TeliaSonera faces tougher times in emerging markets

Suvradeep Bhattacharjee/Ovum | February 19, 2010

TeliaSonera’s full-year results, announced February 11, are certainly better than those of its direct competitors.

The carrier posted a 3% decline in full-year revenue while Tele2 achieved just 3% growth – approximately half the growth achieved by TeliaSonera in 2009. TeliaSonera claimed that it achieved its highest ebitda ever thanks to a combination of cost reductions in its Nordic and Baltic markets and tighter cost controls in emerging markets.

Group revenues were Skr109.2 billion €11.1b) for the year to 31 December 2009, up 5.4% over 2008, while group ebitda lifted 11% to Skr36.7 billion, leading to a 50.3% jump in its free cash flow. However, sales in its top three emerging country markets declined, reflecting intensifying competition in these markets.

Key engines for this growth are emerging markets, which are reported under the Eurasia label. This segment presently includes ten countries (in descending order of 2009 revenues): Kazakhstan, Russia, Azerbaijan, Turkey, Georgia, Uzbekistan, Tajikistan, Nepal, Moldova and Cambodia.

This segment represented about 13% of its 2009 revenue, but delivered almost 30% of revenue growth achieved in Swedish kroner terms. Revenue in six of these countries showed high growth, although it fell in previously fast-growing Kazakhstan, Russia, Turkey and Georgia, warning of challenges that await TeliaSonera in all of its emerging markets.

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