonera AB fell the most in two months in Stockholm trading after UBS AG advised clients to sell the shares and lowered its earnings forecasts for the company because of increasing competition in its main markets.
TeliaSonera fell as much as 2.1 percent to 45.86 kronor, the steepest intraday drop since Feb. 4, and was trading down 0.7 percent at 10:18 a.m. local time, giving the company a market value of 202 billion kronor ($31 billion). Volumes were 55 percent of the daily average in the past three months.
UBS cut its rating on TeliaSonera to sell from neutral and lowered its 12-month share price estimate to 38 kronor from 43 kronor. It also added TeliaSonera to its least preferred list among European telephone companies, after cutting its revenue and earnings forecasts by 2 percent to 3 percent because of higher price competition in Sweden, Finland and Kazakhstan.
“We expect Swedish mobile revenue to turn negative in 2013 driven by discounting, on-going tariff spin-down and regulation,” Andy Parnis and Nick Lyall, analysts at UBS in London, wrote in a note to clients today.
Corporate governance uncertainty “is likely to weigh on the stock given the change in CEO and other issues,” Parnis and Lyall said. UBS expects TeliaSonera’s “23-35 percent valuation premium to narrow significantly now, given that long-term growth forecasts are flat to negative,” the analysts said.
TeliaSonera Chief Executive Officer Lars Nyberg resigned on Feb. 1 after a law firm hired to investigate graft accusations said TeliaSonera should have been more careful when it bought an Uzbeki phone license in 2007. The company’s Chairman Anders Narvinger is also leaving the TeliaSonera board.