Ladies and gentlemen, thank you for standing by, and welcome to the Telia conference call. At this time, all participants are in listen-only mode. There'll be a presentation followed by question and answer session, during which time, if you would like to ask a question, you can do so by pressing star one on your telephone keypad. I must advise you the conference is being recorded today, Thursday the 15th of September, 2016. I'd like to hand over to your speaker today, Johan Dennelind, CEO. Please go ahead.
Good morning from Stockholm. This is Johan Dennelind. I'm here with Jonas Bengtsson, our legal General Counsel. I will open with some brief comments, then Jonas will walk you through some of the process parts, and then I will conclude and open for some brief questions. Given today's release and the nature of the release, you will understand that we won't be able to comment much. Since we wanted you all to get a chance to hear from us, we decided to have a brief conference call. For those of you who have not read the release, let me just repeat the main content, and it reads like this: The U.S. and Dutch authorities have, since the spring of 2014, investigated historical transactions related to Telia Company's entry into Uzbekistan in 2007.
On the evening of 14th of September, i.e., yesterday, Telia Company received new information from the authorities with proposals from them for a settlement with the company. The information received was general and did not go into much detail but suggests a total settlement amount of $1.41 billion, approximately SEK 12 billion for all investigations. There is a quote from our Chairman. Let me just elaborate briefly. As you are aware, some of the Telia Company's historical transactions, which were made and approved by the former management starting 2007, at the time when the company entered the market, are under investigation in several jurisdictions, U.S., Netherlands, and Sweden. We have received proposal now from the authorities within amount of $1.4 billion for all investigations. The proposal covers, as far as we understand, all existing investigations across all jurisdictions. It is a very high amount.
The Board has convened during the night and will now have to analyze the information and decide how to proceed. We have, with information in hand, that we need to disclose to the market. We have on many occasions said that wrongdoings are costly. We have said repeatedly since we started that we cannot exclude legal actions, and wrongdoings and unethical behavior were certainly part of the previous decisions to enter markets. Telia Company acknowledged that and are ultimately prepared to take responsibility for the wrongdoings made at the time. Now, with the information at hand, the Board will have to analyze the information further and then decide how to proceed.
We would like to give you some further background on the process that we have had with the authorities at this moment in time, but please also be aware that this is information just received, and we need to understand this more in detail. With that, I will hand over to you, Jonas, to walk us through a little bit more on the process side and what has happened up to now.
Yes. Good morning, everyone. Let me then give you a relatively brief recap, which I think could be proper at a time like this, to remember what has happened and how the path up until today has been. In late 2012, the Swedish prosecutors started an investigation on whether or not there could be a criminal liability for certain individuals relating to then TeliaSonera's market entry and operations into Uzbekistan. The company started its own investigation to clarify this and engaged external law firm Mannheimer Swartling to go into and look into all details in what had happened. That report was made public and broadcasted live in all Swedish national media in January 2013. As a consequence of that, and the report, I should say, also contained serious criticism about the processes and the actions taken by then management and board.
As a consequence, the former management has left the company, and the new board of directors was elected at the AGM in 2013. The new board, headed by our chair, Marie Ehrling, has had as one of their main priorities to change the company fundamentally and strengthen its controls and processes and to cooperate fully with all investigating authorities to find out what has happened and who is responsible. In spring 2014, we were informed at the same day by the U.S., first the SEC, and a day later by the Department of Justice, and also by the Dutch authorities, that they too were investigating or looking into the same underlying transactions, i.e., then TeliaSonera's market entry and operations into Uzbekistan. The company immediately took the decision to cooperate also with those authorities and have done so since.
We have had and are having extensive cooperation with the authorities in providing information, searching for data, analyzing, providing that to the authorities, meeting them, helping out with questions, et cetera. During these now more than two years, we have had several meetings with the authorities and several document productions to them. We have also concluded and summarized our view and our understanding of what has happened and conveyed that to the authorities. As Johan informed you and as is stated in the press release submitted this morning, yesterday evening, we then received the information from the authorities on their view on how these investigations could be brought to a close by means of a settlement. That was not in full detail, and it is very recently received information.
As we have stated in the press release, the proposed settlement amount adds up to a total of approximately SEK 12 billion. That amount and that proposal, as far as we understood it from the information we received yesterday evening, covers all interest all authorities have in Telia Company activities. There is basically where we are now, I think.
Thank you, Jonas. Let me conclude, open up for questions. We just received this information, the board will now evaluate and analyze this, how to proceed. We will, of course, get back to you as soon as we have any more news. It was important for us to make sure that you got the same information as we at this time. Let me also pick up on some of the questions coming in from many of you. Let me clearly state that we have not changed anything with regards to our dividend and our dividend policy. With those concluding remarks, I will open up for questions.
Thank you. As a reminder, if you'd like to ask a question, say it star and one on your telephone keypad. To cancel a request, hit the hash key. Your first question comes to the line of Roman Arbuzov. Please ask your question.
Good morning. Thank you very much for taking my question. What is the scope, if any, for negotiation on the amount? Is it the type of situation where you either accept what's proposed or go to court essentially?
Thank you, Roman. I probably will say, I hope I don't have to say the same thing too many times, but at this time, we have just received this information, and we need to analyze and understand better how to proceed, and that's what the board is doing as we speak, of course. We will come back with any such further information when we know. If you want to mention anything else, Jonas, on that, please do.
No. I think it is fair to say that the only way to do it now is to understand it better, analyze the information, and then when we have better clarity, to decide on what is the right and proper response to the information we received. We simply are not there right now at this point in time.
Okay. Can I have a follow-up, please? I appreciate it's early days, but do you have any understanding in terms of how the number was arrived at and what are the calculations behind? In particular, I think it's natural to compare this number to what VimpelCom have come out with earlier this year, and they've come out with $800 million. For example, do you have any initial understanding in terms of why your numbers may differ so widely?
Roman, there are some, as we describe it in the press release, on general information, but doesn't go into much detail, and that needs, of course, to be part of our next step to fully understand and hear from the authorities the rationale behind the numbers. Then when we have that, of course, we will also then use that in our next communication with you.
Very much.
Your next question comes from the line of Thomas Heath. Please ask your question.
Thank you. Thomas Heath here with Danske Bank. A few questions, if I may. Firstly, if you would choose to go to court with this, is there any guarantee that the amount will not be even higher? Or is it possible that if you take this to court, the actual settled amount could be even higher? That's my first question. Second question, you say your understanding is that this covers all interests from legal authorities. Am I correct in understanding that covers all interest in all countries across the Eurasian footprint? Thirdly, can you say now if it has any impact on dividend payout for the coming year? Thank you.
Thomas, let me start from behind. We said that we have not changed anything with regards to our dividend. The second question, as far as we know, this covers all existing investigations from the authorities. Jonas, please elaborate if you want. On the first one, we don't want to speculate. That is part of our assessment. We have received this information late yesterday, and we feel obliged to disclose that and then come back to you as soon as we have more information on how we want to respond to this.
I think that's just to comment on that slightly, is that we understand that this proposal covers all interest, all the authorities has in Telia Company. There is no other interest that is not covered by the proposal we received yesterday evening.
Thank you. That's very helpful.
Your next question comes from the line of Mandeep Singh. Please ask your question.
Hi. Sorry to belabor this point, I think it's quite important. On the dividend, obviously you're not changing your dividend policy, but equally, you're saying it's too early to give us any final answers on the amount, how you may choose to settle this or contest it in court. Are you just really saying no change in dividend policy for now, or no change in dividend policy regardless? I think that's an important clarification. The second question I would like to do in the context of this, to what extent is this having any impact, or could you provide us just with an update on your disposable efforts on Eurasia? Thank you.
Yeah, I'm just going to repeat again that we have not changed anything with regards to our dividend policy, and I think you should take comfort in that. The second one, divestments, we have no updates. We are sticking to our previous communication that we believe that will be possible and doable within 12 months from when we announced it earlier this year.
Thank you.
Your next question comes from the line of Peter Nilsson. Please ask your question.
Thank you. Yeah, just one question, please. This is obviously a proposed settlement from the U.S. and the Dutch authorities. How about the Swedish authorities? The Swedish prosecutor's investigation, I believe, is still ongoing. May that also result in a separate settlement with the Swedish prosecutor? Thank you.
Thanks, Peter. Very good that you bring that up and let us clarify. Yes is the short answer, and the longer is from Jonas.
Sorry to bore everyone, as you may know, the Swedish legal system do not recognize criminal liability for legal entities, only for physical persons. The main bulk of the Swedish interest is towards establish whether or not there has been criminal liability on behalf of physical persons. You are right that the Swedish prosecutor has said that he is contemplating for future claim against Telia Company in the event of convictions against one or more individuals. The question about this is that the understanding we have from the information we received yesterday evening is that this proposal covers all such interest also. Again, I must stress that we received this yesterday evening and it's still relatively early hours in the morning after. We need to clarify more what exactly this means for all jurisdictions.
Okay. Very good. Thank you.
The next question comes from the line of Staffan Gossen. Please ask your question.
Yes. I think most questions have been asked, but given the large Swedish state ownership interest, this is in a way U.S. and Dutch authorities taxing Swedish citizens. Do you see that you could get political support in this matter?
This is not a political matter as far as I am concerned. No, this is something that we are dealing with the various authorities from the company.
Okay. Thank you.
Your next question comes from the line of Robert Florack. Please ask your question.
Hi, Robert Florack with Handelsbanken here. I just wanted to clarify one thing. When it comes to the countries in the press release you clearly talk about Uzbekistan. The other geographies, Azerbaijan and so forth, has there been any investigations that have been opened and then closed, or is it just that there's never been any investigation around other countries in Eurasia? Thank you.
Yes. Thank you for the question, Robert, and sorry to be a bit detailed here, but obviously, it's not in the nature of things that investigative authorities do not necessarily share whatever they investigate or not investigate with the parties they are investigating. Having said that, in spring, the Swedish prosecutor publicly announced that they were not investigating any other jurisdictions than Uzbekistan. To the best of our knowledge, there are no other interests from the other authorities either.
All right. Okay. Thank you much.
Your next question comes from the line of Johanna Ahlquist. Please ask your question.
Yes. Johanna Ahlquist with SEB. Two questions, if I may. The first one, how strong is the jurisdiction really for Department of Justice to have such a claim given that you are not a U.S.-listed company or even the company bought the license from at the time? Secondly, you state in the press release that the fine was higher than expected. I'm just wondering what did you expect? Thank you.
Johanna. Thank you. Jonas will cover the first one. The press release, I hope, doesn't say expected or anything. It just says that the amount is very high. That's the board's reaction, and we will make sure that is analyzed, understood, before we make any further comments. It's a very high amount.
Yes, on the jurisdictional point, as you of course know, all countries have their own rules on jurisdiction, and there are several grounds under which a country can establish jurisdiction over transactions or entities. Especially the U.S. have a relatively extensive view on their jurisdictional authorities. There are, of course, several arguments also then under U.S. law, under U.S. legal theory, under which the U.S. government can establish jurisdiction. We cannot at this time go into any details on that. Obviously there are some points that you could argue would point to that the U.S. has jurisdiction. There are also arguments going in the other direction. That is one of the questions we have been discussing in a constructive and good manner with the authorities, and yeah, I think that is all I can say about it right now.
Let me just say one more thing on the first one. I've, throughout the last two years, been very clear in all my answers on the topic of an amount, say that we don't know and we don't want to speculate, and therefore we haven't had an expectation per se. We just now state that it is a big number.
Okay, thank you.
[as please ask a question. Your line is now open.]
You can cut that one.
Okay. We thank you for your attendance, and we're happy to take further questions, of course, as normal through our IR team, and then we'll see you out there. Thank you very much.
Ladies and gentlemen, that does conclude the conference for today. Thank you for participating. We all disconnect.