Telia reported sales down 8.8 percent to SEK 19.628 billion in the third quarter, hurt by divestments and a slowdown on the Swedish fibre market. On an organic basis, sales fell 0.5 percent, and service revenue was down 0.9 percent. The ongoing weakness means the company will continue to focus on cost reductions, the operator said.
Adjusted EBITDA decreased 3.6 percent to SEK 6.604 billion and was down 0.4 percent in local currencies and excluding acquisitions and disposals. Telia said it expects a largely stable adjusted EBITDA on an organic basis over the full year, after a 1.5 percent fall in the first nine months of 2017.
The adjusted EBITDA margin rose to 33.6 percent in Q3 from 31.8 percent a year earlier, thanks to the cost-cutting. Telia said it was on track to reduce its cost base by another 3 percent next year and will continue to push for any improvements in service revenue to come through in EBITDA.
The Swedish operator's net result improved to SEK 2.268 billion from a loss of SEK 8.810 billion last year. Despite the costs of settling the Uzbekistan case, Telia booked a number of one-time gains from selling down its stakes in Russia's Megafon and Turkcell. Operating cash flow also improved to SEK 2.808 billion from SEK 2.089 billion a year ago, helped by an 18.8 percent fall in capital expenditure in Q3. Free cash flow was still a negative SEK 1.281 billion.
Telia maintained its outlook for free cash flow from continuing operations, excluding licenses and dividends from associated companies, to be above SEK 7.5 billion in 2017. This operational free cash flow together with dividends from associated companies of SEK 2.8 billion should be above SEK 10 billion and should cover a dividend around the 2016 level.
Telia CEO Johan Dennelind said the quarter showed the company's steady progress toward becoming a pure Nordic/Baltic player. The aim is to sell the remaining assets in Eurasia, grouped under Fintur holding, by the end of the year, but Dennlined added that he would "not set that as a firm deadline".
