Downgrading Telia to No-Moat From Narrow; Fair Value Estimate of SEK 31

During the early 2000s Telia overextended its operations, owning majority or minority stakes in telecom companies in countries like Nepal, Turkey, Russia, Uzbekistan, Kazakhstan, and Georgia, among many others. Telia’s management realized the lack of competitive advantages far away from home and began to shrink its operations, divesting most of these businesses in the past five years. Although now Telia remains focused on the Nordics and Baltics, it is still present in seven countries, something we believe creates inefficiencies. Telecom operators that remain narrow and focused on their home markets tend to performer better.