Sonera results beat expectations

Sonera predicts a better future as it focuses on it core

Finland's largest telecom operator, Sonera, has revealed an overhaul of its business strategy, after plunging into the red.

Sonera said it would refocus on its domestic market, cap spending on European third-generation (3G) networks and reduce debt through the sale of non-core assets and a 1bn euro rights issue.

In the July to September quarter, Sonera recorded a pre-tax loss of 352m euros, down from a 781m euros profit the previous year, despite a 7.6% rise in sales to 549m euros.

The price of Sonera shares initially dropped 7% on the news but quickly climbed back to its previous level of 4.02 euros.

New strategy

The Nordic operator has invested 4bn euros in 3G in Germany, Spain, Italy and Norway, and has funded various high-tech start-ups catering to the new phone services.

Kaj-Erik Relander resigned as chief executive

But the firm said it had decided not to inject any extra cash in the German 3G consortium and to limit investment in Italy and Spain.

The moves follow a difficult year for Sonera, in which the chief executive resigned, thousands of jobs were cut and shares plunged on worries about its huge debts arising from 3G investment.

Sonera, in which the Finnish state has a majority stake, is a leading developer of mobile e-commerce applications, and dominates the sector in a country with one of the highest rates of mobile phone usage.

Better times ahead

Sonera said it expected smaller losses from associate firms in 2001, and higher profits in its key Finnish mobile operations.

But it expects a fall in revenue growth in 2001, Monday's statement added.

The company said it was also planning to reduce debt through disposals of selected non-core assets, including the sale of its remaining 38.6 million shares in Deutsche Telekom.

"To reduce our debt and reallocate our assets Sonera will continue to implement a program of divesting selected non core assets," Harri Koponen, Sonera's president and chief executive, said.

Sonera also announced a 1bn euro rights issue, in which the Finnish government said it would take full part.