Sweden's TeliaSonera Q2 profit up 8 percent

STOCKHOLM - Nordic telecommunications operator TeliaSonera AB reported Friday an 8 percent rise in second-quarter net profits, boosted by higher sales and the benefits of previous cost-saving measures.

The Stockholm-based company also raised its outlook for margins in operating profit — or earnings before interest, taxes, depreciation and amortization — saying they will be higher this year than in 2008.

The company's shares jumped 7.5 percent to close at 47.40 kronor ($6.31) in Stockholm.

TeliaSonera said net profit in the April through June period came to around 4.5 billion kronor ($600 million), up from 4.1 billion kronor in the second quarter a year ago.

Sales, which grew by about 9 percent in the three-month period, reached 27.5 billion kronor compared with 25.3 billion kronor in the same quarter in 2008.

It said it expects its efforts to keep costs at bay and "offset the negative impact from declining gross domestic product and rising unemployment in our markets."

TeliaSonera CEO Lars Nyberg said he was pleased with the results, considering the turbulence affecting the world's economies.

"We are delivering on the issues that we can control ourselves, namely cost reductions and careful capital spending," Nyberg said. He noted that the first quarter's negative trends of lower equipment sales, lower usage and reduced roaming because of less business travel had continued in most of its markets also in the second quarter.

Organic revenue growth in Eurasia had improved slightly from the first quarter, though, Nyberg said.

Pohjola Bank analyst Kimmo Stenvall called the results "solid," despite feeling that the topline, or the revenue line, was somewhat softer than hoped as overall organic growth was negative.

Stenvall added that despite the fact that most other industries are being hit by the global financial crisis, the telecom sector has so far escaped the turmoil fairly unharmed.

"They've got the fundamentals. We've never really seen a big crash for operators during a recession, but of course in the last recession the business model was different" he said. Stenvall noted that although the sector still faces risks of corporate customers going bankrupt or renegotiating contracts, regular consumers "don't give up their mobile- and their broadband-connections."

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