Telia Company said it is keeping its FY outlook unchanged after second quarter service revenues increased by 3.2 percent on a like-for-like basis, driven primarily by the TV & Media unit but also by growth in mobile and by Telia’s Baltic operations. The Baltic region accelerated its strong performance seen in Q1, as there was less roaming headwind. Baltic service revenues grew by mid-single digits and EBITDA increased by 12 percent in Estonia and 4 percent in Lithuania.
The operator said second quarter net sales inched up by 0.5 percent to SEK 21.88 billion from SEK 21.77 billion, or up by 4.9 percent on a like-for-like basis. Service revenues fell 1.3 percent to SEK 18.88 billion from SEK 19.13 billion, but on a like-for-like basis, service revenues increased 3.2 percent. Covid-19 still hit service revenues relating to roaming, which are are around SEK 50 million lower than Q2 2020, and are around SEK 300 million lower in H1 year on year.
Telia said adjusted EBITDA declined 0.1 percent to SEK 7.73 billion from SEK 7.74 billion but increased by 1.9 percent on a like-for-like basis. Operational free cash flow fell to SEK 2.06 billion from SEK 2.20 billion and cash flow from operating activities dipped to SEK 6.25 billion from SEK 6.27 billion.
The divestment of Telia Carrier to Polhem Infra was completed on 01 June 2021, leading to a capital gain that was the main reason for its positive total net income of SEK 8.10 billion, compared with a net loss of SEK 2.03 billion a year earlier. Last year’s loss had been affected by an impairment of Turkcell Holding.
The leverage ratio based on Q2, and including the proceeds of the sale of 49 percent of Telia’s Norwegian and Finnish towers, is estimated at 2.1x.
Looking ahead, Telia said it still predicts that full-year service revenues will be flat or up at a low single-digit rate in constant currency and excluding Telia Carrier. Adjusted EBITDA, too, will be unchanged or up by a low single digit in constant currency and excluding Telia Carrier. Cash capex excluding Telia Carrier and fees for licences and spectrum should be between SEK 14.5 billion and SEK 15.5 billion.
From 2021-2023, Telia predicts that service revenues in constant currency, and excluding Telia Carrier, will grow by a low single digit. Adjusted EBITDA is expected to rise by a low to mid-single digit. Cash capex to net sales, excluding Telia Carrier and fees for licences and spectrum, is forecast to return to around 15 percent by 2023.
