TeliaSonera delivered a jolt to the telecoms industry and said that it will cut 2,000 jobs after reporting third-quarter earnings that undershot analysts' estimates.
The company said job cuts will be equivalent to 7 per cent of the workforce, with the aim to lower costs by €231.3 million in the next two years. TeliaSonera's third-quarter EBITDA was €1.08 billion, compared to the average forecast of €1.1 billion in a Reuters poll and last year's €1.14 billion.
"Our cost base is today growing at a higher rate than our revenues and we have to reverse this trend," CEO Lars Nyberg said in a statement. "We 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."
"We have an issue of not enough growth," Nyberg said later during the company's earnings conference call. "This is not a TeliaSonera issue, this is an industry issue." The TeliaSonera chief added that even as voice revenues declined operators are still struggling to turn rising data traffic into profits.
"We will see a flat kind of industry for a couple of years until we are able, in a better way, to monetize the growth in data traffic," Nyberg said, according to Reuters.
TeliaSonera in late September canceled its plan to charge customers for making mobile VoIP calls. The company said it would not introduce the additional fees for the use of third-party mobile VoIP calling services, but would instead increase data charges across all tariffs.
While he gave no indications as to where the job cuts will come from, Nyberg said: "We have most of our employees in Sweden, so that gives something of an indication, but I don't want to speculate," he told the TT news agency.
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, told Bloomberg.
Nyberg also added that the company had formally decided to sell its Spanish Yoigo mobile subsidiary, but would look to revive its Danish operations, according to Reuters. He confirmed that the company's Eurasia business remained an important part of its overall business, and indicated that entering Myanmar was a future opportunity.
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