TeliaSonera posts grim second quarter results - 3,000 jobs to go in Sweden

Anders Igel

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The announcement by Telia-Sonera that it would cut 3,000 jobs in Sweden sent shock waves through the telecommunications company, and through the Swedish trade union movement.
      The announcement was made in Stockholm on Wednesday - the same day that second quarter results indicated a loss of EUR 5.1 million.
      The announced personnel cuts were not wholly unexpected; TeliaSonera has already indicated that it would implement a cost-cutting plan by the end of 2007, aimed at saving EUR 430-530 million in annual costs in its Swedish operations.
      Already in the spring TeliaSonera offered 1,000 of its employees the option of early retirement, and that offer has been accepted by more than 600. They are included in the 3,000 jobs figure.
     
The job cuts focus on Sweden, even though the Finnish operations are the greater loss-leader. Finland’s TeliaSonera has had to deal with cutthroat price competition on the mobile phone market, and it is likely to face some trimming as well.
      TeliaSonera Finland has about 6,400 employees. For instance Saunalahti, which is marketing its services quite aggressively, only has about 270 people on the payroll. This considerably lighter cost structure of the new competitors has given the "traditional" operators TeliaSonera and Elisa a run for their money.
      As competition intensifies, personnel cuts seem almost unavoidable if competitiveness is to be maintained.
      Although it is not as intense as in Finland, TeliaSonera is facing price competition in Sweden as well.
     
Although the result announced on Wednesday was below market expectations, the company did have some good news - mainly from outside the home-market area.
      TeliaSonera President and CEO Anders Igel said that the company had developed positively on the Norwegian, Danish Baltic, Eurasian, Turkish, and Russian markets.
      The turnover of EUR 4.5 billion was slightly better than expected, which was attributed to the sharp increase in customers.
     
Igel had nothing new to say about TeliaSonera’s problems with the Turkish service provider Turkcell. However, he insisted that TeliaSonera remains committed to the Turkish market.
      Earlier in the year the Turkish Cukurova Group had refused to sell a 27% holding in Turkcell to TeliaSonera, even though a preliminary contract on the matter had been signed. The deal would have made TeliaSonera the largest shareholder in Turkcell. The cancellation of the contract has led to court action.


Previously in HS International Edition:
  TeliaSonera Turkcell deal founders at last minute (24.5.2005)
  TeliaSonera to dismiss no more than 330 people in Finland (12.4.2005)
  Unequal job security measures irk Finnish TeliaSonera staff (1.2.2005)

Links:
  Press release: TeliaSonera January-June 2005

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