TeliaSonera Dumps Its CEO
The current CEO, Anders Igel, has held the post since Telia and Sonera merged in 2002, but he will now step down at the end of July and be replaced, in the short-term, by CFO Kim Ignatius until a full-time successor is found, a process that could take up to 12 months. (See TeliaSonera Sums Up Year.)
Tom von Weymarn, the carrier's chairman, said TeliaSonera needs a "more visionary leadership -- a CEO who can speed up the execution of our strategy and drive growth in addition to cost efficiencies." (See TeliaSonera Cuts Jobs.)
The chairman said cost-cutting measures had been effective, but more growth is needed, and that needs a more motivational leadership team with different style and qualities. "We need to strengthen our position, not weaken it. We need growth, organic and possible through acquisitions." He said that Dutch incumbent KPN Telecom NV (NYSE: KPN) provided a good role model.
While such comments may have left Igel a little deflated, investors were clearly happy with the planned change, as TeliaSonera's share price edged up 2.6 percent to 51 Swedish Kroner on the Stockholm Exchange.
The root cause of the board's decision appears to be TeliaSonera's inability to gain control of key international assets in Turkey -- Turkcell Iletisim Hizmetleri A.S. (NYSE: TKC), in which TeliaSonera holds a 37.3 percent stake -- and Russia, MegaFon , in which the Scandinavian carrier holds a 34.8 percent stake. (See TeliaSonera Wins Ruling.)
Von Weymarn said the carrier's strategy hasn't changed. "We are still focused on our home market, our investment in Spain, and our Eastern positions," which includes Russia and Turkey, but also assets in Estonia, Latvia, and Lithuania. (See TeliaSonera Goes 3G in Spain.)
"But we need to be more aggressive in achieving growth and cost-efficiencies," added the chairman. "We urgently need solutions to our Eastern positions."
In 2006, TeliaSonera reported revenues of SEK91 billion ($12.9 billion) and net income of SEK19.3 billion ($2.7 billion), the carrier's highest ever annual profits. But the carrier's first quarter numbers were disappointing and was notable for a high number of fixed line reductions.
But analysts believe the board felt Igel had reached the peak of his achievements, and that a new person is needed to resolve ownership disputes. "It appears likely that the board has decided that Igel has taken the company as far as he can," stated Ovum Ltd. analysts Sally Banks and Mark Giles in a research note. "TeliaSonera has repeatedly stated an intention to assume a controlling stake in its Russian and Turkish operations. However, ownership disputes in both regions have undermined these ambitions... It appears that Igel has run out of time, or ideas."
So who could replace Igel? The Ovum pair believe they have identified "a couple of obvious external candidates" -- Kai Uwe-Ricke, the former CEO of Deutsche Telekom AG (NYSE: DT), who quit that post last November, and Elek Straub, the former CEO of Magyar Telekom plc , who quit last December. (See Deutsche Telekom's CEO Quits.)
News of Igel's departure comes just a few weeks after the Swedish government sold an 8 percent stake in the carrier. That move still left it as the leading shareholder, though, with a 37.3 percent stake. The Finnish government hold a further 13.7 percent stake. (See Eurobites: Buying & Selling.)
— Ray Le Maistre, International News Editor, Light Reading