Impairment write-down of approximately SEK 3.4 billion of TeliaSonera International Carrier - no impact on cash flow
The annual impairment test required by International Financial Reporting Standards gives a recoverable value of TeliaSonera International Carrier’s net fixed assets, which is close to zero. As a consequence, a write-down of approximately SEK 3.4 billion will affect the result but not the cash flow in the fourth quarter of 2004. The remaining book value for TeliaSonera International Carrier will be zero.
That a careful reassessment of future year’s cash flows as a basis for the asset valuation of International Carrier would be finalized before the end of the year has been indicated in both the second and third quarter interim reports this year from TeliaSonera.
Two years ago International Carrier was a heavy loss maker. A major restructuring program was initiated. The restructuring has been carried out as planned. The scope and the strategy of the operation have been narrowed and focused. Today the business is EBITDA positive and the negative cash flow is almost eliminated. International Carrier is no longer a burden for TeliaSonera.
However, the operating environment within the sector has continued to deteriorate due to overcapacity and falling prices. As long as this environment prevails, it should not be expected that the financial performance of the International Carrier business will improve. In view of this, the book value of the business will be written down to zero. Nevertheless TeliaSonera will aim to further develop the prospects of the International Carrier business without changing its scope and strategy.
“The tough operating conditions with rapidly falling prices makes it difficult to improve the profitability to a level were we can defend the value in our books and that leaves us with no choice but to make a non-cash write-down,” comments Anders Igel, President and CEO of TeliaSonera.
For further information journalists can contact:
TeliaSonera´s Press Office, +46-(0)8-713 58 30
Statements made in the press release relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of TeliaSonera.