August 5, 2019 / 9:03 AM / 16 days ago

UPDATE 1-CEO of Nordic telecoms group Telia in surprise resignation

* Dennelind has overseen Telia transformation

* Will work notice period while Telia seeks replacement

* Shares down 1.8% (Adds detail, background, analysts, shares)

By Anna Ringstrom

STOCKHOLM, Aug 5 (Reuters) - Telia Chief Executive Johan Dennelind has resigned unexpectedly, having transformed the Nordic telecoms group’s strategy since taking the helm in 2013.

Under Dennelind’s leadership Telia has withdrawn from nearly all of its central Asian markets after years of investigations into alleged corruption linked to local partners, such as in Uzbekistan, and problems accessing cash in some markets.

When he took the job, those operations accounted for about a quarter of profit, but the mobile and fixed-line operator has since refocused on its seven Nordic and Baltic operations, seeking new growth opportunities such as a push into television.

The ongoing overhaul includes its planned takeover of television group Bonnier Broadcasting, with the deal currently being scrutinised by EU antitrust regulators.

Dennelind, who has given Telia 12 months notice, has also instigated a cost-cutting programme and overseen the acquisition of Tele2 Norway and GET Norway. The company has also entered network-sharing agreements in Denmark and Finland under his tenure.

Credit Suisse analysts said the timing of Dennelind’s resignation is a surprise, though there had been some speculation over the past year about a change in CEO given he has been in role more than five years and the Eurasian exit is close to completion.

Board Chairwoman Marie Ehrling said Dennelind’s leadership had been crucial during the overhaul and that she and the board regretted his decision to step down.

SEARCH IS ON

Dennelind will continue in his position for the time being, Telia said in a statement, adding that the exact timing of his departure depends on the recruitment of a successor. The search for a new CEO will begin immediately, it said.

The outgoing chief said Telia is now entering a new phase with several opportunities for value creation and he has decided to leave to take on new challenges.

“I will continue in my role to drive our current agenda forward with full focus and commitment for as long as the board wants,” Dennelind added in the statement.

Credit Suisse analysts said that, with Telia broadly repositioned as a Nordic and Baltics story, it expects “relatively little disruption” from Dennelind’s departure.

“The main question is in what direction a new CEO will take,” they added.

In April, Telia reiterated that profits in Sweden, its biggest market, would remain under pressure this year and that it would cut operating costs in the country by about 3 percent to offset falling fixed-line income.

Shares in Telia, which have lost about 15% of their value since Dennelind became CEO, were down 1.8% in morning trade, slightly outperforming the wider Stockholm market.

“Since we don’t know the successor, it is difficult to say if this is a good or bad thing for the company,” said Inderes analyst Joni Gronqvist.

“However, Dennelind has been effective starting the strategy implementation, putting Telia in good shape for whoever takes over.”

Reporting by Anna Ringstrom Additional reporting by Tommy Lund in Gdynia Editing by David Goodman

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