Telia Company offloads Swedish tower stake as it "returns to growth"
Telia Company's financial results, released today, have detailed further tower sales and the impact of Europe's energy crisis on performance, as president and CEO Allison Kirkby said it has "returned to growth".
The company is offloading a 49% stake in its Sweden tower business to Brookfield and Alecta following similar deals in Finland and Norway back in June. Telia Company said it expects to receive €526 million, valuing the unit at €2.6 billion ($2.9 billion).
Kirkby said: "Telia has a clear strategy to develop and crystalize its digital infrastructure by joining forces with strategic partners that have a similar long-term view of the value of these assets, and bring unique operating and commercial expertise to Telia. We are therefore delighted to expand our partnership with Brookfield and Alecta to also include our towers in Sweden.
"This transaction yet again clearly demonstrates the value of, and our leadership in, digital infrastructure. We firmly believe tower infrastructure is an essential foundation for the continued digitalization of the Nordics and Baltics and together with our partners we are committed to develop that digital infrastructure further.”
The June transaction completed in December and this latest sale is expected to complete "during 2022". The board will propose to return the net proceeds of the transaction to shareholders, after the expected completion, as Telia Company is operating in the lower part of its net debt / adjusted EBITDA target range
Earlier in January, Telia Company entered into an agreement to sell Telia Latvija for €10.75 million.
Rounding off the eventful quarter, Telia Company's financial results confirmed growth in both revenue and EBITDA, according to Kirkby, while reported total net income for the quarter amounted to just under SEK1.2 billion and service revenues stood at SEK19.4 billion.
Service revenue growth was driven by the Baltics and TV and Media, while structural cost reductions continue, and "as we absorb a full quarter of premium sports rights, our EBTIDA remained unchanged". The core telco business, excluding the TV and Media unit, grew EBITDA by 3%.
Results in challenger markets were "mixed but with some positive signs". On this front, Norway saw service revenue increasing to 2.6% growth, despite what was referred to as the "drag from our wholesale business". Both the consumer and enterprise segments saw growth of 3-5%.
EBITDA declined by 3.6% but was stable excluding the wholesale business.
In Finland, where service revenue declined 2.8%, the results remained below last year but with "trends starting to materialise". But consumer post-paid ARPU saw an increase, albeit small, attributable to new value-oriented strategy and 5G migrations, as well as a positive shift towards lower cost and digital sales channels.
Europe's energy woes
While declining legacy businesses muted some results, Telia Company said Europe's rising energy costs were also posing issue, weighing down the impact of digital transformation initiatives.
Telia Carrier said the turnaround is expected to take until the second half of 2022, as "we are prioritizing longer-term levers over quick fixes".
In Denmark trends were similar to the previous quarter with stable service revenue but EBITDA declined, again, mainly on the back of higher energy costs.
Commenting on the full results, Kirkby said: “One year after setting out our plan to reinvent Telia and make it better for our customers, our employees, our owners and the societies of the Nordic and Baltic region, we are boldly moving forward.
"We have returned to growth on both revenue and EBITDA, we have secured our network leadership, we have laid the foundations for a sustainable digital transformation of the whole of Telia, and we remain a sector leader in responsible business. We are also on track to create the region’s first meaningful tower company with an enterprise value of €2.6 billion, in partnership with one of the world’s largest owners and operators of towers, and we have deleveraged our balance sheet.
"We are proud that whilst we are in the midst of a comprehensive upgrade of our networks, while simultaneously modernizing and digitizing our many customer experiences, we have delivered on our outlook, and generated operational free cash flow that fully covers both our heightened investments and our progressive dividend," she added.