EUR 850.00 For Business Accounts Only

Morningstar | TELIA Updated Forecasts and Estimates from 12 Dec 2018

With the Finnish government selling down its stake in the company, TeliaSonera has changed its name to Telia. After lapses in judgment in its dealings in Uzbekistan, which led to the resignation of much of its senior leadership, Telia has a new management team that has decided to exit seven markets in Eurasia. The first divestiture was its fast-growing Nepalese operation. While the company generated a solid financial return from this country, we are disappointed with the sale price. Nepal had become Telia's largest market in Eurasia by number of subscribers and was still growing rapidly. We think 5 times EBITDA is too low a multiple for such a fast-growing business. The firm has now also sold its operation in Tajikistan and its Spanish business, which wasn't part of Eurasia.Subscriber and revenue growth has slowed significantly in the other five markets that are for sale. We are now even more concerned regarding the price at which they will be sold. With these divestitures, Sweden will account for 45% of Telia's revenue. Sweden has been one of the best-performing markets in Europe, but it also witnessed a slowdown in 2016. The small and midsize enterprise market is particularly struggling, and we expect this to hold back growth in the country through at least year-end 2017.Telia is the incumbent telecom operator in Finland, though it is only the second-largest carrier in the country. It also has extensive assets in Norway and Denmark. It called off merging its Danish operation with Telenor's as a result of regulatory concerns. These other Nordic countries will provide an additional 25% of revenue after the Eurasian divestiture.The Baltic region's operations were hit hard by the global recession, but they have been the bright spot recently. With mobile penetration rates well above 100%, we think growth will be driven by increased data usage, rather than significant subscriber growth. The firm also owns sizable positions in MegaFon and Turkcell. MegaFon's success has been impressive; it is now the second-largest wireless telecom operator in Russia.