CEO cuts cost to post profit as TeliaSonera struggles in domestic markets

29 Oct 2003

Nordic telecoms powerhouse TeliaSonera reaped the benefits of some drastic cost-cutting measures to post a third quarter profit. The telco’s CEO Anders Igel has shed jobs and cut equipment spending since joining the company in July of last year, whilst expanding into the Russian and Baltic regions in search of new revenue streams. Under his regime TeliaSonera posted net income of SEK1.74 billion in the three months to the end of September, compared to a loss of SEK12.27 billion in the corresponding period of 2002. Those year-ago losses were affected by a SEK12.1 billion restructuring cost for the telco’s International Carrier division, which operates a fibre-optic network in Europe and the US. However, Igel has significantly cut staff numbers at the business and trimmed spending on network equipment to avoid any repeat on the company’s balance books. Additionally cost reductions from last year’s merger of Sweden’s Telia and Finland’s Sonera are coming faster than expected, with profit for the quarter equal to 39.4% of turnover, a vast improvement on the 34.3% ratio twelve months before. But Igel’s rationalisation measures cannot mask the fact that TeliaSonera is losing business to competitiors in its traditional Nordic markets. The telco’s share of Sweden’s telephony market has fallen 16% in five years, to around 64%, and it lost 30,000 Finnish mobile customers in the quarter as number portability came into effect.