Monthly Archives: December 2013

Finland says no to TeliaSonera data cable project

The country plans to instead attract data centres with its own fibre-optic cable.

FINLAND has turned down the attempts of TeliaSonera International Carrier to convince it to embark on a major fibre-optic cable project. According to information obtained by Helsingin Sanomat, the Swedish provider of fibre-based communications services has laid out a plan to roll out a massive fibre-optic cable from St. Petersburg and possibly also from Finland via the Baltic countries and Poland to Germany.

The data cable by one of the world’s leading providers of fibre-optic data communications services would allow for high-speed transmission of data and thus appeal especially to data networking companies.

However, Pekka Haavisto (Greens), the minister responsible for ownership steering, revealed last week that Finland intends to build its own undersea fibre-optic cable to Germany. With an estimated cost of 100 million euros, the national project is roughly ten times smaller than the one planned by TeliaSonera, Helsingin Sanomat believes.

Finland is an 11 per cent minority shareholder in TeliaSonera.

Sources for the story also reveal that preliminary official estimates suggest that participation in the TeliaSonera project would cost less than building the submarine cable.

The reasons for Finland and TeliaSonera to build the cable are markedly different. For Finland, fast and secure fibre-optic cables are means to attract foreign firms and investments to the country; for TeliaSonera they are means to profit from data communications and to strengthen its operations in the Baltic region.

A spokesperson at the Government’s ownership steering department has confirmed that attempts to convince Finland to participate in a private data cable venture have been made, but declined to comment on the information about TeliaSonera’s plans.

Kalevi Alestalo, a senior financial counsellor at the department, says that for the present the state wants to keep a tight rein on the project and to search for an alternative for the data cables of telecoms operators. “When looking for investments to Finland, our project is better,” he asserts.

In addition to appealing to firms such as Google and Yandex with massive data transfer needs, Finland believes the cable could transform the country into an hub for data communications from Asia and Russia.

Furthermore, Finland views that it is crucial to offer an alternative route for data traffic, with companies currently disinclined to rely on the Swedish data network due to Swedish authorities’ right to monitor any phone and Internet communications crossing the country’s borders.

Finland’s unwillingness to embark on private cable ventures, in turn, stems from the fact that they are ineligible for EU subsidies. The European Union has allocated hundreds of millions of euros for the improvement of data communications within its borders and has already granted subsidies to data cable projects in Southern Europe. Also Finland has conducted preliminary talks with the union.

“It would be difficult to receive subsidies, if this was clearly the project of a single telecoms operator,” Alestalo reminds.

Elsewhere, Haavisto reminds that Finland is yet to take its final decision on the matter, thus leaving the door open also for a private solution.

Finland is now searching for investors for its data cable project, planning to raise two-thirds of the necessary funds from private companies and institutional investors. According to Haavisto, talks with interested parties have already been held but no contracts or letters of intent have yet been signed.

At present, the entire outbound data traffic from Finland could travel through a single pair of optical fibres, says Juhapekka Ristola, the director general of the communications policy department at the Ministry of Transport and Communications.

The data cable planned by Finland contains six pairs of optical fibres, whereas the cable planned by TeliaSonera contains nearly 50 pairs, Helsingin Sanomat believes.

TeliaSonera fires top brass

Four senior employees are to leave TeliaSonera for conducting transactions that have not been in line with sound business practice.

According to the company, this is a direct result of a still on-going thorough review by the international law firm Norton Rose Fulbright LLP, which was chosen by TeliaSonera’s Board of Directors on April 18 to examine transactions and agreements made over the past few years by the company and partners in Eurasia.

The Swedish law firm Mannheimer Swartling has also been advising the board.

According to Marie Ehrling, chairman of the board ?“The Board’s conclusion is that some senior employees no longer have the trust of the Board. Therefore they have been notified that their employment with TeliaSonera will be terminated and they will leave their position effective immediately. It is not the Board’s task to assess the legal aspects, but we have decided to hand over the material from the Norton Rose Fulbright review to the Prosecutor’s office as part of our continuous dialogue.”

“The president and CEO Johan Dennelind has already taken important measures to strengthen governance and compliance in TeliaSonera. The board will with all possible means support and facilitate this important work.”

Johan Dennelind, president and CEO, added: ?“Together with the Board I have come to the conclusion that the way some transactions in the past were managed does not live up to the high standards of business ethics and transparency that TeliaSonera wants to stand for. Based on Norton Rose Fulbright’s findings I am taking necessary actions. It is the responsibility of all our employees, including senior management, to ensure that we maintain high standards of business ethics and to implement necessary governance and compliance to uphold them. Going forward we need strong leadership on all levels to create a sound culture.”

TeliaSonera has also announced that its executive VP and CFO Per-Arne Blomquist will leave his position effective immediately.

Christian Luiga, currently head of CEO Office, will assume the position as acting CFO.

Uzbekistan: Four Fired from TeliaSonera amid Corruption Row

Four executives have been dismissed from Nordic telecoms giant TeliaSonera amid an ongoing corruption investigation in Sweden that has come uncomfortably close to Gulnara Karimova, the scandal-hit daughter of Uzbek President Islam Karimov. 
“The Board’s conclusion is that some senior employees no longer have the trust of the Board,” Marie Ehrling, its chairwoman, said in a statement posted on TeliaSonera’s website on November 29. “Therefore they have been notified that their employment with TeliaSonera will be terminated and they will leave their position effective immediately.”
The dismissals come amid repercussions from an ongoing corruption probe that Swedish police opened in September 2012 into claims that the Swedish-Finnish telecoms giant paid hundreds of millions of dollars in bribes to enter Uzbekistan’s telecoms market.
The probe forced the resignation of CEO Lars Nyberg in February, and now four more heads have rolled. The company did not name them all but said in a second statement on November 29 that Chief Financial Officer Per-Arne Blomquist would “leave his position effective immediately.” The Financial Times reported that Tero Kivisaari, the company’s former head of the Eurasia division, was another of the fired employees.
The FT report quoted CEO Johan Dennelind as saying he no “longer had trust” in Kivisaari, who was removed as the company’s President of Business Area Mobility Services last month over his “role in TeliaSonera’s criticized investments in Uzbekistan,” the company said at the time.
Now TeliaSonera says that it had hired law firm Norton Rose Fulbright “to conduct a thorough review of the transactions and agreements made over the past few years by TeliaSonera and partners in Eurasia.” The review is still continuing, but “on the basis of the information and conclusions to date it is evident to TeliaSonera’s Board and CEO that the processes for conducting some transactions have not been in line with sound business practices. As a consequence four individuals will now leave the company.”
TeliaSonera has previously acknowledged paying $350 million for 3G licenses to operate in Uzbekistan to Takilant Limited, run out of the tax haven of Gibraltar by Gulnara Karimova associate Gayane Avakyan, who is also the subject of a money-laundering investigation in Switzerland. Radio Free Europe quoted TeliaSonera – which has always denied wrongdoing and says it has “zero tolerance” toward corruption – as saying that the decision to dismiss the four “is not connected to ongoing probes into the company’s business dealings with Uzbekistan.”
The move comes as Karimova is under unprecedented attack in Uzbekistan, where her media and business empires are being closed and subjected to criminal investigations and she is becoming entangled in an investigation into the alleged kidnapping of one of her former staff.