Sweden’s biggest mobile operator, Telia Co AB, faces an uphill battle to further trim its cost base after the announced departure of its chief executive by the end of January at the latest.
(Bloomberg) — Sweden’s biggest mobile operator, Telia Co AB, faces an uphill battle to further trim its cost base after the announced departure of its chief executive by the end of January at the latest.
Allison Kirkby will end her tenure at the 150-year-old Swedish carrier part-way through a corporate restructuring plan centered on cost savings and slashing debt. While results in the core telecom operation have held up well in recent quarters, a downturn in the advertising market continues to weigh on its TV & Media division.
“The surprise resignation of Telia’s CEO Allison Kirkby adds execution risk to what we saw as an already-stuttering multiyear cost-transformation program,” Bloomberg Intelligence analyst Tom Ward said in a note.
Telia has lost about 30% of its market value under Kirkby’s leadership and its shares are now trading at their lowest level since 2002. The stock price fell as much as 4.4% on Monday in the wake of her decision to take the helm at BT Group Plc.
One of Kirkby’s key tasks in her three years as Telia CEO has been to cut costs as part of a wider transformation plan into a digital media company. In December 2019, two months after Kirkby was tapped to lead the firm, the group completed the acquisition of Sweden’s biggest commercial TV station, TV4 and its C More streaming platform.
But Telia’s entry into the TV market continues to be marred by challenges including falling advertising revenues and questions over the strategy of its premium sports offering.
The outgoing CEO’s “focus has been on improving the core telecom operations of Telia, which she has done with good results,” wrote Pareto Securities analyst Stefan Ward, who rates the stock a buy. “However, other areas of weakness (such as TV & Media) have overshadowed the positive results.”
Telia traces its roots back to 1853, when the company was founded as a government-run telegraph company—in a similar vein to Kirkby’s new employer in the UK. The Swedish state still owns roughly 40% of the carrier.
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