Telia Company Ab ((SE:TELIA)) has held its Q1 earnings call. Read on for the main highlights of the call.
Telia Company AB’s recent Q1 2025 earnings call conveyed a balanced sentiment, reflecting steady growth in service revenue and EBITDA, alongside successful strategic divestments and environmental initiatives. Despite these positive developments, the company acknowledged ongoing challenges in the Norwegian and Finnish markets, particularly due to contract losses and declines in the subscriber base.
Service Revenue Growth
Telia reported a close to 2% growth in service revenue for Q1 2025, with significant contributions from Sweden, which saw a 2% increase, and the Baltic markets. This growth underscores the company’s robust performance in these regions.
EBITDA Growth
The company achieved an impressive EBITDA growth of nearly 7% this quarter. This was largely driven by strong performances in Sweden, Finland, and Lithuania, highlighting the effectiveness of Telia’s operational strategies in these markets.
Climate Transition Plan
Telia’s commitment to sustainability was underscored by its Climate Transition Plan, published in March, which aims to achieve net zero emissions by 2040. This initiative reflects the company’s dedication to environmental responsibility.
Free Cash Flow
Telia reported a free cash flow of SEK 1.7 billion for the quarter, with a target of SEK 7.5 billion for the full year. This financial metric is crucial for assessing the company’s liquidity and operational efficiency.
Leverage Decrease
Despite quarterly dividend payments of SEK 2 billion, Telia has successfully reduced its leverage to 2.18x EBITDA. This indicates a strengthening financial position and prudent fiscal management.
Sweden Network Award
Telia’s network in Sweden received global recognition, being ranked as a top 5 network by umlaut. This accolade highlights the quality and reliability of Telia’s telecommunications infrastructure.
TV and Media Business Sale
In a strategic move, Telia agreed to sell its TV and Media business to Schibsted Media. This divestment allows Telia to concentrate more on its core telecom operations, aligning with its strategic priorities.
Telia Towers Performance
Telia Towers has demonstrated robust growth, with EBITDA increasing by over 25% in the past three years. Managing over 8,000 sites, this segment continues to be a significant contributor to Telia’s overall performance.
Norway Service Revenue Challenges
In Norway, Telia faced challenges with service revenue growth remaining negative. While mobile growth was positive at 1%, it was offset by a decline in fixed service revenue, indicating areas needing strategic focus.
Finland Subscriber Base Decline
Telia Finland is experiencing a decline in its postpaid subscriber base, with service revenue growth at minus 2%. This trend highlights the competitive pressures and market challenges in Finland.
ICE Wholesale Contract Impact
The migration of the ICE wholesale contract in Norway is anticipated to initially worsen the EBITDA decline before improvements are realized. This transition poses short-term challenges but is expected to stabilize in the future.
Macro and Competitive Pressures
Telia is facing pressures from macroeconomic factors and competitive pricing, particularly in B2B customer segments. This environment necessitates strategic adjustments to maintain market competitiveness.
Guidance
Looking ahead, Telia’s service revenue growth of nearly 2% aligns with its full-year outlook and midterm ambitions, driven by Sweden and the Baltic markets. The company’s EBITDA growth of approximately 7% slightly surpasses its full-year target. Strategic milestones include the sale of the TV and Media business and the Climate Transition Plan aiming for net zero by 2040. CapEx is projected to remain below SEK 14 billion, with free cash flow targeted at SEK 7.5 billion for the year. Leverage has decreased to 2.18x EBITDA, showcasing financial resilience.
In conclusion, Telia Company AB’s Q1 2025 earnings call reflects a positive trajectory in service revenue and EBITDA growth, supported by strategic divestments and environmental commitments. While challenges persist in Norway and Finland, the company’s forward-looking guidance suggests a focus on strengthening core operations and maintaining financial stability.