Telia Company

Telia Company's SEK 600m Covid hit softened by new contracts

21 October 2020 | Melanie Mingas

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Telia Company has reported an estimated SEK 600 million impact on service revenues from Covid-19 due to lower roaming and advertising income.

However, president and CEO Allison Kirkby (pictured), said that decisive action had shielded the company from further fall out and that it is now on track to end 2020 “at the upper end of our guidance range”.

“It has been a busy quarter for Telia Company, as we embark on a journey to restore Telia to a thought leader that outperforms the industry by delivering superior customer experiences and superior business results,” said Kirkby.

In the third quarter, net sales increased 2%, with like for like net sales down 3.7%. Operational free cash flow fell to SEK 3,732 million and cash flow from operating activities fell to SEK 7,392 million.

Service revenues grew 2.2% to SEK 18,733 million and like for like, service revenues declined 4.8%.

“I am very proud that we are successfully striking the balance between supporting our customers and society in a time of great uncertainty and delivering on our short-term financial commitments, while preparing the strategic roadmap that will deliver sustainable, long term value for shareholders,” Kirkby added.

Calling the Q3 results “encouraging”, Kirkby said that while service revenues declined by 4.8% year on year to SEK 18.7 billion as a result of lower roaming and advertising income, Telia Company still delivered an EBITDA of SEK 8.2 billion, a level similar to the same quarter last year.

Further, Cash CAPEX in the quarter amounted to SEK 3 billion and operational free cash flow to SEK 3.7 billion.

“We have now generated SEK 9.2 billion in operational free cash flow so far this year, and even though the fourth quarter typically is weaker from an operational cash flow perspective, we expect to end the year at the upper end of our guidance range,” Kirkby said.

Looking at the year to September, net sales increased 4.1%, while adjusted operating income fell 14.5%. Total net income fell to SEK 1,689 million, a result attributed to Telia Carrier's sale of Turkcell Holding.

Following the sale of Telia Carrier itself to Sweden’s Polhem Infra, the board of directors is to propose an additional dividend of SEK 0.65 per share, subject to the approval by an Extraordinary General Meeting.

Made in the Nordics

The financial results were announced as Telia Company confirmed new procurement deals with Ericsson and Nokia in key regional markets.

Both are to deliver radio access network technology (RAN) to base stations to modernise Telia’s 4G network and upgrade it to 5G. The five-year strategic deal with Ericsson will see 10,000 Telia Carrier base stations modernised in Sweden and Estonia, while the Nokia contract will see RAN technology delivered to stations to modernise the 4G network and upgrade it to 5G in Finland.

Telia Company will also implement the new Nokia SA 5G Core solution – the brain of a mobile network – in all its markets, providing customers with “entirely new capabilities over time”.

Kirkby said the deals “bring together three of the region’s wireless pioneers to provide superior network experiences based on 5G and 4G technology to Telia’s 10 million mobile customers in Sweden, Finland and Estonia.”

Icing the cake, these developments were announced as Telia Company appointed Per Carleö as SVP and head of brand and member of the group executive management, effective 1 January 2021.

Carleö will take responsibility for “transforming the brand perception” and helping establish the company as a “purpose driven digital telco, recognised for best-in-class customer and digital experiences”.

Commenting on the appointment, Kirkby said: “Per is a highly creative and commercial individual with a strong focus on building his vision for brands through the lens of the customer. He brings a unique set of skills and experiences as well as a proven track record of reinventing iconic brands and creating holistic and effective marketing campaigns, most recently at Volvo Cars. As we prepare to renew Telia’s purpose, strategy, and brand propositions, I am delighted that Per will be part of our Group Executive Management team and help us accelerate our transformation journey.”