Headline: Telia Company's Earnings Call: Growth and Upgraded EBITDA Outlook Take Center Stage

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Headline: Telia Company's Earnings Call: Growth and Upgraded EBITDA Outlook Take Center Stage

Scandinavian telecommunications operator Telia Company (ST:TELIA) announced its financial results for the third quarter of 2024. The results indicate moderate service revenue growth and stronger EBITDA performance. The company has upgraded its EBITDA outlook for the year to mid-single-digit growth and is implementing a transformation program to enhance operational efficiency.

Key Highlights:

  • Service revenue increased by 1.2%, with a 2.6% rise in the consumer segment.
  • Corporate revenue declined by 1.7%.
  • EBITDA grew by 1.7%, with significant contributions from Sweden and TV and Media.
  • The transformation program is expected to deliver at least 2.6 billion SEK in efficiencies.
  • Structural operational cash flow declined due to increased interest payments.
  • Leverage improved, with net debt at 2.17x EBITDA.
  • CapEx guidance was significantly revised downward to below 14 billion SEK.

Company Outlook: Telia Company targets a 2% CAGR for service revenue and a 4% CAGR for EBITDA by 2027. The company focuses on customer satisfaction and operational efficiency amid short-term revenue challenges.

Downsides:

  • Structural operational cash flow fell from 3.7 billion SEK to 3.1 billion SEK.
  • Corporate revenue shows a downward trend with a 1.7% decrease.
  • Service revenue growth is anticipated to remain below 2% in the near term due to pricing changes and contract exits.

Upsides:

  • Consumer revenue in Sweden grew by 3.9%, supported by broadband and TV growth.
  • TV and Media had a strong quarter with a 2% service revenue increase, driven largely by digital advertising.
  • The company secured significant football broadcasting rights, expected to strengthen its sports portfolio.

Missing Elements:

  • Service revenue growth slowed in Finland and Norway, with a slight decline in Finland and mixed results in Norway and the Baltics.
  • In Finland, service revenue adjusted for regulatory impacts decreased by 0.6%.

Q&A Highlights:

  • Executives discussed market stability and pricing strategies in various regions.
  • Management expressed confidence in achieving at least 5% EBITDA growth in the coming year.
  • The transformation program aims to increase efficiency and reduce the workforce by approximately 3,000 employees.

In summary, Telia Company is experiencing a period of moderate growth with a strategic focus on operational efficiency and customer satisfaction. The upgraded EBITDA outlook reflects management’s confidence in long-term financial goals and ongoing initiatives. Despite some challenges in corporate service revenues, Telia’s consumer segment and TV and Media division show positive trends. The company’s commitment to efficiency improvements, including disciplined investment and a significant transformation program, enhances its potential to achieve financial targets in the coming years.