Telia Company announced at its Capital Markets Day plans to reduce its operational expenses of approximately SEK 24 billion by around 2 percent annually in 2019-2021 on a net basis. It said cash flow synergies from the Get and TDC acquisition in Norway will reach a full run rate of NOK 800 million by the end of 2021, up from a target of NOK 700 million previously.
Its ambition to reduce net working capital has been increased from SEK 5 billion to SEK 6 billion, of which SEK 3.6 billion was realised in 2017-2018. It also announced green commitments for 2030.
The group reiterated its full year operational free cash flow outlook for 2019 of SEK 12.0-12.5 billion, and said it aims to sustain and expand this level for 2020 and 2021.
As it stated when it released its fourth quarter results for 2018, following January and February trading, it still expects EBITDA development in the first half of 2019 to be weaker than in the second. For the first quarter of 2019, the underlying organic EBITDA decline is expected to be slightly more than the decline in Q4 2018, excluding M&A and the IFRS16 impact. This is because of the three main countries, but it will not affect the full year operational free cash flow outlook for 2019.
New operating model
Telia said part of the 2 percent or so annual operating cost reduction would be achieved by implementing a new operating model. The effect will be gradual, with a target to cut costs by 10-15 percent by 2022 on a cost base of around SEK 6 billion. In its Q4 results, it had said it aimed to cut Swedish operating expenses by around 3 percent in 2019.
The cash flow synergies from the Get and TDC acquisition in Norway are expected to reach a full run rate of NOK 800 million by the end of 2021, up from NOK 700 million previously. The realisation will be front-end loaded with an ambition of NOK 450 million for 2020, said Telia.
In addition, Telia Company said it is making new green commitments for 2030, focusing on zero carbon dioxide emissions and zero waste, with requirements for the supplier base and motivation for customers to follow.
