Sweden Requests Change of Chairman at Telia

(Bloomberg) -- Telia Co. proposed replacing Chairman Marie Ehrling with Swedish industry veteran Lars-Johan Jarnheimer after its largest shareholder, the Swedish state, requested a change of board leadership.

The government has called for the company to hold an extraordinary general meeting to appoint a new chairman, according to a statement on Sunday. Ehrling has been in the position since 2013.

“Lars-Johan is strongly business minded and has extensive experience within telecommunications,” Daniel Kristiansson, the head of Telia’s nomination committee, said in the statement.

The move coincides with the departure of Telia Chief Executive Officer Johan Dennelind, who announced in August that he would leave after six years at the helm, and raises questions about the company’s move into media content, a key part of the strategy pursued by Dennelind and Ehrling.

Telia’s acquisition of Bonnier AB’s TV operations was widely criticized by government representatives as well as opposition parties, and the reshuffle “raises uncertainty” about how Telia’s new management and board will act in relation to the purchase, DNB analyst Stefan Gauffin said in a note. The deal is currently under a European Commission review.

“It is a question whether the state also will push for a breakup of Telia Sweden into an infrastructure company and a commercial company focusing on the end users,” Gauffin said. A split could open the way for the government to divest its share in Telia’s consumer-facing business while maintaining control over network assets seen as important for national security.

Telia gained as much as 3.7% on Monday, the most in 15 months. Shares had been little changed so far this year before Monday, while the benchmark OMX Stockholm 30 Index had gained about 21%. Since Ehrling became chairman in April 2013, the stock is down 6.8%. In that period, the OMXS30 index has gained almost 42%.

Jarnheimer, 59, was CEO of Telia rival Tele2 AB between 1999 and 2008 and has served on boards of companies including Millicom International Cellular SA, Modern Times Group AB and SAS AB.

Start Immediately

In an interview with Dagens Industri newspaper, Ehrling said she had planned to step down as chairman at the annual general meeting in the spring of next year. She said it was up to the Swedish state to comment on the reasons for the change, and said Jarnheimer is “a very good choice” of successor.

“It is important to enable the new chairman to start his work immediately, and hence, the state has chosen to call an extraordinary general meeting,” Minister of Enterprise Ibrahim Baylan said in an email. “Ehrling has done admirable work for the company during many years.” The government’s stake is about 38%.

Telia, is currently run by Chief Financial Officer Christian Luiga as acting CEO. According to Ehrling’s interview with Dagens Industri, that process of finding a permanent replacement is now almost completed and should be concluded before she departs.

Dennelind and Ehrling were brought in after Telia’s reputation had been tarnished by revelations of corruption in Uzbekistan, and led a retreat from Central Asia to focus on Nordic expansion.

Media Push

Keen to add media and content to Telia’s broadband, cable and mobile businesses, Dennelind oversaw a 9.2 billion-krona ($953 million) bid for Bonnier’s television operations, including TV channels and video-streaming services such as Sweden’s TV4, MTV in Finland and C More. In its third-quarter report on Oct. 17, Telia said it expects the European Commission to have made its final decision on that deal by Nov. 19.

Under Dennelind, Telia started to exit markets such as Azerbaijan, Georgia and Kazakhstan. That marked a U-turn by the former Swedish phone monopoly, which under Dennelind’s predecessors Lars Nyberg and Anders Igel had pushed into the former Soviet Union, back when western companies were attracted to its political opening in the 1990s.

Late last year, Dennelind announced the sale of Telia’s stake in Uzbekistan’s Ucell, which marked the final exit from a venture that led to penalties of almost $1 billion to U.S. and international authorities to settle a graft probe.

To contact the reporters on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net;Niclas Rolander in Stockholm at nrolander@bloomberg.net

To contact the editors responsible for this story: Jonas Bergman at jbergman@bloomberg.net, ;Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Jennifer Ryan, Thomas Pfeiffer

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