Telia Company service revenue recovers from Q1 decline

Allison Kirkby.jpg

Telia Company saw service revenue increase 3.2% in Q2 to reach SEK 18.9 billion, following a decline of 2.3% in Q1.

The results also confirmed an increase in net sales of 4.9% like for like and 0.5% compared to Q1, driven primarily by the TV and media division of the business, and through growth in mobile.

For the half year, net sales declined 1.1% to SEK44 billion while like for like net sales increased 2.4%. Service revenues decreased 3.1% and like for like, service revenues increased 0.4%.

President and CEO Allison Kirkby said: "We continue to be the undisputed market leader in Sweden and the Baltics. In Sweden we saw a broad-based positive development on all leading indicator KPIs such as subscriber base, ARPU, and churn during the quarter, in both the enterprise and consumer segments. Excluding legacy products and one-off items Sweden delivered service revenue growth of 2% in the quarter and flat EBITDA, the latter a clear improvement from the 5% decline in Q1.

"Especially pleasing were the mobile trends, where the enterprise and consumer segments showed mobile subscriber service revenue growth of 2.5% and 2.1%, respectively. The Baltics accelerated prior quarter’s strong performance as we saw less roaming headwind, with service revenues growing mid-single digits and EBITDA growing by 12% and 4% in Estonia and Lithuania, respectively."

In its challenger markets, Kirkby said the business was seeing growth in the mobile customer base in the Norwegian enterprise segment while the consumer mobile customer base stabilised. On the former, the firm has recently won contracts with the Norwegian postal service – Telia Norway’s largest contract to date - as well as the renewal of an existing contract with the Norwegian broadcaster NRK.

However, while Kirkby said TV and media had had "another excellent quarter", wholesale activities proved to be a drag on the results.

Overall service revenues saw a 1.5% decline due to a negative wholesale impact, with the latter "partly masking clear core business progress and improvement from the 3.5% decline in the prior quarter", Kirkby said.

In Denmark, EBITDA was "temporarily weak" but KPIs on underlying subscriber base and churn managed to turn things around towards the end of the quarter.

Meanwhile, Finland had "a tough quarter" as service revenues declined and "an unexpectedly high cost-base led to a clearly unsatisfactory EBITDA decline", Kirkby said.

"While we have made progress on simplifying our portfolio by divesting non-core assets, such as the Alerta alarm business, there is a clear need to accelerate network modernization and digitalization to drive improved customer experience and a better brand perception," Kirkby added, however, there are more changes to come.

She continued: "Concurrently, we continue to review, and have plans to radically reduce the cost base in the coming months."

On 5G, Telia Company now offers services in 22 cities in Sweden, while in Finland and Norway its 47% and 25% 5G population coverage respectively includes 95% population coverage in the largest cities. In Estonia Telia Company is the sole 5G provider. 

The outlook for the full year is unchanged.