Telia cuts FY outlook as virus hits TV & Media, reduces dividend proposal

News General Global 26 MRT 2020
Telia cuts FY outlook as virus hits TV & Media, reduces dividend proposal

Telia Company said the effects of the Covid-19 pandemic will cause it to miss its 2020 forecast for group EBITDA and operational free cash flow, and that it will reduce its dividend proposal to the AGM. This is because of the impact on Telia's television and media operations, while the effects on the rest of its business are currently limited. There could be an EGM in the autumn to vote on an extra dividend, the company added.

In January, Telia had predicted that based on the group structure at the end of 2019 and stable currencies, adjusted EBITDA would expand by 2-5 percent in 2020, and operational free cash flow would be between SEK 10.5 billion and SEK 11.5 billion.

The operator said it will now propose a dividend of SEK 1.80 per share, instead of SEK 2.45. Visibility is limited and there is great uncertainty, which leaves the long-term impact and consequences for Telia Company unclear, it said. Television viewing has increased during the outbreak but there has been a rapid decline in advertising revenues, and the cancellation of sport events has hit pay-TV revenue.

Telia’s current assumptions suggest EBITDA for the TV & Media unit in the range of zero to SEK 500 million in 2020 compared with SEK 1.5 billion in 2019. It had been targeting an operational free cash flow of around SEK 500 million from TV & Media in 2020, but acting president and CEO Christian Luiga said this will not be achieved, and Telia cannot estimate a new level at this point.

Luiga said the company believes that units other than TV & Media will suffer to a limited extent, but the longer restrictions remain in place, the more likely it is that there will be a negative effect on its telecoms business, which is not quantifiable at this stage.

Possible risks include traveling restrictions causing lower roaming revenues; limited sports output pressuring on TV distribution revenues; changing market dynamics affecting planned commercial activities; the financial stability of its customers; the general supply chain effects; and the well-being and accessibility of its workers and contractors.

The decision to lower the dividend proposal to SEK 1.80 from SEK 2.45 reduces the pay-out to SEK 7.4 billion from SEK 10.0 billion. The dividend payment will still be made in two separate tranches.

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