Telia reduces turnover but increases operating profit: “Mobile business was stable”

Operating profit increased.

Turnover fell 1.9 percent to SEK 21,274 million (21,697). The outcome can be compared with the Bloomberg analyst consensus, which was 21,984. On a comparable basis, revenues decreased by 1.3 percent.

Service revenue increased 1.5 percent to SEK 18,634 million (18,359). On a comparable basis, service revenue increased by 2.2 percent.

“In Sweden, fixed service revenue drove our growth during the quarter, and in particular Telia’s leading TV experience which has enabled price change opportunities over the past 12 months, while the mobile business was stable. Consumer business continued its positive trend for both NPS and service revenue, which increased by 5.0 percent. This was supported in part by our work to improve customer service, with record low volumes of inbound contacts for the consumer segment which in March saw a 40% decrease compared to three years ago,” writes the CEO Patrik Hofbauer in the report.

Adjusted ebitda result amounted to SEK 7,144 million (6,912), expected 7,197, with an adjusted ebitda margin of 33.6 percent (31.9).

The operating profit was SEK 2,284 million (1,768). The operating margin was 10.7 percent (8.1).

Adjusted operating profit amounted to SEK 2,675 million (2,472), expected to be SEK 2,346, with an adjusted operating margin of 12.6 percent (11.4).

The profit before tax was SEK 1,022 million (926).

The profit after tax was SEK 757 million (738).

Earnings per share amounted to SEK 0.15 (0.15).

Operating free cash flow improved to SEK -779 million (-3,620) and the structural part of Operational free cash flow decreased to SEK 413 million (613).

TV and Media’s advertising revenue fell by 6.3 percent in the quarter and is attributed to weak market conditions. At the same time, they were lower than in previous quarters and were compensated by 5.2 percent growth for pay-TV revenues.

Net debt/adjusted ebitda amounted to 2.43x at the end of the quarter.

Strengthened the balance sheet

The outlook for the full year is unchanged.

“Operational momentum continued in the first quarter, with growth across all telecom businesses and progress on the turnaround of TV and Media. The development of NPS and service revenue in the consumer segment has been encouraging. Directly after the end of the quarter, the sale of Telia Danmark was closed as expected, which strengthens our balance sheet,” writes CEO Patrik Hofbauer.

Hofbauer provides a forward-looking view.

“The focus during my first quarter as CEO has been to analyze the business and build our medium-term plan together with our business unit leaders. I have seen a company with impressive assets and a committed organization, and with a strategy that is sound in all essential aspects, our goal is to eliminate obstacles and complexity, so that Telia can become simpler and faster in decision-making and commercial execution. If we are successful in this, we expect to be able to grow our cash flow to above our current dividend level in the coming years. We plan to share more details about our medium-term ambitions after the summer.”