TeliaSonera to slash Capex for 2014 due to bleak sales outlook

TeliaSonera on Thursday said it would lower its Capex (capital spending) for the year 2014, following a revision in annual sales outlook from previously flat to slightly below the level in 2013.

Though Capex to sales ratio will continue to be 15 percent during 2014, since TeliaSonera is expecting a decline in sales this year, the Capex will decrease in line with sales forecast.

“As a result of lower revenues in Spain, mainly equipment related, we revise our full-year organic net sales outlook from previously flat to slightly below the level in 2013. We reiterate our forecast of EBITDA margin at around last year’s level and CAPEX-to-sales of around 15 percent,” said Johan Dennelind, president and CEO of TeliaSonera.

Meanwhile, TeliaSonera said its second quarter sales decreased 1.2 percent to SEK 25,017 million from SEK 25,312 million. Service revenues dipped 0.4 percent.

Operating income decreased 10.4 percent to SEK 6,347 million from SEK 7,086 million. This was mainly due to lower income from the associated companies MegaFon and Turkcell.

TeliaSonera said its net income decreased 12.1 percent to SEK 3,545 million from SEK 4,031 million.

TeliaSonera said it continues to develop its data-centric price models and sees further positive effects from customers migrating to new price plans.

Johan Dennelind, president and CEO of TeliaSonera

TeliaSonera Sweden

In Sweden, net sales remained stable compared to last year and underlying EBITDA margin improved slightly to 39.8 percent, supported by solid consumer opera­tions and cost saving activities.

TeliaSonera expanded 4G and fiber coverage by investing SEK 5 billion annually over a three year period to ensure better internet experience.

TeliaSonera Europe

In region Europe, a key priority for TeliaSonera is to improve competitive positions in our Nordic and Baltic markets. In Spain, margin recovered in the second quarter, but the business remains sub-scale with a market share around 7 percent.

TeliaSonera said it is reviewing its future presence in the Spanish market.

TeliaSonera Eurasia

TeliaSonera Eurasia has increased focus on governance, control and new business initiatives. The region continues to deliver strong profitability, with an EBITDA margin improving to 54.4 percent, supported by solid development in Kazakhstan and Nepal. Organic revenue growth was 7 percent, propelled by 35 percent growth in data revenues which now accounts for 14 percent of sales in the region.