TeliaSonera Q3 performance welcomed by Jefferies analysts

TeliaSonera enjoyed what analysts at Jefferies called a "solid" third calendar quarter on the back of improvements to its Swedish and Finnish operators, despite a near 13 per cent fall in net income year-on-year.

Joohan Denneline, TeliaSonera president and CEO

Johan Dennelind, TeliaSonera president and CEO

The Sweden-headquartered operator saw net income fall 12.2 per cent year-on-year to SEK4.07 billion (€444 million/$570 million) in the recent quarter, despite reported revenues holding steady at SEK25.4 billion--a marginal 0.2 per cent increase on Q3 2013. TeliaSonera noted sales in individual currencies, and excluding acquisitions and disposals, fell 2 per cent year-on-year.

In a statement emailed to FierceWireless:Europe, Jefferies analysts hailed the quarter as solid for TeliaSonera, pointing to stable service revenues and high equipment sales in the operator's domestic market, a return to revenue growth at its Finnish division, and lower investment at its loss-making Spanish unit.

Jefferies noted TeliaSonera's domestic performance was aided by improving mobile service revenues, which fell a marginal 0.5 per cent year-on-year in the third quarter. The operator's home unit also benefitted from earlier availability of the latest iPhone model, which Jefferies states came around a week earlier than in 2013 and improved domestic equipment sales as a result.

"We consider ever improving service revenue trends rather encouraging as this means b2c [business-to-consumer] growth is by now almost offsetting pressure in b2b [business-to-business]," Jefferies analysts said.

Johan Dennelind, TeliaSonera's president and CEO, admitted the enterprise market in Sweden is marked by "fierce competition", but said the company's mobile business in the country is being "fuelled by migration to data-centric price models." The operator also experienced "solid demand for high speed fixed broadband," in Sweden during the third quarter, Dennelind added.

Jefferies noted that TeliaSonera's Finnish unit recorded its first growth in service revenues in 2014. The division saw net sales increase 5.3 per cent year-on-year to SEK3.2 billion on the back of rising mobile and broadband subscriptions. Fixed telephony users, however, fell 6.3 per cent year-on-year.

In Spain, the operator is "stepping on the brakes hard, with no postpaid net adds this quarter…and very low device sales," Jefferies noted.

TeliaSonera's Norwegian business increased overall net sales by 1.5 per cent year-on-year in the recent quarter despite mobile subscriber numbers falling 1.3 per cent over the same period. The operator in July agreed to acquire the local business of rival Tele2, which is exiting Norway after failing to secure an LTE licence and additional 3G spectrum in an auction in December 2013.

Dennelind said the company is maintaining its full-year 2014 guidance on the back of its third-quarter results, and revealed the company will "invest an accumulated amount of up to SEK4-5 billion during 2015 and 2016 to further drive growth and improve our competitiveness."

For more:
- see TeliaSonera's earnings statement
- view the full earnings report [PDF]

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