TeliaSonera AB, the Nordic region’s second-largest phone company, named Lars Nyberg chief executive officer to revive growth after profit fell for the first time in two years in the second quarter.
Nyberg is the former CEO of NCR Corp., the world’s largest maker of automated teller machines, and starts on Sept. 3, Stockholm-based TeliaSonera said today. Net income fell 9 percent to 3.83 billion kronor ($569 million) from 4.21 billion kronor a year earlier. Sales rose 5.1 percent to 23.9 billion kronor.
TeliaSonera ousted CEO Anders Igel in June, saying it needs a leader who can spur growth. The company lost about 1 million fixed-line clients so far this year. Before today, TeliaSonera shares were down 4.2 percent in 2007 on concern the company is falling behind rivals including Norway’s Telenor ASA, which has unseated TeliaSonera as the biggest Nordic phone operator.
“He seems to be known as sort of a miracle maker in the U.S.,” said Jari Honko, an analyst at EQbank in Helsinki who rates the stock “reduce.” “It’s very positive for TeliaSonera that he has experience from making major changes in a company.”
Analysts had predicted profit of 3.91 billion kronor, the average estimate of seven analysts compiled by Bloomberg.
Shares of TeliaSonera rose as much as 0.8 kronor, or 1.6 percent, to 50.5 kronor, and traded at 50.25 kronorn as of 11:04 a.m. in Stockholm, after dropping as much as 4 percent earlier.
“TeliaSonera’s board wanted a visionary leader and a team player,” interim CEO and Chief Financial Officer Kim Ignatius said today in an interview. “We’ve found exactly that person.”
Nyberg, 55, is chairman of Sweden’s Micronic Laser Systems AB and IBS AB. He retired as CEO of NCR in 2005 after a decade at the company, where he directed NCR’s spinoff from AT&T Inc. in 1996. He’s also a former senior manager at Royal Philips Electronics NV. Ignatius will act as CEO until Nyberg starts.
“There are some real challenges, don’t fool yourselves, but there are also some real opportunities,” Nyberg said at a press conference at TeliaSonera’s headquarters. “One of the benefits I have is that I’ve been very international in my previous career.”
Von Weymarn had said June 12 that TeliaSonera may need as long as a year to find a new CEO. Ignatius said in the interview that he plans to stay on as CFO under Nyberg.
Igel said in April that he is “concerned” about the margin development at the fixed-line unit and that ongoing measures to ease costs won’t suffice to halt the customer drain. TeliaSonera will likely announce additional measures in the third quarter, Ignatius said today.
TeliaSonera had 450 million kronor in costs in the second quarter tied to a writedown of a network in Finland, as well as 330 million kronor in costs for job cuts. The company said today “additional measures” will be needed to reduce costs as more subscribers give up their traditional telephone lines. The company also spent more on marketing at its wireless unit.
The telephone company aims to move more clients to mobile- phone subscriptions. In the second quarter, TeliaSonera lost 58,000 fixed-line customers in Sweden alone, after losing 104,000 in the previous quarter.
Sales at the broadband unit, which includes high-speed Internet and traditional phone services, rose 2.7 percent as Web-access demand outpaced a drop at the fixed-line operations.The company added 370,000 broadband customers in the quarter, and lost 432,000 fixed-telephone lines.
TeliaSonera reiterated today it aims to reach annual sales of 100 billion kronor in 2008. Last year, sales reached about 91 billion kronor. TeliaSonera, the product of a merger between the former phone monopolies of Finland and Sweden, said net income, excluding some gains, will be “somewhat higher.”
“I still expect the company may have to downgrade its forecast in the near future,” EQbank’s Honko said.
Telenor has sought to take market share from TeliaSonera in Sweden, partly with acquisitions. The Norwegian company bought Vodafone Sweden AB, Glocalnet AB as well as Bredbandsbolaget AB, which handed Telenor a larger slice of the high-speed Internet market. The Fornebu-based company last year overtook TeliaSonera as the biggest Nordic phone company by revenue.
Both Telenor and TeliaSonera have pursued growth outside their home markets as subscriber growth in the Nordic region reaches saturation. Telenor runs operations in countries including Bangladesh, Malaysia and Thailand. TeliaSonera this month agreed to acquire MCT Corp to gain holdings in Uzbekistan, Tajikistan and Afghanistan.
To contact the reporter on this story: Janina Pfalzer in Stockholm at email@example.com