In the third quarter, organic sales increased 2.4 percent, as 5.0 percent growth in Europe and a 1.5 percent increase in Sweden offset a decline of 3.2 percent in Eurasia. EBITDA excluding one-time items, currency effects and acquisitions and disposals declined 0.9 percent. The operator blamed the decline on its operations in Eurasia, and in particular Kazakhstan where it's suffering from intense price competition. This was offset by positive organic EBITDA growth in its home market Sweden and the rest of Europe.
On a reported basis, net sales increased 6.3 percent to SEK 27.029 billion, and adjusted EBITDA rose 3.1 percent to SEK 9.730 billion, leading to a lower margin of 36.0 percent compared to 37.1 a year ago. Net profit improved 12.7 percent to SEK 4.589 billion, helped by a higher contribution from Turkcell, while free cash flow fell to SEK 4.699 billion from SEK 6.387 billion, mainly due to delayed dividends from Megafon.
TeliaSonera said it expects continued improvement in the regions Sweden and Europe in Q4, but Eurasia and Kazakhstan will remain difficult. The company reiterated its intention to exit the Eurasian markets and said the process to sell the assets had already started. The operator maintained planned capital expenditure this year at SEK 17 billion, excluding licence and spectrum fees.
In response to recent criticism from the investor Muddy Waters about the transparency of its operations, TeliaSonera also issued a statement clarifying the application of IFRS in its results. The company said its own review and auditor Deloitte did not find any need to change the accounting of acquired assets and operations, put options granted to minority shareholders or provisions for potential claims from law enforcement.
The company also acknowledged that it was not happy with its partner situation in Azerbaijan and Uzebkistan and the current management would not have chosen to work with these companies, the ultimate owners of which are still unknown. No dividends were paid to these companies in 2015 and 2016, nor have any future dividends been promised, TeliaSonera said.
Finally it rejected the request to publish the report conducted by law firm Norton Rose on its Eurasia activities, saying it could expose the company to lawsuits. Some people and businesses mentioned in the report did not share the same views as outlined by Norton Rose, the company said. The information has been shared with prosecutors and Deloitte.
