LONDON -- Standard & Poor’s Equity Research, the world’s leading provider of independent investment research, has initiated coverage on Tele2 and TeliaSonera with “Sell” recommendations, citing concerns about the business models and growth prospects of the leading Nordic telecommunications operators in Europe’s fiercely competitive broadband market. Nordic telecommunications analyst Bengt Molleryd has concluded that premium share price ratings currently awarded to Tele2 and TeliaSonera by investors are not warranted.

S&P Equity Research Initiates Coverage on TeliaSonera (TLSN SS) at “Sell”
“TeliaSonera faces a bleak future as fixed line revenues continue to deteriorate, mobile faces fierce price competition and the expansion in Spain signals that the company is lacking a credible growth strategy,” Molleryd says, initiating coverage with a “Sell” recommendation and 12-month price target of SEK 49 per share. The upcoming divestment of 2 billion shares by the Swedish State will also create an overhang that will further depress the share price, which is currently trading at a 12% premium to its peers. TeliaSonera has repeatedly altered its international strategy and now lacks a credible growth strategy, highlighted by the plan to build a network in Spain instead of operating as a Mobile Virtual Network Operator, which could lower investment by at least 50%. “The company has a poor track record on greenfield investments, making it difficult to see how it could succeed to enter a market with mobile penetration of 113%.”

Standard & Poor’s