TeliaSonera Feels the Pinch

Only days after Deutsche Telekom AG (NYSE: DT) cuts its earnings forecast for 2009, Nordic powerhouse Telia Company has revised its full-year revenues forecast for this year as the global economic malaise starts to affect customer spending habits. (See Downturn Smacks Deutsche Telekom .)

In reporting its first-quarter results Friday, TeliaSonera said it now expects full-year revenues to be in line with the 103.6 billion Swedish kroner (US$12.8 billion) generated in 2008. Previously it had said it expected revenues to increase, but had not specified any particular rate of growth. (See TeliaSonera Reports Q1.)

"The macroeconomic environment worsened during the first quarter," noted CEO Lars Nyberg, "and although the telecom services industry has been less affected than other industries there are signs of changed customer behavior in several of our markets." And he's not talking about folk howling at the moon, either.

The shift in outlook could spell bad news for the carrier's suppliers, as while TeliaSonera is keen to maintain its earnings potential and continue to generate cash, it's prepared to cut its capital expenditures (capex) "if the economy continues to deteriorate." The operator is already planning to fork out less on its networks this year than in 2008, when it spent SEK15.8 billion ($1.94 billion).

Even if capex is cut further, though, it's not expected to slow down the carrier's ambition to be among the first service providers to offer LTE-based mobile broadband. "Capital expenditures will be driven by continued investments in broadband and mobile capacity," the carrier noted. (See Swedes Dig 4G.)

Find out more about TeliaSonera's LTE ambitions in this LRTV interview:

— Ray Le Maistre, International News Editor, Light Reading

Be the first to post a comment regarding this story.
Sign In