Telia to announce write-downs on central Asian investments

By:
Alan Burkitt-Gray
Published on:

Second quarter results this week will show capital loss on Turkcell, reduced valuation on Ucell and ‘no recoverable value’ on Kazakh stake

Discontinued operations will hit Telia Company hard in the operator’s second quarter report, due out on Thursday.

The Stockholm-based operator is focusing on Nordic and Baltic markets after deciding to unwind and sell its central Asian operations. Problems with alleged corruption in Uzbekistan led the company to decide to sell them all.

Now the company is saying that it faces a capital loss of 1.8 billion kronor ($216 million ) on the divestment of Turkcell shares and an impairment loss of $180 million relating to its Uzbek operations.

“Due to increased regulatory and currency risks in Uzbekistan as well as an updated view of the valuation ranges for Ucell”, Telia says its best estimate of the risk adjusted debt-free value of Ucell has been reduced from 3.3 billion to 1.3 billion kronor ($396 million to $156 million) as on 30 June.

“The impairment has no cash flow effect,” said Telia in a statement. “Changes in any of the estimated risk adjustments made for Ucell would have a material impact on the estimated fair value. The most significant impact on fair value will be the buyer’s ability to operate in the country and convert local currency.”

Telia has also written down its holding in Kazakhstan company Rodnik, which owns KazTransCom, by the equivalent of $36 million. “The asset is no longer deemed having a recoverable value,” says Telia. “The write-down does not impact cash flow.”