Group outlook for 2008

Net sales are expected to show stable growth in the financial year 2008 compared to the previous year.

Despite continued aggressive investments in future growth and in the quality of our networks and services, TeliaSonera's ambition for 2008 is to maintain the EBITDA margin level of 2007, excluding non-recurring items.

Net income for 2008 is estimated to be somewhat higher than in 2007, excluding the positive one-off items of approximately SEK 2.0 billion in 2007 and potential positive one-off items in 2008. These positive one-off items in 2007 included the following after-tax amounts:

  • SEK 850 million new deferred tax assets recorded, mainly in Finland for old tax losses;
  • SEK 631 million gain from the sale of Eltel (no tax effect); and
  • SEK 555 million from the reversal of historical interconnect provisions in Sweden (SEK 771 million pre-tax).

Capital expenditure will be driven by continued investments in broadband and mobile capacity and is expected to be around SEK 15 billion in 2008.

Efficiency measures

Intensified efficiency improvement is imperative for TeliaSonera to be able to continue shifting the product mix by investing in mobility and IP-based services.

Operating expenses for the Swedish and Finnish operations totaled about SEK 36 billion in 2007, of which approximately SEK 22 billion is the primary cost base to be addressed by the planned efficiency measures. Efficiency measures to be implemented primarily in the Swedish and Finnish operations during 2008 and 2009 are estimated to give an annual gross savings effect of approximately SEK 5 billion compared to the cost base of 2007.

TeliaSonera estimates that about two-thirds of these efficiency measures comprising savings of addressable costs and sustainable savings in volume-related costs will be implemented during 2008 and the remaining one-third in 2009. The efficiency measures are expected to result in a reduction of approximately 2,900 employees, of whom about two-thirds in Sweden and one-third in Finland. The related restructuring costs, to be reported as non-recurring items, are estimated to be around SEK 4 billion, of which approximately two-thirds in 2008.