By Sven Grundberg
STOCKHOLM--Swedish telecommunications company TeliaSonera AB is
losing hope that it will be able to run its Spanish operation Yoigo
alone, and has embarked on yet another review on how to exit the
competitive and crowded Spanish mobile market.
"There are very few good options, if any, to on our own take
this asset to any greater heights," TeliaSonera's Chief Executive
Johan Dennelind told reporters Wednesday, as the Swedish operator
published its results for the second quarter.
TeliaSonera's Spanish business--a low-cost, mobile-only operator
that is run under the Yoigo brand name--has struggled to reach
profitability since its inception, and has only a 7% market share
in Spain. In the second quarter of this year, the unit--which is
the smallest independent operator in Spain-- recorded a 19.3%
annual drop in sales.
"We need well above 10% [market share] to reach sustainable
profitability," Mr. Dennelind said.
Spain's telecoms market has long been considered ripe for
consolidation, as Europe's vast number of operators look for merger
opportunities, but regulators have historically been unwilling to
let players tie up.
However, Vodafone PLC's agreement to purchase midsize Spanish
rival Ono SA earlier this year has been seen a first step in a
broader shake-up of the country's telecom industry. The deal was
greenlighted by the European Commission earlier this month, which
said the combined company wouldn't undermine competition in the
Spanish market.
Mr. Dennelind said he thinks operators are gradually meeting
fewer regulatory roadblocks in their attempts to merge.
"There seems to be a general acceptance for consolidation, at
least from four to three players [in each market]," he said. "There
are some precedents for consolidation now, and in very competitive
markets there will be less of an issue."
Yoigo was established in 2001 as a joint venture between Videndi
SA, a Spanish construction company and Sonera of Finland, which a
year later merged with Swedish firm Telia to create TeliaSonera.
The operator launched its services several years later, after
TeliaSonera in 2006 acquired a 77% stake in the business.
TeliaSonera has tried to extricate itself from the Spanish
business before. TeliaSonera withdrew an earlier auction process to
rid itself of Yoigo last year, in part because bidders were
unwilling to take the regulatory risk that the deal would be
blocked.
Citing poor performance for its unit in Spain, TeliaSonera cut
the overall revenue outlook for its business this year. The
Stockholm-based operator reported a 1.2% annual drop in quarterly
revenue to 25.02 billion Swedish kronor ($3.67 billion).
TeliaSonera has experienced sluggish growth in recent years,
amid is difficult economic conditions and shifts from voice
services to wireless mobile data. Earnings before interest, taxes,
depreciation, and amortization, or Ebitda, came in at 8.84 billion
kronor, down from 8.93 billion kronor a year ago, while net profit
fell to 3.55 billion kronor from 4.03 billion kronor a year
ago.
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