STOCKHOLM, Sweden - Nordic telecommunications operator TeliaSonera AB on Friday reported an 11 percent rise in its fourth-quarter net profit, but said it would slash 2,900 jobs, or 9.3 percent of its work force, to cut costs.
The Stockholm-based company said the job cuts will generate savings allowing it to invest more money in mobile and Internet services.
About two-thirds of the layoffs will be made in Sweden and about one-third in Finland, and will cost the company around 4 billion kronor ($618 million), it said. Two-thirds of the cuts will be made in 2008, and the rest in 2009.
"The planned efficiency measures are mandatory to allow us to continue investing in future growth at the same time as we defend leading positions in more mature markets and provide high-quality networks and services," said TeliaSonera Chief Executive Lars Nyberg.
The company expects the cuts to result in savings of about 5 billion kronor ($774 million) annually.
Separately, TeliaSonera said it had proposed paying about $573 million for the remaining stakes in two Latvian telecommunications businesses.
TeliaSonera posted a profit of 4.47 billion kronor ($691 million) for the October-December period, up from 4.03 billion kronor in the year-ago period. Sales rose to 24.9 billion kronor ($3.85 billion), compared with 23.19 billion kronor in the same quarter the previous year.
The result beat expectations of analysts, who had forecast a net profit of 4.22 billion kronor ($653 million) in the quarter on sales of 24.66 billion kronor ($3.82 billion).
For the full year, TeliaSonera recorded a net profit of 17.67 billion kronor ($2.77 billion), up from around 17 billion kronor a year earlier.
Despite the better-than-expected earnings, TeliaSonera shares plunged 10.6 percent to close at 50.50 kronor ($7.75) in Stockholm.
Kimmo Stenvall, an analyst at Oko Bank, said "sales growth was excellent in every single business area." But he noted that tighter margins in the Nordic and Baltic countries — offset by lower income taxes and contributions from some of the company's minority holdings — were a disappointment, pulling down the share price.
Marketing costs in the quarter were also higher than expected, he said, while the company's operations in Turkey and Russia "once again did excellent."
In its outlook for 2008, TeliaSonera said it expects net sales figures to show stable growth compared with 2007 and, excluding one-off items, its net income to be "somewhat higher than in 2007."
It added that 2008 capital expenditure "will be driven by continued investments in broadband and mobile capacity" and is expected to come to around 15 billion kronor ($2.32 billion).
In a separate statement, TeliaSonera said it had submitted a nonbinding indicative offer worth around 3.7 billion kronor ($573 million) to the Latvian government to buy the remaining stakes in Latvian Mobile Telephone Company and Lattelecom.
TeliaSonera currently holds a direct shareholding of 49 percent in Lattelecom and a direct and indirect shareholding of 60.3 percent in LMT.
The offer is subject to approval by TeliaSonera's board, it said, adding it has also asked the Latvian government to reply to its offer by Feb. 29.
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