TeliaSonera AB TLSN
Short TeliaSonera: disclosed Uzbekistan bribery is only the tip — ~SEK 17bn of suspect Eurasia/Nepal payments plus a multi-billion DOJ FCPA settlement threaten the dividend and cut stub fair value to SEK 27-29.
Thesis
Muddy Waters is short TeliaSonera because the SEK 3.1bn Uzbekistan bribery it has already conceded is a fraction of a far broader corruption problem spanning Uzbekistan, Azerbaijan, Kazakhstan, Nepal, Cambodia, Georgia and Russia, with roughly SEK 17bn (US$2.1bn) of suspect transactions identified plus a SEK 7.6bn contingent Azerbaijan put-option obligation. The firm argues that the board under Chair Marie Ehrling and CEO Johan Dennelind is running a 'passive cover-up' — refusing to release the Norton Rose Fulbright investigation, continuing accounting gimmicks that inflated 2013-14 EPS by 5.9% and 3.8%, and still paying dividends to unidentifiable beneficial owners. A DOJ FCPA settlement could exceed US$1bn, benchmarked against Siemens (1.2x corrupt payments) and Alstom (10x), and Eurasia/Nepal disposals would erase 33% of consolidated free cash flow, putting the dividend at risk and reducing the stub business to SEK 27-29 per share at 7.4x EV/EBITDA.
SCQA
TeliaSonera is a Nordic telecom that expanded aggressively into Eurasia and Nepal through joint ventures, acquiring licences and stakes via local partners tied to ruling families — Gulnara Karimova in Uzbekistan, the Aliyev regime in Azerbaijan, and similar counterparties in Kazakhstan, Nepal and Cambodia.
Disclosed Uzbekistan bribery of SEK 3.1bn is the tip of an iceberg — Muddy Waters identifies ~SEK 17bn of suspect payments across seven countries, plus accounting gimmicks inflating EPS, while the board refuses to release the Norton Rose Fulbright report and continues paying dividends to unknown UBOs.
Release the full NRF investigation, write down billions of SEK in assets that disguise corrupt payments, restate historical financials, cease all dividends to unknown beneficial owners, cooperate with DOJ and Swedish/Dutch authorities, and publicly prioritise compliance over short-term results.
Transparency lets investors price the tail risk properly; Muddy Waters values the post-disposal stub at 7.4x EV/EBITDA for SEK 27-29 per share (base/downside), well below the market, with FCPA fines estimated at SEK 12.5bn comparable to Siemens.
The three reasons
- 1
Uzbekistan is the tip — ~SEK 17bn (US$2.1bn) of suspect payments span seven Eurasian countries
- 2
DOJ FCPA settlement could exceed US$1bn; disposals erase 33% of consolidated free cash flow and put the dividend at risk
- 3
Board 'passive cover-up' hides the NRF report, keeps paying dividends to unknown UBOs, and uses accounting gimmicks
Primary demands
- Release the full Norton Rose Fulbright investigation report
- True up financial statements via write-downs of assets that disguise corrupt payments and restate historical results
- Adopt more conservative accounting policies (put option liability, minority interest treatment)
- Cooperate with authorities and pursue civil litigation against suspected wrongdoers
- Immediately cease paying dividends to joint-venture partners whose ultimate beneficial owners are unknown or suspect
- Adopt firm policy prioritising compliance and transparency over short-term financial performance
- Advocate for the release of imprisoned Azeri journalist Khadija Ismayilova
KPIs cited
Pattern membership
Where this document fits across the library's 12 rhetorical / structural patterns.
Precedents cited
- Sino-Forest Corporation (Muddy Waters' own fraud exposure)
- Siemens FCPA settlement (US$1.6bn on US$1.36bn corrupt payments)
- Alstom FCPA settlement (US$772m, 10x corrupt payments)
- Wal-Mart Mexico FCPA investigation
- BP Gulf of Mexico / Volkswagen crisis communication (Lord Browne BBC podcast)
Notable slides (5)
Notes
Open letter format addressed directly to 12 named directors c/o TeliaSonera AB, Stockholm. Hybrid between a letter and a short-seller research note: 12 pages of argument followed by Appendix A (country-by-country corruption refresher), Appendix B (red-flag matrix of SEK 3bn of questionable transactions), and Appendix C (valuation methodology with peer comparables). The letter is signed by the firm (Muddy Waters, LLC) rather than a named individual — no personal signature visible in the sampled pages. Tone is adversarial but framed as concerned shareholder advice; unusually quotes Lord Browne (ex-BP CEO) on crisis communication as a third-party counsel to management. Document is plain Times Roman text with footnote-heavy citations (47+ footnotes) — functional rather than designed; no charts, only text tables in appendices.