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Sonera, the leading Finnish mobile phone operator which is locked in a dispute with the Latvian government over its stake in the state-owned fixed-line carrier Lattelekom, reported on April 23 a 64 percent rise in first quarter net profits, to 270 million euros ($240 million).
The group, which is set to merge with Sweden's Telia, registered a profit of 165 million euros in the same period a year ago.
Sales in the first quarter rose by 2 percent to 536 million euros, with Sonera's 2.5 million domestic mobile phone subscribers providing the bulk of the increase.
"The results slightly exceeded our estimates, with the domestic mobile phone division performing better than we expected," said Karri Rinta, a telecom analyst with Evli Bank.
Sonera's share price dropped 2.23 percent in Helsinki following the news to 5.29 euros.
The first-quarter earnings report from the state-controlled operator - the Finnish government owns 52.8 percent of Sonera - indicated it had managed to get its swelling debt under control and analysts said the group was on the path to recovery.
"Overall it was a positive result and a definite sign that Sonera is back on track," Rinta said.
Sonera almost went bankrupt last year after investing heavily in Internet ventures and next-generation (3G) mobile phone operators, paying over 4 billion euros for stakes in 3G licenses in Italy, Germany, Norway and Spain.
As a result, its debt swelled to 5.66 billion euros in March 2001, but shrank to 2.44 billion in March this year after sales of stakes in GSM operators in the United States and Hungary and a 1 billion euro rights issue.
However, Sonera's results continue to be dragged down by investments in 3G and Turkish and Russian GSM operators. Losses from associated companies grew to 89 million euros in the first quarter, from a loss of 39 million euros in the same period last year.
Sonera and Telia will merge later this year to create the biggest telecom operator in the Nordic-Baltic market. With a combined market capitalization of about 18 billion euros, the merged group would have had sales of 9 billion euros in 2001. It will employ some 34,000 people.
Sonera owns the Danish firm Tilts, which has sued the Latvian government because of its intention to liberalize Latvia's fixed-line market next year. The government had originally agreed to keep the market closed until 2010.