TeliaSonera cuts fiscal year outlook on mobile slowdown, Nepal records strongest sales growth at 62.7 per cent

TeliaSonera lowered its outlook for the full year due to a slowdown in key mobile markets.

The operator now expects organic sales flat to one per cent higher, versus an earlier outlook for one to two per cent growth, according to the operator.

Underlying sales growth slowed from 2.9 per cent in the first quarter to zero in the second quarter.

The company forecast an adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) margin slightly lower over the full year, after earlier expecting a stable result. Adjusted EBITDA was down by two per cent year-on-year in the second quarter to Swedish Krona (SEK) 9.01 billion, and the margin fell by one per cent point to 34.3 per cent.

TeliaSonera's quarterly net profit grew by 10 per cent to SEK 4.25 billion, due to a capital gain of SEK 3.01 billion from its stake in Megafon, offset by impairment charges of SEK 3.07 billion on some of its mobile activities.

Free cash flow jumped to SEK 14.79 billion, thanks to a dividend of SEK 11.72 billion from Megafon. The subscriber base rose in the three months by 1.4 million at consolidated companies and 0.8 million at associate companies, to a total 174.6 million.

The Eurasia activities continued to grow, with revenues up by 18.9 per cent to SEK 4.93 billion and EBITDA 15 per cent higher at SEK 2.48 billion. While revenue growth in local currency slowed to 1.6 per cent in Kazakhstan, hurt by price competition and interconnection rate cuts, Armenia sales rose by 10.4 per cent, Uzbekistan was up by 13.9 per cent, and Tajikistan increased 17 per cent.

Nepal had the strongest sales growth at 62.7 per cent, while Georgia was up by three per cent, and Moldova grew by just 0.2 per cent. Capital expenditure increased to 32.6 per cent of sales, or SEK 1.61 billion.

However, the mobile division posted sales down by 2.3 per cent to SEK 12.58 billion, and EBITDA fell by nine per cent to SEK 3.70 billion.

Weaker sales were due to a slowdown in growth in Sweden (sales up by 3.9 per cent) and Spain (up by 3.8 per cent) and lower revenues in Finland (down by 4.9 per cent), Norway (down by 6.1 per cent) and Denmark (down by 14 per cent) due to lower voice revenues, regulatory price cuts and the move to 'bucket' price plans.

The operator added just 0.2 million new mobile customers in the three months, for a total 19.4 million.

At the broadband division, sales dropped by 0.8 per cent to SEK 9.09 billion, and EBITDA was down 3.6 per cent to SEK 2.80 billion. Sales in Sweden fell by 3.6 per cent to SEK 5.05 billion, and revenues in Finland dropped by 3.2 per cent to SEK 1.45 billion. Both markets saw growth in TV services, but continued to suffer from lower voice revenues and PSTN subscribers.

The latter fell by 121,000 in the quarter to 3.8 million, while TV subscribers grew by 30,000 to 1.2 million.