TeliaSonera Issues Profits Warning on Write-Downs and Higher Costs
Published on: 16th Jan 2014
By: Ian Mansfield
TeliaSonera has issued a profits warning saying that its fourth quarter results will be hit by SEK2.5 billion (USD390 million) of one time costs due to the costs of associated with redundancies and writedowns.
The full financial details will be announced on the 30th January, but the preliminary figures are below.
TeliaSonera said that it will record a total SEK 1.17 billion non-cash goodwill impairment charge related to its operations in Denmark and Lithuania.
Further, TeliaSonera will book non-cash impairment charge of SEK 598 million related to the operations acquired in Kazakhstan in January 2013. This relates mainly to the WiMAX operation and is based on the view that it will take longer time to get full use of the acquired frequencies due to current absence of a 4G license.
As a result of a new country structure announced last December, there will be further consolidation of IT systems and platforms. Combined with a general IT structure review, obsolete systems and platforms with a total book value of SEK 565 million will be scrapped or written down, reported as non-cash charges in the fourth quarter results of 2013.
In the third quarter report 2013, TeliaSonera estimated that costs for redundancies, as part of the overall efficiency measures, would amount to SEK 1.4 billion for the full-year 2013, of which SEK 1.0 billion was recorded in the first nine months. In the fourth quarter of 2013, costs for redundancies were SEK 229 million. Consequently, total costs in full-year 2013 related to redundancies amount to just above SEK 1.2 billion.
On August 1, 2013, TeliaSonera's Spanish subsidiary Yoigo entered into an agreement to divest mobile telephony towers to Abertis Telecom for a projected SEK 530-620 million in the fourth quarter of 2013. The number of towers included in the transaction has been reduced why total sales proceeds will amount to around SEK 350-440 million. The transaction was partly finalized in the fourth quarter of 2013 with a positive cash flow impact of SEK 230 million, of which SEK 179 million is reported as a net gain.
Due to four major storms in Sweden at the end of 2013, extra maintenance costs for fault handling will impact Broadband Services Sweden in the fourth quarter of 2013 by SEK 143 million.