July 17, 2015 / 6:03 AM / 4 years ago

UPDATE 1-TeliaSonera Q2 core profit beats expectations, sees risks in Eurasia

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STOCKHOLM, July 17 (Reuters) - Swedish telecom operator TeliaSonera posted second-quarter core profit above market expectations on Friday and repeated its outlook of flat earnings this year, although it sees increased risks stemming from its Eurasian unit.

“Looking ahead, we expect the earnings trend to improve somewhat in the second half of the year and reiterate our full year outlook, but we see increased risks related to performance in Eurasia,” Chief Executive Johan Dennelind said in a statement.

Its Eurasia region, which consists of Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova and Nepal, has long been a growth engine for Sweden’s largest carrier and accounted for 20 percent of group sales last year.

In the Eurasian unit, service revenues in local currencies, excluding acquisitions and disposals, decreased 2.0 percent.

In the fourth quarter last year, its Eurasian sales fell for the first time, but returned to growth in the first quarter of 2015.

Price competition in Kazakhstan was tough in the second quarter, and that is also the main profitabilty risk for the rest of the year, Dennelind told Reuters.

On a positive note, TeliaSonera raised its synergy target for its integration with Tele2 Norway by 200 million crowns to around 1 billion crowns.

The company’s earnings before interest, tax, depreciation and amortisation (EBITDA), excluding non-recurring items, were 9.2 billion Swedish crowns ($1.08 bln) versus a year-ago 8.8 billion and a mean forecast 8.9 billion in a Reuters poll of analysts.

Telia reaffirmed it expected 2015 EBITDA earnings to be around the same level as in 2014 on a like-for-like basis, excluding non-recurring items. ($1 = 8.5365 Swedish crowns) (Reporting by Sven Nordenstam and Olof Swahnberg)

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