Telia Company has met its outlook for a small increase in annual adjusted EBITDA in 2016 and forecast a stable result this year. In the fourth quarter, the company saw a sharp rise in net profit, to SEK 7.338 billion versus a loss of SEK 3.010 billion a year earlier when it took impairments on Denmark and Uzbekistan, thanks to the profit of SEK 4.5 billion on selling its Spanish operator Yoigo.
Telia said it's "highly probably" that it will complete this year the sale of the rest of its Eurasia assets. Buyer interest has been higher since its partner Turkcell said it's also looking to sell its stake in Fintur, the holding company for the Eurasia operations, Telia said. The only possible delay is the Uzbekistan unit Ucell, which is still facing corruption investigations in the US, Sweden and Netherlands. Provisions for settling the case led to a drop in Telia's annual profit and a reduction in the dividend to SEK 2 per share from SEK 3 a year earlier.
Telia is improving its dividend policy going forward. It now plans to distribute at least 80 percent of free cash flow, excluding licenses, from continuing operations to shareholders. Previously the cash flow amount included license costs, meaning more of cash flow is now set aside for shareholder returns. For 2017, Telia targets operational free cash flow (excluding licenses and dividends from associates) at over SEK 7 billion, versus SEK 5.5 billion 2016. This operational free cash flow together with dividends from associates should cover a dividend around the 2016 level, the company said.
In the fourth quarter, Telia reported net sales down 6.7 percent to SEK 21.130 billion, hurt by the divestment of Yoigo. In local currencies and excluding acquisitions and disposals, sales increased 0.2 percent, with 0.7 percent growth in Sweden offset by a 0.3 percent decline in the rest of Europe. Telia's results exclude the Eurasia activities, as these are considered held for sale.
Adjusted EBITDA declined 1.9 percent in local currencies, excluding acquisitions and disposals, and was down 2.7 percent to SEK 6.380 billion on a reported basis. The EBITDA margin, excluding non-recurring items, rose to 30.2 percent from 29.0 percent a year ago. A lower contribution from the stake in Megafon led to a drop in adjusted operating profit of 24.3 percent to SEK 3.737 billion.
