Telia Company Ab ((SE:TELIA)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Telia Company AB’s recent earnings call conveyed a generally positive sentiment, highlighting significant achievements in customer satisfaction, EBITDA growth, and the successful execution of its Change Program. Despite facing challenges in Norway that impacted service revenue and EBITDA growth, the overall tone of the call was optimistic, with the positives outweighing the negatives.
Improved Customer Satisfaction
Telia Company AB reported a continued improvement in its group-wide Net Promoter Score (NPS), with Telia Sweden receiving customer satisfaction awards and strong results in EPSI surveys in Finland and Norway. This improvement in customer satisfaction is a testament to the company’s focus on enhancing customer experience across its markets.
Free Cash Flow and Dividend Coverage
The company saw an increase in free cash flow, which successfully covered the SEK 2 billion dividend for the quarter. Telia also upgraded its full-year outlook for free cash flow to approximately SEK 8 billion, up from SEK 7.5 billion, indicating strong financial health and the ability to return value to shareholders.
EBITDA Growth and Margin Expansion
Telia achieved an EBITDA growth rate of 4.4% and expanded its margin by 140 basis points compared to the same quarter last year. This growth reflects the company’s effective cost management and operational efficiency.
Successful Change Program
The Change Program has led to tangible savings and improved operational efficiency for Telia, resulting in a reduction of employees and resource consultants by almost 25%. This strategic initiative has been instrumental in driving the company’s profitability.
Upgraded Full-Year CapEx Outlook
Telia lowered its full-year CapEx outlook from SEK 14 billion to around SEK 13 billion, demonstrating strong CapEx discipline. This adjustment reflects the company’s commitment to maintaining efficient capital allocation.
Successful M&A Activities
The company successfully closed a TV and Media transaction, signed a memorandum of understanding in Latvia, and launched an offer to acquire Bredband2 to strengthen its consumer business in Sweden. These strategic moves are expected to bolster Telia’s market position.
Challenges in Norway
Norway posed challenges for Telia, with negative service revenue and EBITDA growth due to lower mobile wholesale revenue and broadband and TV headwinds. The company is actively addressing these issues to mitigate their impact.
Service Revenue Decline in Norway
The decline in mobile wholesale revenue in Norway is expected to be around SEK 95 million in Q4, with fixed business headwinds being actively managed. Telia is focused on reversing these trends to stabilize its revenue streams.
Enterprise Revenue Decline in Finland
In Finland, service revenue trends showed a decline in the Enterprise segment, attributed to the discontinuation of noncore activities and a weak market. Telia is working on strategies to revitalize this segment and improve its performance.
Forward-Looking Guidance
Telia Company AB provided forward-looking guidance, highlighting a group-wide improvement in NPS and high customer satisfaction outcomes in Sweden, Finland, and Norway. Financially, the company reported a 1% growth in service revenue and a 4.4% increase in EBITDA, although slightly below their annual ambition. The full-year free cash flow outlook was upgraded to around SEK 8 billion, and the CapEx forecast was adjusted to around SEK 13 billion. Telia’s leverage decreased to 1.93x, supported by increased EBITDA and proceeds from divestments. The company emphasized its commitment to delivering profitable growth and shareholder value while maintaining operational efficiency.
In summary, Telia Company AB’s earnings call reflected a positive sentiment, with significant achievements in customer satisfaction, financial performance, and strategic initiatives. While challenges remain, particularly in Norway, the company’s proactive measures and forward-looking strategies position it well for continued growth and shareholder value creation.