Telia posts $908m loss due to Uzbekistan settlement

By:
James Pearce
Published on:

Swedish firm saw Q3 profits plummet after US and Dutch authorities imposed fine following investigation into Uzbek activities

Telia has seen a huge plunge in profits in its third quarter results after taking a SEK12.5 billion ($1.4 billion) hit due to it past dealings in Uzbekistan.

The Swedish firm saw a Q3 net loss of SEK 8.8 billion ($908 million) for the quarter ending 30 September, compared with a net profit of SEK4.5 billion ($505m) in the same quarter in 2015.

The drop in profitability was linked to corruption allegations surrounding Telia’s entry and operations in Uzbekistan, with a settlement proposal announced in September following a US and Dutch investigation.

CEO Johan Dennelind admitted the provisions had “severely impacted” the quarter’s results, but could not say when the discussions would conclude.

“We have been aware of the US and Dutch interest since March 2014, and have from the beginning cooperated with all authorities,” he explained. “Our discussions with relevant authorities continue with the goal of achieving a resolution that will be in the best interest of our shareholders. It is at present not possible to make a certain assessment on the final outcome or time for resolution, but we believe we are approaching the end of these investigations.”

The Uzbekistan scandal dates back to what was then TeliaSonera’s acquisition of Uzbekistan operator Coscom – later rebranded as Ucell – in July 2007. TeliaSonera "did not conduct a sufficiently in-depth analysis into the identity of our local partner in Uzbekistan before we invested in the country or into how this partner came to own the assets that were later obtained by TeliaSonera", said then CEO Lars Nyberg in his 2013 resignation statement.

A report by Swedish Television in September 2012 alleged that TeliaSonera paid $320 million for its Uzbekistan licences through Gayane Avakyan, an Uzbek woman in her late 20s described as having "close ties" to Gulnara Karimova, the daughter of Islam Karimov, who had been president of Uzbekistan since 1991. Karimov died on 2 September 2016.