Monthly Archives: April 2005

TeliaSonera given four weeks to cut prices

(AFX) TeliaSonera AB has four weeks to cut its interconnection fees for fixed line telephony by an average of 10 percent, or face a 100 million kronor fine, the Swedish telecoms regulator PTS said.

PTS said TeliaSonera’s fees are too high.

“TeliaSonera has market dominance with regards to fixed line telephony which makes it important that other operators can buy these services at competitive prices,” PTS said.

The Local

Finnish firms expanding their operations in the Baltic Sea Region

 

Finnish firms have been active in the Baltic States and especially in Estonia since the beginning of bilateral trade between Finland and the Soviet Union. It seems that the Finns have come to stay in the Baltic States. The motives for Baltic operations have somewhat changed in the course of time but in general, the operations of Finnish firms have grown constantly. Companies seeking for cost advantages have often later realised also the local market potential. Finnish providers of business services that have followed their customers to the Baltic countries have later expanded their customer base to local actors. Finnish firms in the fields of information technology, textile and furniture, have been seeking for cost advantages particularly in Estonia through outsourcing or own production operations. Retailers, foodstuffs industry and construction companies have been attracted by the growing Baltic markets.

Among the Baltic countries, Estonia has been the easiest market for Finnish firms to enter. Most Finnish firms have succeeded well in Estonia, and some Finns have even gained the position of a market leader (e.g. HK-Ruokatalo, Vaasan&Vaasan, TeliaSonera). Considering the large num-ber of Finnish firms operating in Estonia, there seem to be relatively few firms that have clearly failed. Estonia has actu-ally been a test market for internationalisation for many Fin-nish firms. For example, Elcoteq, which is currently operating globally, started its internationalisation from Estonia in the early 1990s. At the break of the millennium, also Finnish re-tail and foodstuff companies started to look for growth through internationalisation and often headed to Estonia. In the future, one factor challenging foreign operations in Esto-nia is the lack of labor force. In certain sectors there are al-ready major difficulties in finding professional labor force. Companies often train their employees themselves.

In Latvia, Finnish firms have encountered considerably more problems due to the unpredictability and lack of coop-eration of the state or local administration. The stumbling of several Finnish firms in Latvia indicates that the Latvian busi-ness environment is clearly more difficult than e.g. in Estonia. Although there are Finnish firms active in various sectors in Latvia (e.g. telecom, foodstuff, retail), individual investments made have been relatively small in value.

As a rule, Finnish firms have entered Lithuania following their competitors. Therefore, they have faced relatively se-vere competition in the Lithuanian market. However, it seems that Finnish operations in Lithuania have not witnessed any major problems as in Latvia. Finnish investments to Lithuania have been fewer in number but larger in value compared to Latvia. Investments have mainly been targeted to telecom, foodstuff, retail and energy sectors.

During the past 10 years, the business environment has undergone tremendous changes in the Baltic countries. Es-pecially Estonia has developed rapidly, and Finnish firms have a very positive image about Estonia’s business envi-ronment. The Estonian legislation and other formal institu-tions regulating the firms’ operations are on a western level. However, being based on German and other Central Euro-pean models, the Estonian legislation partly differs consid-erably from the Finnish one. For example, as regards issues concerning ownership of land and real estate, the knowledge of local lawyers is often indispensable. The problem is the lack of precedents and as yet unestablished legal praxis, which sometimes shows in unexpected court rulings.

Also informal institutions in Finland and Estonia are be-coming more similar. This is due to the foreign investments flowing to Estonia and importing western business practices. On one hand, business practices are modernising as the older generations are withdrawing from working life. Younger than 30-years-old-Estonians have not worked in Soviet com-panies. On the other hand, there are still some clear differ-ences between Finnish and Estonian business lives. For ex-ample, the role of personal relations is emphasised in Esto-nia, and the personal network of a candidate may be a cen-tral factor affecting the selection of a local partner or man-ager. Companies try to achieve good contacts e.g. with the local administration, which may in many cases speed up and ease problem solving. Corruption was a considerable prob-lem in Estonia especially in the beginning of the 1990s. Lately, however, corruption has clearly diminished, although there are still some regional differences. In general, the cor-ruption situation is much better in Estonia when compared to Lithuania or Latvia, not to mention Russia.

Many Finnish firms nowadays view the Baltic countries as part of their home market, which covers the entire Baltic Sea region. Estonia alone is no longer an interesting target mar-ket. Rather, Estonia opens avenues to business opportunities in the East (Russia) and South (other Baltic countries). How-ever, Estonia’s potential as a stepping stone to Russia has so far not realised. Trade with Russia was expected to accumu-late as the double tariffs were removed in conjunction with the EU membership. High expectations have been under-mined e.g. by increasing import tariffs of metals from Russia. Russia has also tightened e.g. the hygiene requirements of imported Estonian foodstuffs. Nevertheless, all the Baltic countries undoubtedly have good preconditions to compete for transit trade to/from Russia as their ports and other com-munication infrastructure are improving. As the cost advan-tages are gradually disappearing, the competitive advantage of the Baltic countries will most likely increasingly base on their logistic potential.

Baltic Rim Economies
Riitta Kosonen
Director, Helsinki School of Economics/CEMAT and Professor, University of Joensuu
Piia Heliste Project manager at HSE / CEMAT.

 

In Latvia, Finnish firms have encountered considerably more problems due to the unpredictability and lack of coop-eration of the state or local administration. The stumbling of several Finnish firms in Latvia indicates that the Latvian busi-ness environment is clearly more difficult than e.g. in Estonia. Although there are Finnish firms active in various sectors in Latvia (e.g. telecom, foodstuff, retail), individual investments made have been relatively small in value.

As a rule, Finnish firms have entered Lithuania following their competitors. Therefore, they have faced relatively se-vere competition in the Lithuanian market. However, it seems that Finnish operations in Lithuania have not witnessed any major problems as in Latvia. Finnish investments to Lithuania have been fewer in number but larger in value compared to Latvia. Investments have mainly been targeted to telecom, foodstuff, retail and energy sectors.

During the past 10 years, the business environment has undergone tremendous changes in the Baltic countries. Es-pecially Estonia has developed rapidly, and Finnish firms have a very positive image about Estonia

TeliaSonera Finland boss quits following profit drop

Latvia makes progress on e-signatures

The Government of Latvia has launched consultations with potential certification service providers concerning the implementation of secure electronic signatures in the country.

 

On 19 April 2005 the Latvian government gave mandate to the Secretariat of the Minister for Special Assignments for Electronic Government Affairs (the “Secretariat”) to start consultations with telecommunications operator Lattelekom and Latvia Post about the implementation of secure electronic signatures in the country. This decision was taken following the presentation by the Minister for Special Assignments for Electronic Government Affairs Mr. Janis Reirs of an informative report on the implementation of e-signatures.

 

Legislation defining the legal status and conditions of use of electronic signatures (Electronic Documents Law) was passed by the Latvian Parliament in October 2002 and came into force on 1 January 2003. However, the development of electronic signatures has until now been impeded by the fact that no certification service provider has yet been approved. Lattelekom and Latvia Post, as well as the State Information Network Agency (VITA), have stated their intention to become certification service providers, but the Secretariat needed the government delegation to start negotiations.

 

Following the government decision, a working group was set up for coordinating the implementation of electronic signatures. Comprising the Secretariat, Lattelekom and Latvia Post, the working group is expected to develop a detailed implementation plan shortly. At its first meeting on 21 April, the Secretariat asked Lattelekom and Latvia Post to join their resources for bringing the project forward. Lattelekom indeed has the required IT expertise and infrastructure, while Latvia Post has distribution network needed with more than 900 post offices across the country. Pooling their know-how and resources is required to accelerate the implementation of electronic signatures, while reducing costs and ensuring maximum impact. Lattelekom said it was willing to invest its resources in the development of e-signatures, provided government bodies and municipalities subsequently purchase and implement electronic signatures. In particular, Lattelekom intends to create the infrastructure required for the provision of e-signature with its own resources by next autumn. The company is also expected to be involved in the development of marketing and promotion strategies and activities designed to drive the take-up of e-signatures by the public.

 

The Latvian Prime Minister Mr. Aigars Kalvitis considers that the implementation of electronic signature has to be hastened and should start already in the autumn of this year. However, the Head of the Secretariat Mrs. Ina Gudele stated that at least nine months would be needed between the appointment of a certification service provider and the issuance of the first electronic signatures. One specific difficulty, according to Mrs Gudele, lies in the uncertainty concerning the future format of electronic signatures (cards-based/software-based). In October 2004 the previous Latvian government decided to put on hold its electronic identity card project until precise EU requirements for travel and identification documents are known. The new Latvia government, installed in December 2004, decided earlier this year to re-start work on identification cards. A group comprising the Secretariat, the Ministries of Interior, Justice, Transport and Finance, is in charge of working out a strategy for the future support of electronic signatures.

 

The government also has to make further decisions concerning funding for the creation of the e-signature infrastructure and for the implementation of the secure e-services using e-signatures by state administration and municipalities, in order to provide employees of these institutions with e-signature certificates by 1 July 2006.

 

According to Minister Janis Reirs, the maximum number of potential e-signature users could reach 35% of the country’s economically active inhabitants, or approximately 400,000 people. The total costs of the e-signature implementation project are estimated at 1.2 million Latvian lats (EUR 1.7m) over three years, of which 350 000-400 000 lats (EUR 502,000-575,000) are anticipated to be spent for the issuance of smart cards.

 

© European Communities 2005
Reproduction is authorised provided the source is acknowledged.
The views expressed are not an official position of the European Commission.
Disclaimer

 

Further information:

 

Netikėtai sumažėjo „TeliaSonera“ ketvirčio pelnas

TeliaSonera Q1 earnings lower than expected

(AFX) TeliaSonera AB said first quarter EBITDA excluding non recurring items fell to 6.9 billion kronor from 7.2 billion a year earlier, hit by lower margins amid increasing price competition in Sweden and Finland. The result was below average market expectations of 7.45 billion kronor, as recorded by SME Direkt.

EBITDA margin excluding non recurring items dropped sharply to 33.1 percent from 36.4 percent. The company warned the competitive environment in Sweden and Finland will will hit its EBITDA going forward.

“The competitive environment in Sweden and Finland is intensifying faster than anticipated. This will continue to have a negative impact on EBITDA margins and operating income excluding non-recurring items for the rest of the year. The other elements in the outlook remain as stated in the full-year report 2004,” said TeliaSonera.

First quarter sales rose slightly to 20.8 billion kronor from 19.77 billion a year earlier.

TeliaSonera said the drop in earnings was chiefly due to the company’s Finnish operations.

“The mobile market in Finland was characterized by aggressive competition resulting in strong price erosion and high churn. To defend its customer base, Sonera met the competition with reduced prices, which led to price erosion of 20 percent year on year,” the company said.

The company said its cost reductions are to continue. “Market realities in Sweden and Finland emphasize the need for the restructuring programs already initiated,” it said.

The company’s International Mobile unit in Eurasia reported strong growth.

“Both the majority-owned operations in Eurasia and the associated companies in Russia and in Turkey showed strong sales and earnings growth, which led to a robust improvement in operating income year on year.”

The company also announced the departure of its Finnish president Anni Vepsaelaeinen and appointed Esa Korvenmaa as an acting president for TeliaSonera Finland.

The Local

Competition hits TeliaSonera

TeliaSonera, the Nordic region’s largest telecommunications operator, on Tuesday reported a greater-than-expected fall in first-quarter profits, and warned that intense competition in its home markets would hit margins during the rest of the year.

The company blamed the worsening results on price erosion, especially in Finland, where the price of mobile calls has tumbled 20 per cent in the past 12 months. Shares in the group fell 6 per cent in Stockholm to SKr 39.80.

Ft.com

TeliaSonera Finland President resigns

Company posts lower figures after “price erosion” in Finnish market

Anni Vepsäläinen
Esa Korvenmaa
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The President of TeliaSonera Finland Anni Vepsäläinen has tendered her resignation, the company reported on Tuesday. Esa Korvenmaa, responsible hitherto for the Large Corporate sector of the Finnish business, will take over from today as Acting President while the search goes on for a successor.
The announcement stated that Vepsäläinen was leaving the company on her own initiative and to pursue other interests. She has worked for Sonera since 1987 and has headed the Finnish operations of TeliaSonera since 2003. Vepsäläinen commented that her departure and the weaker result posted by TeliaSonera were not connected.

“I joined the company practically straight from school, and I am thus still in my first place of employment. I’m now 41, and have been pondering what I would like to do next. Perhaps the moment has come to look for some new challenges”, said Vepsäläinen to the Finnish News Agency STT.
No severance package will be involved, as Vepsäläinen is leaving of her own volition.

TeliaSonera Chairman Tom von Weymarn noted in an interview with YLE TV-News that the negative publicity surrounding the company of late may have influenced Vepsäläinen’s decision. He did not regard the announcement as a very great surprise.
The Chairman’s remarks were presumably a reference to the widely-publicised trial of former managers of the telecommunications service provider, who face charges over the illegal tracing of telephone calls in 2000 and 2001, and to announcements in February that the company was to shed some 650 jobs in Finland, despite having just turned in figures indicating a net result of EUR 1.6 billion for 2004. Earlier this month, the number of likely Finnish redundancies was reduced to just over 300. (See linked articles)

TeliaSonera released its first-quarter figures for 2005 today. They were somewhat disappointing. Net sales were up by some five percent to SEK 20,804 million (EUR 2,277 million), with sound development in most operations, but “price erosion” in Finland had reduced margins.
Some analysts have gone so far as to describe the situation in Finland as “catastrophic”, with usage not increasing sufficiently to balance the decline in prices in a fiercely competitive market. Profits also fell in Sweden, but they were down by as much as 85% in the Finnish market.

Sonera is not alone in feeling the chilly Finnish draft; one of its smaller local rivals, Saunalahti, issued a sharp profit warning on Monday for the first quarter and the entire year.
TeliaSonera’s operating income, not including non-recurring items, amounted to SEK 4,670 million (EUR 510 million; 1Q/2004: SEK 4,822 million). Net income totalled SEK 3,563 million (EUR 389 million) and earnings per share came to SEK 0.68 (EUR 0.074), down from SEK 0.73 a year previously.
The immediate response was to see pressure on the company’s stock, which was down over 6% in the early afternoon in Helsinki.

Helsingin Sanomat

Finnish welfare state: Creating discrimination against women

 

The welfare state creates discrimination against pregnant women, and it’s only getting worse…

More and more Finnish women experience unfair discrimination at their work due to pregnancy or maternity leave. On the part of many, discrimination is so severe the occupational safety and health administration has to take the matter to the police.

The Finnish News Agency (STT) reported Thursday that the Helsinki unit of the Nordic telecommunications group TeliaSonera has tried to get rid of women on maternity leave. Several women had been told their jobs would be terminated. Part of the women had not yet given birth.

Pregnancy discrimination is surprisingly common, and still growing,” said Juha Kumpulainen of the equality ombudsman’s office.

I wouldn’t want to be a young female job-seeker in Finland!! And if you’re pregnant you can just forget about getting a job here. Although I think being a non-Finnish speaker in Finland is almost as hard, if not harder. Now how about being a pregnant, job-seeking, ex-pat in Finland – whoa!!

www.finlandforthought.net

Per Olof Sjostedt appointed Head of TeliaSonera’s Representative Office in Moscow

Per Olof Sjostedt, 52, has been appointed Head of TeliaSonera’s Representative Office in Moscow. Mr. Sjostedt will start his new assignment on June 1, 2005 in connection with the establishment of the office. The representative office will be responsible for TeliaSonera’s operations in Russia.
 
Per Olof Sjostedt, who is a Swedish citizen, has more than 20 years of working experience within telecom from Eastern Europe, whereof ten years in Russia, i.a. as Head of Ericsson’s operations in Russia between 1998 and 2001. He is fluent in Russian and has also held positions at the Swedish Embassy in Moscow. Before joining TeliaSonera he was Head of the Russian operations of Emerson Network Power Systems.

Mr. Sjostedt holds an MSc in Electrical Engineering from the Royal Institute of Technology, Stockholm and a BA in Slavonic languages and political science from the University of Stockholm. He is also a member of the Presidium and an honorary doctor at the International Telecommunications Academy.

TeliaSonera is the leading telecommunications company in the Nordic and Baltic regions. At the end of December 2004 TeliaSonera had 15,411,000 mobile customers (51,359,000 incl associated companies) and 8,312,000 fixed telephony customers (8,943,000 incl associated companies) and 2,017,000 internet customers (2,056,000 incl associated companies). Outside the home markets TeliaSonera has extensive interests in the growth markets in Russia, Turkey and Eurasia. TeliaSonera is listed on the Stockholm Stock Exchange and the Helsinki Stock Exchange. Net sales January-December 2004 amounted to SEK 81.9 billion (EUR 9.08 billion). The number of employees was 29,082.

PrimeZone
For further information journalists can contact:
TeliaSonera’s Press Office
+46-(0)8-713 58 30