TeliaSonera on Friday warned of a difficult climate at its Eurasian operations and reported a set of second quarter financials that showed a declining bottom line.
However, the Swedish telco said it expects to see improved earnings trends in the second half of the year and stuck with its full-year forecast.
The operator generated net sales of 27.12 billion kronor (€2.89 billion) in the three months to the end of June, up 8.5% on last year, or an increase of 1.9% in local currency terms.
EBITDA grew by 4% in reported terms and shrank by 4% in local currency terms to SEK9.19 billion. Net income attributable to owners of the parent company contracted by 8.1% to SEK3.26 billion.
"In the second quarter, organic service revenues and EBITDA remained slightly under pressure, while reported numbers were supported by the acquisition of Tele2 in Norway and currency effects," TeliaSonera CEO Johan Dennelind said, in a statement.
"Free cash flow improved significantly thanks to the dividend payment from Turkcell," he added.
"In Eurasia, the quarter was challenging in several aspects," TeliaSonera Dennelind said, making specific reference to April’s earthquake in Nepal and fierce competition in Kazakhstan.
The Eurasian business contributed SEK5.74 billion to quarterly sales and SEK3.05 billion to EBITDA.
"In Sweden, pressure on profitability eased in the quarter," Dennelind said. The telco posted net sales of SEK9.27 billion in its home market, up 1.9%, and said EBITDA excluding non-recurring items slid by 4.9% to SEK3.44 billion.
TeliaSonera’s Europe business posted 10.7% sales growth and 4.8% EBITDA growth to SEK10.85 billion and SEK2.61 billion respectively.
"Looking ahead, we expect the earnings trend to improve somewhat in the second half of the year and reiterate our full year outlook, but we see increased risks related to performance in Eurasia," Dennelind said.
"Group EBITDA, on a local organic basis and excluding synergies in Norway, is anticipated to remain around last year’s level, while capex is estimated to be approximately SEK17 billion, excluding licence and spectrum fees."
