Company Trend Analysis - Still Work To Do For Telia In Eurasia - JUNE 2017

BMI View: The fact that Telia has only managed to sell two of its Eurasian assets since first announcing its strategy in September 2015 highlights the difficulty of finding willing buyers in tough operational environments. Only once all Eurasian sales will be finalised that Telia will be able to fully focus on its new strategy, focusing on the Nordics and convergence.

Telia has sold its 60% stake in Tcell in Tajikistan, to the Aga Khan Fund for Economic Development (AKFED), which already controlled the remaining 40%. A deal had been agreed in September 2016, but had been delayed because of a tax dispute between Telia and the Tajik government. This highlights the difficulties Telia has had in selling its Eurasian assets, part of its strategy since September 2015, as Tajikistan is only the second market where it has achieved a sale (see ' Economy, Ownership And Business Model Behind TeliaSonera Exit ' , September 18 2015). This in turn put some pressure on the company's ambition to fully refocus on its Scandinavian and Baltic subsidiaries.

Telia has discontinued its Eurasian operations, but it continues to be present in Azerbaijan, Georgia, Kazakhstan and Moldova, through its Fintur Holdings joint-venture with Turkcell, as well as in Turkmenistan and Uzbekistan. While the economic environment is improving, through amelioration in Russia which positively impacts the rest of the region, there have always been two major impediments to Telia's growth prospects in Eurasia. The first is ownership, as Telia, while having the controlling stake, never had full control of any of its operations, usually having to accept a stake from a government entity. This leads to the second impediment, the risk from corruption on its global operations, with the case in Uzbekistan a clear example. The carrier was fined USD1.4bn by US and Dutch authorities, with a more recent agreement reducing the fine to USD1bn (still tentative), and Telia wants to avoid similar situations potentially happening elsewhere. This is also one of the reasons why its main Nordic rival Telenor has also exited Eurasia (see ' Telenor Follows TeliaSonera Out Of Eurasia ' , October 5 2015).

Corruption An Issue
Legal Environment Operational Risk Index
f = BMI forecast. Source: BMI

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