Telia Company Ab ((SE:TELIA)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Telia Company Ab presented a mixed sentiment, showcasing strong operational performance and strategic advancements, particularly in Sweden, with robust EBITDA growth and successful M&A activities. However, challenges in Norway and flat revenue in Finland posed significant headwinds, balancing the overall sentiment of the call.
Strong EBITDA Growth
The company reported an impressive EBITDA growth of 6.2% in Q2, slightly exceeding expectations. This growth was accompanied by an expansion of the EBITDA margin by 200 basis points, indicating efficient cost management and operational improvements.
Successful M&A Activity
Telia Company highlighted its successful M&A activities, including the closure of the TV and Media transaction and signing an MOU for exiting Latvia by 2026. Additionally, the announcement of a public tender for Bredband2 shares aims to strengthen its consumer business in Sweden.
Innovation and Partnerships
The company extended its NorthStar innovation program by partnering with the Swedish Armed Forces. This collaboration focuses on advancing secure communication and 5G applications, showcasing Telia’s commitment to innovation and technological advancement.
Strong Performance in Sweden
Sweden emerged as a strong market for Telia, with robust service revenue growth and the best net mobile subscriber intake in over five years. The consumer segment also saw a growth of 2.3%, reflecting the company’s successful strategies in this region.
Improved Free Cash Flow and Leverage
Telia generated a free cash flow of SEK 2.3 billion, with improved leverage at 2.09x. This was supported by EBITDA growth and proceeds from divestments, indicating a solid financial position and effective capital management.
Challenging Market in Norway
The Norwegian market posed challenges, with declines in both service revenue and EBITDA due to lower mobile wholesale revenue and broadband and TV headwinds. The company anticipates further difficulties in Q3, highlighting the need for strategic adjustments.
Flat Revenue in Finland
In Finland, service revenue remained flat, impacted by the ramp down of non-core activities and the loss of a large public contract. This affected net additions and churn, posing challenges for revenue growth in the region.
Headwinds in Macroeconomic Growth
Enterprise growth faced challenges due to low macroeconomic growth, particularly in Finland and Norway. This poses difficulties for future revenue stabilization, requiring strategic initiatives to overcome these hurdles.
Forward-Looking Guidance
Telia Company maintained its full-year outlook largely unchanged, with a focus on continued EBITDA growth and strategic investments. The company aims to keep CapEx under SEK 14 billion annually and improve free cash flow, supported by asset divestments and strategic acquisitions like the Bredband2 shares. The expansion in convergence remains a priority, with converged customers now making up 57% of its base.
In conclusion, Telia Company’s earnings call reflected a balanced sentiment, with strong growth and strategic advancements in Sweden countered by challenges in Norway and Finland. The company’s focus on innovation, strategic M&A activities, and financial discipline positions it well for future growth, despite the macroeconomic headwinds.