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Stockholm (pte019/11.02.2005/11:30) - Nordic telecoms giant TeliaSonera http://www.telia.com has announced that it plans to cut costs by between 5 billion and 6 billion Swedish Kroner (550 million and 660 million euros) over the next three years, due to flat fourth-quarter sales and profits. As the Financial Times (FT) http://www.ft.com reports, the Swedish-Finnish group has said the moves will hit its 2005 operating profits but eventually lead to higher market growth. According to the telecoms operator, the brunt of the measures will hit Sweden, with only about 1 billion Swedish Kroner (110 million euros) worth of cuts in Finland. Costs will be directed at all its operations and include redeploying staff and making redundancies, the company said.
The company has faced tough competition in its core domestic markets but has focused on products and making acquisitions to boost market share. According to the company, Finland and Sweden would be affected by the first phase of the three-year transition, as it makes the move from fixed to mobile and internet based services. As the FT reports, mobile operations in Norway, Denmark, the Baltics and other operations in Russia and Turkey are all expected to continue to see increases in sales and profits and will be unaffected by the new measures.
"We do have the foundation for taking the lead in the migration from fixed mobile to internet based services. Here radical changes are necessary to adapt to markets," said Anders Igel, the company's chief executive. "The actions we are taking will have a negative impact on our profits initially but should be seen as an investment to build an even more competitive TeliaSonera." Pre-tax fourth quarter earnings for the group rose from 7.14 billion Swedish Kroner (785.8 million euros) to 7.46 Swedish Kroner (821 million euros). Sales for the three months to the end of December rose from 21.05 billion Swedish Kroner (2.32 billion euros) to 21.25 Swedish Kroner (2.34 billion euros).
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