Telia Company is leaving its FY outlook unchanged after it said it returned to EBITDA growth in the first quarter of 2021 as it executes a turnaround strategy. Telia Asset Management is fully operational and "actively" reviewing its tower assets in Norway and Finland. The operator said it had remained "relatively resilient" as coronavirus restrictions increased in all of its markets compared with the fourth quarter of 2020, including store closures.
Net sales in the first quarter of 2021 declined by 2.7 percent to SEK 21.81 billion from SEK 22.43 billion but on a like-for-like basis, net sales remained unchanged. Service revenues decreased by 4.9 percent to SEK 18.75 billion from SEK 19.72 billion or by 2.3 percent on a like-for-like basis. Covid-19 reduced roaming revenues and this is estimated to have dented service revenues by around SEK 250 million.
Adjusted EBITDA declined 0.4 percent to SEK 7.25 billion from SEK 7.28 billion or but was up 2.2 percent on a like-for-like basis. Operating income decreased to SEK 1.82 billion from SEK 2.41 billion.
Total net income dropped to SEK 974 million from SEK 1.15 billion and total net income attributable to owners of the parent company amounted to SEK 965 million, down from SEK 1.11 billion.
Operational free cash flow increased to SEK 4.04 billion from SEK 3.31 billion and cash flow from operating activities increased to SEK 7.54 billion from SEK 7.17 billion.
At the beginning of the first quarter of 2021,a strategy to transform Telia began, the operator said. All the necessary approvals for the disposal of Telia Carrier have now been received and the transaction will close on 01 June 2021.
The outlook for 2021 remains unchanged. Service revenues and adjusted EBITDA are expected to be flat or to grow by a low single digit in constant currency terms and excluding Telia Carrier. Cash capex, excluding Telia Carrier and fees for licences and spectrum, is still expected to be in the range of SEK 14.5-15.5 billion.
As Sweden suffered from lower roaming income and an acceleration of legacy declines, EBITDA shrank by 5 percent. There was underlying growth in consumer mobile, broadband and television, and a 3 percent drop in operational expenditure. Legacy migration and organisational streamlining have yielded network cost reductions in Sweden, including staff cuts. Slightly more than 400 FTE/FTC reductions had been implemented by 31 March and Telia expects to have made 1,000 FTE/FTC reductions by the end of this year.
Telia expects positive trends in Sweden in the "second part" of 2021 thanks to commercial activities and increased efficiency. The operator said convergence is a key "value lever" and its multi-year deal to provide Swedish housing developer Familjebostader with broadband, TV and IoT reflects its convergence capabilities. Telia Sweden has added 38,000 customers to its converged consumer proposition, Telia Life.
Lithuanian EBITDA rose 4 percent and there was 6 percent EBITDA growth in Estonia.
Telia Norway had a strong quarter with an "encouragingly stable" consumer mobile segment and continued momentum in the SME sector. Its Telia Samlet converged proposition already has 23,000 customers. Lower opex and special items resulted in EBITDA growing 16 percent.
Denmark was heavily hit by covid restrictions and product portfolio rationalisation, but the shift to becoming a simpler digital operator led to relatively stable EBITDA.
Finland suffered sizable roaming impact along with weaker ICT and professional services, but customer perception is improving thanks to 5G and new TV packages, and continued headcount reduction minimised the EBITDA decline to 2 percent.
TV & Media had an "excellent" quarter, and revenue grew by 3 percent. Pay-TV and OTT turnover climbed by 10 percent but advertising revenue fell by 1 percent. Opex dropped by 3 percent. The TV and Media division had positive EBITDA for the first quarter after a small loss last year.
Telia’s commercial share of viewing increased to 49.8 percent in Sweden, and time spent on its TV4 Play AVoD platform grew by 36 percent. "Masked Singer" attracted more than 2 million Swedish viewers per episode in its first weeks. March advertising revenues were particularly strong as a result.
Turning to mobile operations, Telia said it is modernising all its networks and as a result strengthening its 5G positions in Sweden, Norway and Estonia, while catching up in Finland. In Sweden, up to 55 percent of new handsets sold support 5G. In Q1, Telia became the first operator in Norway to launch an Enterprise Mobile Network (EMN).
