Board of Directors’ Report

A new Teliasonera is taking shape

For TeliaSonera, 2015 was a year of tough challenges and crucial decisions on the future direction of the company, but also one when we made several new exciting investments. We have taken important steps to achieve our vision to become a New Generation Telco.

The pace of digitalization continued to accelerate in 2015. This has an impact on us all. The influence of data transmission and data management will revolutionize large parts of society during the next few decades. While the possibilities are endless, this also put new demands on companies such as TeliaSonera. This trend is indeed in line with our strategic direction and TeliaSonera will continue to focus on the best connectivity and develop new services for our customers whilst we simultaneously invest in new initiatives in areas that supplement and strengthen our operations in our biggest markets.

During the year, we have chosen to clarify TeliaSonera’s focus on its home markets in the Nordic and Baltic countries. Northern Europe is today one of the most connected regions in the world, and the mature markets are characterized by intense competition, high quality, and conscious customers. At the same time it is the region with the highest demand for new services and solutions.

We have strengthened our position in the Nordic and Baltic countries for example by combining TEO and Omnitel in Lithuania, and we have carried out a successful acquisition on the Nordic markets. We will continue to seek synergies on our markets and are positively disposed to the continuing consolidation trend.

We have deepened our cooperation with Spotify in order to improve knowledge transfer between the two companies. Innovative cooperation initiatives increase our attractiveness and allow us to offer our customers a more comprehensive service portfolio. We believe that this will make customers select us and stay with us, and allow us to provide more services to them.

When we made the decision to withdraw from the countries of region Eurasia over time, we passed a milestone in TeliaSonera’s history. There were several parameters to take into account, and various interests and arguments to consider. TeliaSonera has felt a great responsibility to make fundamental changes in the operations in Eurasia. Extensive improvements have also been made during the recent years in areas related to human rights and anti-corruption. This has required major training efforts, new guidelines and frameworks, controls and conscious leadership, which have changed the culture from top to bottom, from inside to outside. It has taken time to implement the changes, but without them, the Board could not have decided to withdraw from the region over time.

It is possible to conduct business on problematic markets, and companies with a strong conviction and clear values are needed in these countries. However, this sets high requirements for internal rules, control and monitoring. Unfortunately, TeliaSonera once established itself on several of these markets in a way that is not in harmony with the company’s present view of ethical and responsible business operations. The conclusion we have come to in the course of the work we have done shows clearly how important it is to act in the correct way from the very beginning, when entering new markets.

Now we can state that a new TeliaSonera is shaping up. In order to retain our competitiveness, we must be able to detect opportunities, develop our competence and cope with challenges as regards business models and investment needs. Such a setting is ideal for a strong-willed telecommunications operator wanting to break new ground.

On behalf of the Board of Directors, I wish to thank the shareholders for being entrusted with the task of leading TeliaSonera and all the employees for their great efforts during the year.

Marie Ehrling

Chair of the Board

 

 

TeliaSonera reports its financial results by the two operating segments region Sweden and region Europe. The regions are country-based organizations, and for which certain financial information is reported. Collectively reported as Other operations are the international carrier operations, customer financing and dunning operations, TeliaSonera Holding, TeliaSonera’s shareholdings in Russian MegaFon (25 percent) and Turkish Turkcell (38 percent) as well as Group functions. Group functions include Communications, Corporate Development (including M&A), Finance (including Procurement and Real Estate), Human Resources, Legal Affairs, Commercial and Technology (including IT), CEO Office, Ethics and Compliance Office and Internal Audit.

In this Report, prior periods have been restated to reflect the discovery of certain classification errors between net sales and cost of sales referring to supplier rebates in region Europe. Further, restatements impacting external service revenues in region Sweden and region Europe have been made to reflect a new product classification.

As of December 31, 2015, the former operating segment region Eurasia is classified as held for sale and discontinued operations and therefore not included in the segment information and presented as a single amount in the consolidated statements of comprehensive income. Assets and liabilities in region Eurasia are presented separately in two line items in the consolidated statement of financial position for 2015. The consolidated cash flow statements are presented including region Eurasia, but with additional information for certain line items. Where appropriate, comparative periods have been restated to reflect the exclusion of region Eurasia from continuing operations.

For additional information on restatements and classification, see Notes C1 and C34 to the consolidated financial statements.

In this Report, comparative figures are provided in parentheses following the operational and financial results and refer to the same item in the full year of 2014, unless otherwise stated.


© TeliaSonera 2015
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