Telia (TELIA) Q3 2024 earnings summary

Executive summary

• Major change program underway, targeting SEK 2.6 billion in annual savings and a reduction of 3,000 positions by December 1, with a focus on customer-centricity, value creation, and digital growth.

• Consumer NPS and ARPU improved, with Sweden leading in customer satisfaction; digital TV and media revenue up due to streaming and advertising.

• New midterm ambitions: service revenue CAGR of 2%, EBITDA CAGR of 4%, book CapEx below SEK 14 billion, and free cash flow of at least SEK 10 billion by 2027.

• Net income rose 28.1% to SEK 2,511 million, and EPS increased to SEK 0.59.

• Operational free cash flow declined, impacted by higher interest and tax.

Financial highlights

• Q3 service revenue grew 1.2% like for like, with consumer up 2.6% and enterprise down 1.7%; mobile revenue up 1.6%, fixed up 0.6%.

• Adjusted EBITDA rose 1.7% year-over-year to SEK 8,475 million, margin reached 39.0%, the highest in five years.

• Operating income increased by SEK 400 million, net income up SEK 600 million, and EPS R12 at SEK 2.34.

• Free cash flow at SEK 1.5 billion, down from SEK 3.3 billion year-over-year, due to higher interest and tax.

• Leverage ratio improved to 2.17x, net debt reduced by SEK 1.1 billion.

Outlook and guidance

• 2024 outlook upgraded: service revenue low single-digit growth, adjusted EBITDA mid-single-digit growth, CapEx below SEK 14 billion.

• Service revenue growth expected below 2% for Q4 2024 and H1 2025, with EBITDA growth above 4% in the same period.

• 2025-2027 ambitions: service revenue CAGR 2%, adjusted EBITDA CAGR 4%, free cash flow >SEK 10 billion by 2027.

• Dividend policy maintains a floor of SEK 2.00 per share, with low to mid-single digit growth ambition.