* Decision follows “hard work” on corporate governance
* Company under investigation for Uzbekistan deal
* Region accounted for 20 pct of group sales in 2014
* Shares rise almost 4 percent (Adds news conference, analyst, share, background, detail)
By Sven Nordenstam and Olof Swahnberg
STOCKHOLM, Sept 17 (Reuters) - Nordic telecom operator TeliaSonera will gradually abandon its Central Asian markets, hit by years of investigations into alleged corruption linked to local partners and problems accessing cash in distant countries.
Exiting seven countries which account for a fifth of its sales and where mobile telephony is expanding raises questions about how Telia intends to grow as it focuses more on its mature home markets in the Nordics and Baltics.
TeliaSonera CEO Johan Dennelind said work done to improve corporate governance in Nepal, Kazakhstan, Uzbekistan, Azerbaijan, Georgia, Moldova and Tajikistan made it possible to sell these businesses to others, although Telia had been unable to solve crucial underlying problems.
In Uzbekistan and Azerbaijan, TeliaSonera still does not know the identity of the ultimate owners of its local partner companies. In Uzbekistan and Nepal it is sitting on the equivalent of close to 5 billion Swedish crowns ($607 million) which it cannot bring home.
“We think we have exhausted our options to resolve the two major issues, about partners and repatriation of cash,” Dennelind told a conference call.
Dennelind was appointed two years ago to restore the company’s reputation after corruption allegations over a 2007 deal to get a mobile licence in Uzbekistan forced the exit of its previous chief and most of its board.
In past years, the markets Telia is set to exit have served as a growth engine with higher profitability than the group average. Growth has however stalled in recent quarters amid economic problems for countries with close ties to Russia.
Last year, like-for-like growth in those markets was 4.4 percent, versus a decline of 1.8 percent for the group, while the core profit margin was 53.1 percent, much higher than the group 34.9 percent margin.
“Exiting Eurasia can substantially limit the company’s growth opportunities in the short term,” said Inderes analyst Jari Honko. “It goes without saying that TeliaSonera will be very active within M&A.”
TeliaSonera shares were up 3.8 percent by 1040 GMT, as the move will strengthen its balance sheet, potentially leading to higher and more stable dividends, Alandsbanken analyst Stefan Olsson said.
A senior banker who has done business with Telia said it would likely redouble efforts to set itself apart from competition by becoming more of a content provider, suggesting Swedish entertainment broadcasting group MTG as a possible target.
Telia this year bought a slice of Spotify, expanding an existing partnership with the music streamer as it seeks new ways to grow beyond its traditional base.
TeliaSonera, which last week said it would scrap a planned merger with Norwegian peer Telenor in Denmark after antitrust setbacks, did not comment on potential other deals.
The company said that at this stage it was not possible to estimate how long its exit from the Eurasia region would take and that it was hard to estimate the value of the assets this early in the process. The combined book value is about 20 billion crowns, Dennelind said.
Turkcell, Turkey’s largest mobile operator in which Telia owns 38 percent, said it would consider buying some of Telia’s assets. ($1 = 8.2420 Swedish crowns) (additional reporting by Anna Ringstrom in Stockholm and Anna Ercanbrack in Helsinki; editing by Terje Solsvik and Jane Merriman)