TeliaSonera Second-Quarter Profit Rises on Cost Cuts

TeliaSonera AB, Sweden’s largest telephone company, said second-quarter profit increased 8.2 percent as it cut costs to make up for lower customer spending.

Net income rose 8.2 percent to 4.47 billion kronor ($595 million), or 1 krona a share, from 4.13 billion kronor, or 0.92 krona, a year earlier, the Stockholm-based company said in a statement today. Sales increased 8.7 percent to 27.5 billion kronor. The stock rose as much as 7.5 percent.

Revenue was hurt by lower equipment sales, lower usage and less business travel, the company said. TeliaSonera raised its margin forecast for this year, citing measures that reduced its cost base by 5.8 percent in the second quarter from a year earlier. The company is cutting 2,900 jobs by the end of 2009.

“The margin was excellent due to cost cuts and the upped Ebitda guidance is clearly positive,” said Kimmo Stenvall, an analyst at Finland’s Pohjola Bank who has an “accumulate” rating on the stock. Stenvall said he will probably increase his target price of 45 kronor after today’s report.

TeliaSonera predicts its margin based on earnings before interest, tax, depreciation and amortization will be higher than last year’s level of 31.8 percent excluding non-recurring items. The previous forecast was for an unchanged margin at that level.

TeliaSonera rose as much as 3.3 kronor to 47.4 kronor, the most in eight months. It traded at 46.9 kronor as of 11:04 a.m. in Stockholm, giving the company a market value of 211 billion kronor. Before today, the stock had risen 13 percent this year.

Revenue Outlook

TeliaSonera trimmed its revenue forecast to “in line with or slightly below the level of 2008” from “around the same level” as last year, based on local currencies and excluding acquisitions. Until April, TeliaSonera had forecast higher revenue this year.

“Looking ahead, we expect that our efforts to lower addressable costs and capital expenditure will offset the negative impact from declining GDP and rising unemployment in our markets,” Chief Executive Office Lars Nyberg said in the statement.

TeliaSonera said sales in its mobility services unit went up almost 8 percent to 13 billion kronor in the period, boosted by mobile data and mobile broadband in Sweden.

The economic slump has so far had limited effect on sales in the broadband services unit, where TeliaSonera said it’s still investing in faster networks to support Internet Protocol TV and broadband. The unit reported sales of 10.7 billion kronor. link.....