New strategy for Telia International Carrier
- Limiting operations to wholesale business aimed at large customers and the provisioning of services on the profitable parts of the wholly owned network.
- Extensive restructuring program. - Positive cash flow expected during 2003 adjusted for the restructuring charges.
- Restructuring provisions of approximately 3.5 billion SEK, will impact the results in 2002, mainly in the 3rd quarter.
- Write down of fixed assets by approximately 6.0 billion SEK in the 3rd quarter year 2002.
Telia´s President and CEO Anders Igel comments:
- The new strategy enables us to reach profitability and at the same time it gives us the opportunity to capture future market potential. It also makes it viable to turn the business around to positive cash flow during 2003 before the restructuring charges.
The development in the telecom market with lower expectations on broadband expansion, delay of 3G build out and insolvencies among carrier competitors has meant a dramatic development in the international carrier market. The turbulence has caused deterioration in market growth, increased market risk and lower asset values in the industry. Because of this market development it has been necessary to change the strategy of the Telia International Carrier business, which requires restructuring.
In the light of the market development, the Board of Directors of Telia today announces the decision to change the strategy for Telia International Carrier. The new strategy is the result of the earlier announced comprehensive review of Telia's international carrier business, carried out in order to clarify how the international carrier business can reach a positive cash flow as soon as possible.
The new strategic direction means that Telia International Carrier will focus on offering wholesale capacity and IP services to large customers over the profitable parts of the wholly owned European and the trans-Atlantic networks. Telia International Carrier will also continue to run the IP network and to maintain and operate its peering points and relationships in Europe and in the US. The international voice business will be focused to interconnect agreements and bilateral routes.
As a consequence of the new business focus the operations will be restructured. The restructuring program includes that Telia will close down its Asian operation, close down the national UK voice reseller business and discontinue to offer domestic US capacity services. The co-location business will be terminated. The number of commercial points of presence will be significantly reduced. Telia will centralise its resources for sales, finance, administration and customer care to Sweden. The refocusing means a substantial scale down of the number of offices, technical facilities, operation and maintenance contracts as well as leased lines.
The new carrier will be able to conduct global business with less than 50 percent of today's workforce of some 800 employees. The reduction will have effect on employees both inside and outside Sweden.
- In this context it is important to stress that the pace and magnitude of the restructuring actions will be governed by the existing customer obligations, Anders Igel continues.
The new international carrier operation is expected to reach a positive cash flow during 2003 adjusted for the restructuring charges.
The restructuring requires provisions of approximately 3.5 billion SEK, which will impact the results in 2002, mainly in the third quarter this year.
In the 2001 results Telia wrote down assets by 3.0 billion SEK given market conditions at the time. The market development and the limited scope of the new business have called for Telia to revaluate its assets. Hence, Telia will write down fixed assets by approximately 6.0 billion SEK in the third quarter 2002.
Telia is holding a press conference today at 10.00 at Telia VisionCenter,
Vitsandsgatan 9, Farsta, Sweden.
For further information journalists can contact:
Telia's Press Office +46 8 713 58 30
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