TeliaSonera AB Earnings Call Nuggets: Eurasia Growth Levels and Finnish Subscribers

TeliaSonera AB (TLSN.ST) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Eurasia Growth Levels

Stefan Gauffin – Nordea: Yes. Stefan Gauffin, Nordea. Couple of questions. First, with you already stated your guidance was a bit conservative. Just looking at the trends at the moment, Eurasia improving growth from 12% to 16% this quarter and much driven by Uzbekistan and we should see that trend continue. We also see Kazakhstan improving the growth trend. So my view is that Eurasia should continue at these growth levels. We also have quite easy comparable quarters in Mobility in Q2, Q3 this year and you also stated that you have seen increased in take in fiber, so my view is that this is a truly conservative guidance. Where am I wrong?

Lars Nyberg – President and CEO: I don’t know you sound like some of my colleagues, but I feel a bit uncertain about the telecom industry. This whole shift or voice going down 10%, you have to realize voice is our biggest business by far. If that 10 becomes 15, it will have a huge impact on us and how quickly can we change the business model and capture more of the data that’s sort of the uncertainty. If would be able now this year, which I hope we will, to establish a new business model that actually flies, I will be a whole lot less concerned and maybe be more brave, but this is the best judgment that P.A. and I have and our colleagues have done. It is a bit conservative, but it has good reasons to be conservative.

Per-Arne Blomquist – EVP and CFO: If I may add. I think that we see 2013 as a transitional year. I mean there’s a lot of things that happens here with investment and fiber and new business models, et cetera and thus far I think we’re a bit cautious. But remember the first quarter last year we were accused to being too pessimistic and (indiscernible) the year as well. So we have to be a bit cautious in this environment.

Stefan Gauffin – Nordea: Then the question on Turkcell. There was a ruling yesterday maybe a bit unclear ruling. But you have earned your blocked dividends from Turkcell. Has your positioned around dividends in Turkcell changed in any way?

Lars Nyberg – President and CEO: Well, I don’t think the issue of dividend is the biggest issue. We have a conflict between the owners of Turkcell and that needs to be resolved. We have a deadlock in this case that you talk about is between the Russians and Cukurova and the decision yesterday, I view as one step at least forward in resolution. Unfortunately, it is not clear cut position as you say, but at least is a step forward. I assume that we will restore dividend as soon as possible and certainly no later than when the deadlock is resolved.

Finnish Subscribers

Sven Skold – Swedbank: Question on Mobility, you mentioned that voice revenue is down roughly 10%. If you split out them or which is obviously very weak market. How is it – how does it look then? Second, it’s the second quarter in a row where you actually gain some subscribers in Finland and that has not been the history if you’re looking at 12 or 24 months perspective. Has anything changed in offers in Finland or…

Per-Arne Blomquist – EVP and CFO: We can think that about Finland. We have introduced a new offering that couldn’t be competed with from the other competitors. We can say is from a free roaming in the whole Nordic and Baltic area and that has sort of turn out to be very good. So I think that’s one of the things that we have changed in Finland.

Lars Nyberg – President and CEO: I can take first one, I’m little bit slow on math, but Denmark was down 16% and the average was 10%. So I guess that that leaves about 8% excluding Denmark. We have a here from the gentleman if we can get the Mike there.

Unidentified Analyst – Swedish News Agency: (indiscernible), Swedish News Agency. Lars Nyberg, could you please clarify what you meant this morning when you said you were not employed, you were not there when the decision was made to invest in Uzbekistan. I mean the deal with – the partnership deal was closed in December 2007, new deals were made in 2008 and 2010, sounds like you were employed?

Lars Nyberg – President and CEO: What I tried to say was that I’m very happy that tomorrow we will get an external report. It’s a very complicated transaction in a very complicated legal environment and a big portion of the transaction was done in a timeframe where I don’t know the details, because I wasn’t there physically. So that – what I was trying to say was, I’m happy that we tomorrow get an external report from renowned legal firm, who understands the legal aspects of this, who have gone through all the details and we will talk about hat report tomorrow.

Unidentified Analyst – Swedish News Agency: Just asking you to clarify…

Lars Nyberg – President and CEO: I just did. I just did.

Unidentified Analyst – Swedish News Agency: No, you didn’t. You were employed in December 2007, 2008 and 2010.

Lars Nyberg – President and CEO: We have plenty of opportunities to discuss that topic tomorrow, so I think that we…

Unidentified Analyst – Swedish News Agency: It sounds like some preemptive blaming of your predecessor or the people in your…

Lars Nyberg – President and CEO: No you said, I ….

Unidentified Analyst – Swedish News Agency: …you did realize that interpretation of your comment.

Lars Nyberg – President and CEO: Are you talking or am I talking.

Unidentified Analyst – Swedish News Agency: Go ahead, please.

Lars Nyberg – President and CEO: I repeat it again what I said to you.

Unidentified Analyst – Swedish News Agency: No, please don’t. Please answer the question.

Lars Nyberg – President and CEO: I did. You won’t get the nugget answer. The big portion of this deal was done before I was employed and therefore I know the details.

Unidentified Analyst – Swedish News Agency: But also…

Lars Nyberg – President and CEO: So now I have answered your question. I think that we leave that discussion for tomorrow and we can hand over the microphone to – I see a hand from Thomas there.

Thomas Heath – Handelsbanken: Thomas Heath with Handelsbanken Two questions, if I may. Firstly, keen to hear a little bit about the Swedish fiber rollout, particularly take up rates. When you started the project, there was some uncertainty about the return on this investment. Maybe if you could comment a bit on the earlier projects? Then, secondly, on working capital, you discussed earlier this year that you were starting to look into this. It would appear to me that there’s some structural headwind there with the increasing handsets sales and TVs and so forth. So what can you do from a company point of view and what expectations do you have to deal with working capital?

Per-Arne Blomquist – EVP and CFO: Let’s start with the working capital. We have been working with sort of the (sector) what is actually is included in this and what has driven sort of the consumption of high working capital during the last few years, higher prices on phones and also that we, however, shifted from prepaid to postpaid. So what we’re doing right now is to look into this, how this could be mitigated within sort of the offerings and also just to the knowledge of this – these all effects has helped us to have a much better control. But, of course, over time if prices on handset will go up, that will affect the operating capital negative from our perspective. But I think we have increased the awareness of how we deal with these issues. When it comes to the fiber rollout, we have been working pretty intensely now during 2012 to improve the rollout processes and I have been very deep (indiscernible) here in rolling this and what we could see is that we had a very low ambition when it comes to the uptick. From the very beginning we talked about 25%, 30% and perhaps going up to 50%. In certain areas where we had done a good deal, we come up to (60%, to 70%, to 80%) total take up. So that’s why we are a bit optimistic. If we do this in the right way, the demand for fiber is – I wouldn’t say unlimited but it’s very easy to sell with the right pricing and with the right distribution and selling process.

Andreas Ekstrom – VP, Group IR: Thank you, Thomas. We have a number of questions on the conference call. We will come back to the floor in just a minute. But operator could we please have the first question from the conference call.