November 26, 2012 4:21 pm

Telia chief eyes exit as scandals take toll

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Lars Nyberg, CEO TeliaSonera Stockholm, Sweden©Johan Jeppsson

Lars Nyberg (above) is to be replaced temporarily by chief financial officer, Per-Arne Blomquist

Lars Nyberg has had a bruising past seven months. The chief executive of TeliaSonera was tempted out of retirement to take the top job at the Swedish telecoms operator in 2007, having been out of the job market for four years.

The thrill of attempting to turn round the company has been replaced this year with intense scrutiny of its fast-growing activities in undemocratic countries such as Uzbekistan and Belarus.

“The last seven months has not been so fun,” he says in an interview with the Financial Times at the group’s central Stockholm headquarters. The low point undoubtedly came from his six-year-old son. “My son said he saw me with the police [by my side] on the TV,” he says quietly.

Rumours have swirled around Stockholm that he could resign or even be fired, leading to the board last month reaffirming its confidence in him. But the 60-year-old, whose contract expires at the end of next year, says he could well leave earlier as the board also disclosed it has started a process to find his replacement.

“I think I will have to adjust to the circumstances,” he says, meaning that if his successor can start early, Mr Nyberg would then leave.

Telia has faced two separate fierce attacks this year. The first was over the Swedish group allowing authorities in Azerbaijan, Belarus and Uzbekistan to monitor traffic on its networks, causing outrage in Sweden.

The government, Telia’s biggest shareholder with a 37 per cent stake, has put freedom of expression at the heart of its foreign policy, leading to a high-profile dispute in Belarus. Stockholm chastised Telia publicly, forcing Mr Nyberg to say the company would improve its work on privacy and freedom of expression.

The second issue is potentially far more serious. A Swedish television broadcast claims that Telia had bought its telecoms licences in Uzbekistan from a company with ties to the president’s daughter. Mr Nyberg denies any corruption and has said Telia at the time tried but failed to establish if there were any beneficial owners behind the company. Swedish prosecutors are now investigating and Telia has instigated its own inquiry into what happened.

Mr Nyberg, in his first extended interview since the Uzbek allegations broke two months ago, says that much has changed in the five years since Telia bought its licence in the country, pointing to new bribery laws in the UK and Sweden.

“It is always simpler to have an opinion five years after ... What we did then was the general practice [and] I’m convinced it was within the law,” he says.

He calls corruption “a galloping disease” but says global efforts to crack down on it mean that Telia’s practices have changed recently.

“Five years ago you had to do something to break the law. The law now says if you don’t do something you might be breaking the law. It is a major difference. We have to do a lot more discovery [of documents]. We have to have all the paperwork,” he says.

Managers are now rotated more frequently from country to country, and Telia has implemented the same SAP software system around the world. Still, Mr Nyberg says: “My concern is that even with the new laws, if you follow them and go further there is still a risk that a power structure in a corrupted country somehow benefits ...” he tails off when obviously meaning a senior official.

Having outgrown its local Nordic market, Telia has expanded into central Asia with operations in countries such as Georgia, Kazakhstan, Moldova, Nepal and Tajikistan.

Shareholders have largely shrugged their shoulders about the controversies, preferring to focus on its plans to sell shares in the initial public offerings of Russia’s Megafon and Kazakhstan’s Kcell. Telia’s shares have risen about 3 per cent since the first allegations surfaced in April, slightly outperforming the broader Swedish market.

Mr Nyberg brushes aside the withdrawal of Goldman Sachs from the Megafon IPO and underlines how the flotation helps ease the situation at one of the two big problem children he inherited when he became chief executive. The other is Turkcell, Turkey’s leading mobile group, where Telia and its Russian partner have been in a long-running dispute with one of the country’s richest men over strategy and board influence.

Mr Nyberg is hopeful that a legal case in front of the UK’s Privy Council will resolve matters but he concedes it may be an issue for his successor. “I think there will be a resolution in Turkcell. [Will I still be CEO when it happens?] It depends on when I go.”

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