TeliaSonera has responded to an open letter Muddy Waters sent to its board of directors. The notorious short-selling firm, which is led by Carson Block, revealed earlier this week that it is shorting the company’s stock and accused management of withholding information from investors. However, management said they don’t “recognize” the conclusions drawn by Muddy Waters.
TeliaSonera cooperates with probes
In a press release this morning, TeliaSonera management reminded investors that they have been fully cooperating with the continuing investigations in the U.S., the Netherlands and Sweden. They added that the company is “as open and transparent as possible with respect to listing requirements and the investigations.”
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TeliaSonera also said that through today, it had not received any claims from officials in the U.S. and that it can only revise its financial statements if or when any claims materialize in the U.S. The company said that its financial statements are currently prepared according to International Financial Reporting Standards and that Deloitte is its auditor under the International Auditing Standards.
Muddy Waters lodges complaints against TeliaSonera
The company’s comments were in response to Muddy Waters’ accusations that TeliaSonera hasn’t published “the likelihood” that its operations in Eurasia and Nepal face problems that are similar to those in its Uzbekistan business. It’s alleged that the company corruptly paid more than 3.1 billion Swedish Krona in Uzbekistan.
Also Muddy Waters claims that Uzbekistan “appears to be only the tip of the iceberg. The firm said it is estimating “perhaps conservatively” that the company might have made more “corrupt payments” of more than 17 billion Swedish Krona in Nepal and Eurasia. Further, Muddy Waters thinks TeliaSonera “is potentially obligated” to pay more money to a “problematic” Azerbaijan partner.
The firm listed four possible implications for investors as a result of what it alleges is the company’s failure to report more information to investors. The first deals with cash flow, which could impact whether TeliaSonera can pay the promised dividends and further affect its credit profile. Second, Muddy Waters thinks the company will have more legal liabilities, possibly including the U.S. Department of Justice. Third, the firm accused management of not appearing “to be capable of dealing with the significant challenges posed by TeliaSonera’s corruption issues.” And finally, the firm thinks the company “is a mediocre operator” in its northern European operations, as sales there have fallen since 2009.
Shares of TeliaSonera closed down 3.69% at 41.75 Swedish Krona per share at the Stockholm Stock Exchange on Thursday.