Telia Company said as it released its fourth quarter and full-year results for 2020 that it is updating its strategy to create a ‘Better Telia’ and has announced targets to improve EBITDA by reducing opex. The operator has also announced the creation of Telia Asset Management, creating the opportunity to bring in external investors and speed up infrastructure development.
The operator said the ‘Better Telia’ strategy is led by a new purpose to ‘Reinvent better connected living’. It said it will switch from being a “somewhat passive facilitator of connectivity” to being an “active orchestrator” of connected living.
It will implement a “customer experience-led” transformation programme that is expected to yield improved EBITDA minus capital expenditure of SEK 3.00 billion by 2023 and SEK 5.00 billion by 2025. As part of this, it will cut opex by SEK 2 billion by 2023 and by SEK 4 billion by 2025.
The operator has also announced the creation of Telia Asset Management, creating the opportunity to bring in external investors and speed up infrastructure development. It has been working to identify relevant assets, and said there has been a “special focus” on its towers, especially in markets where it acts as a challenger.
Turning to its fourth quarter results, the group said net sales in Q4 grew 2.7 percent to SEK 23.46 billion from SEK 22.84 billion in Q4 2019 but were down 1.9 percent on a like-for-like basis. Service revenues grew 4.0 percent to SEK 19.77 billion from SEK 19.01 billion a year earlier but fell 2.1 percent on a like-for-like basis because of lower roaming and advertising revenues.
Adjusted EBITDA declined 5.5 percent to SEK 7.48 billion from SEK 7.91 billion after an increase in Telia’s operational cost base in Q4, and dropped by 6.6 percent on a like-for-like basis. The operator said Covid-19 had an estimated negative impact of SEK 400 million on service revenues and SEK 200 million on adjusted EBITDA in the fourth quarter.
Operating income was a negative SEK 23.00 billion compared with positive income of SEK 2.60 billion a year earlier after a capital loss of SEK 17.96 billion on the disposal of Turkcell Holding, mainly related to reclassified accumulated foreign exchange losses. The quarter was also affected by an impairment of SEK 7.80 billion related to goodwill in Finland.
Operational free cash flow increased to SEK 2.86 billion from SEK 977 million, and cash flow from operating activities increased to SEK 7.96 billion from SEK 5.57 billion, both mainly driven by changes in working capital.
An agreement was reached during the fourth quarter to sell Telia Carrier for SEK 9.45 billion to pensions investment firm Polhem Infra. As announced in preliminary figures released earlier this month, the company is proposing an ordinary dividend for 2020 of SEK 2.00 per share (SEK 2.45).
Looking ahead to 2021, Telia Company said it expects service revenues and adjusted EBITDA to be flat or to grow at low single-digit rate, on a constant currency basis and excluding Telia Carrier. Capital expenditure excluding Telia Carrier and fees for licences, spectrum and right-of-use assets is expected to be in the range of SEK 14.5 billion to SEK 15.5 billion.
For the full year 2020, net sales grew by 3.8 percent to SEK 89.19 billion from SEK 85.97 billion a year earlier, and were down by 3.4 percent on a like-for-like basis. Operating income was negative at SEK 17.75 billion, compared with positive SEK 12.29 billion, after the disposal of Turkcell Holding and the impairment for Finnish goodwill. Total FY net income was a negative SEK 22.76 billion compared with positive SEK 7.26 billion.
As Telia had indicated in its preliminary results earlier this month, full-year operational free cash flow was SEK 12.10 billion, down by 3.8 percent from a year earlier. FY adjusted EBITDA dipped by 1 percent to SEK 30.70 billion, as it had declared in the preliminary figures.
