TeliaSonera has rejected criticism from a hedge fund that claims to have a short position in the company's stock. The investment research firm Muddy Waters published an open letter to TeliaSonera's board questioning whether the company has fully acknowledged and disclosed the extent of possible damages from the corruption allegations at its operations in Eurasia. Damages, fines and possible writedowns on the activities could severely affect the company's credit profile and ability to pay dividends, according to Muddy Waters.
TeliaSonera said in response that it "does not recognize the conclusions" of the report and reiterated that it's fully cooperating with investigations by public prosecutors in Sweden, the Netherlands and the US. "TeliaSonera is as open and transparent as possible with respect to listing requirements and the investigations," the company said. It noted further that it has not received any claims from US authorities, and only if and when any claims materialize could it consider taking financial provisions.
While the TeliaSonera investigations have mainly focused on problems in Uzbekistan, the Muddy Waters report estimates that the company may have made corrupt payments of over USD 2.1 billion across its Eurasia and Nepal operations. Almost USD 1 billion may also be owed to a difficult partner in Azerbaijan, the report said. TeliaSonera recently said that it plans to sell the activities in Eurasia, but Muddy Waters questioned whether the company will be able to attract a high enough price to cover the potential costs and avoid a major loss. The letter called on TeliaSonera to release the results of its own investigation commissioned in 2013 in order to help investors better understand the issue and its potential consequences.
