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TeliaSonera sees growth in '10

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CIOL Bureau
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STOCKHOLM, SWEDEN: TeliaSonera posted forecast-beating quarterly earnings on Thursday and said sales and profits should expand modestly this year, helped by cost controls and subscriber growth in the central Asian region.

The telecoms industry has come through the global downturn relatively well and TeliaSonera's cautiously positive outlook and focus on efficiency chimed with recent comments from rivals including mobile market leader Vodafone.

TeliaSonera - the Nordic region's biggest operator - said its Eurasia unit, which includes countries such as Kazakhstan, Azerbaijan and Uzbekistan, would drive growth in 2010 while costs would be flat despite increasing capital expenditure, raising core profitablity slightly.

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"It won't be a big increase (in profitability)," Chief Executive Lars Nyberg told Reuters. "We are really talking about preserving the margin we have."

Earnings before interest, tax, depreciation, amortisation and non-recurring items were 9.0 billion Swedish crowns ($1.24 billion) in the fourth quarter, versus a forecast for 8.8 billion in a Reuters poll.

Sales were down 2 per cent year-on-year while costs fell 13 percent, mirroring the picture reported by Britain's BT which posted higher quarterly profits on Thursday despite falling revenues.

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Cautious optimism

While the economic picture remains murky - TeliaSonera said it expected a turnaround later this year or possibly in 2011 - continued cost cutting should preserve operators' profits.

Earlier this month Vodafone, the world's largest mobile operator by revenue, raised its outlook for 2010, while late in January Dutch firm KPN said it expected flat sales but improved EBITDA.

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Belgium's Mobistar, which also reported its results on Thursday, struck a gloomier note.

The firm, majority owned by France Telecom, forecast flat sales but lower profits this year due to planned investments and regulatory pressure on the industry.

TeliaSonera shares were up 1.3 percent at 1136 GMT against a 1 percent fall in the European telecoms index .SXKP. Mobistar shares rose a touch. BT stock, weighed down by worries over massive pension deficits, was down more than 8 percent.

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Sales growth

TeliaSonera said it expected net sales to grow slightly this year despite markets staying tough.

Nyberg said higher mobile penetration in Eurasia could mean growth will approach double-digit levels in the region in 2010.

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This, and a flat cost base, would mean the core profit margin would be somewhat higher in 2010 than the 33.6 percent achieved in 2009, the company said.

"If you look at TeliaSonera's guidance for 2010 it is somewhat positive," said one analyst who declined to be named.

The firm also raised its dividend by 25 percent and said in future it aimed to pay out at least 50 percent of net profit against its earlier target of at least 40 per cent.

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Foreign exchange movements hit sales and profit in the Eurasia unit in the fourth quarter, though both lines increased in local currency terms.

Sales were also down in the mobile and broadband services units. With the exception of Eurasia, sales falls were more than offset by cost cutting.

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