Telia Company AB (TLSNF) Q2 2025 Earnings Call Highlights: Strong EBITDA Growth Amidst ...
Free Cash Flow: SEK2.3 billion, supported by a dividend from Tet in Latvia.
Leverage: Reduced to 2.09 times, aided by EBITDA growth and proceeds from the Marshall investment.
Sweden Consumer Segment Growth: 2.3%, driven by strong TV performance and mobile subscriber intake.
Sweden EBITDA Growth: Approximately 8%, supported by profitable growth and change program tailwinds.
Finland EBITDA Growth: 10%, driven by business simplification and change program execution.
Norway Service Revenue and EBITDA: Both trending down due to lower mobile wholesale revenue and broadband/TV headwinds.
Lithuania EBITDA Growth: 11%, with strong service revenue growth in mobile and fixed sectors.
Estonia Service Revenue and EBITDA Growth: 3% to 4%, with good cash flow conversion.
CapEx: Well within the frame of less than SEK14 billion per year.
EBITDA Margin Expansion: 200 basis points, in line with margin expansion goals.
Operating Expenses: Declined by 5.1%, driven by the change program.
Net Debt Reduction: Decreased by SEK1.5 billion, with leverage now below 2.1 times.
Warning! GuruFocus has detected 4 Warning Signs with TLSNF.
Release Date: July 18, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Telia Company AB (TLSNF) reported strong EBITDA growth of 6.2%, slightly ahead of expectations, driven by cost efficiencies and strong performance in Sweden and Finland.
The company maintained its full-year outlook, with financials largely as expected, and reiterated its commitment to free cash flow above SEK10 billion by 2027.
Telia's strategic focus on convergence is yielding results, with a 5% annual growth in average revenue per household and a reduction in churn for converged customers.
The acquisition of Bredband2 is expected to strengthen Telia's consumer business in Sweden, with anticipated synergies of over SEK200 million within three years.
Telia's balance sheet continues to improve, with leverage reduced to 2.09 times, supported by strong free cash flow and proceeds from divestments.
Negative Points
Service revenue growth was somewhat below the full-year ambition due to a slowdown in Norway, impacting overall performance.
Norway faced challenges with both service revenue and EBITDA trending down, attributed to lower mobile wholesale revenue and headwinds in broadband and TV.
The company anticipates a softer Q3 before growth picks up again in Q4, with Norway expected to continue facing headwinds in the near term.
Telia's mobile end-user service revenue trends in Sweden, Finland, and Norway are lagging behind peers, indicating room for improvement.
The company faces regulatory scrutiny for its acquisition of Bredband2, with potential challenges in obtaining competition authority approval.
Q & A Highlights
Q: Can you elaborate on your cost-cutting outlook and the implications of the Latvian asset sale? A: (Patrik Hofbauer, CEO) The Latvian asset sale is part of our strategy to simplify our organization, not an exit from the Baltics. We continue to drive efficiencies without a large-scale cost-cutting program like last year, but we are benchmarking to ensure competitiveness.
Q: Regarding the bid on Bredband2, do you expect any regulatory hurdles, and what synergies do you foresee? A: (Patrik Hofbauer, CEO) We see Bredband2 as complementary, with low market share overlap, and expect regulatory approval. (Eric Hageman, CFO) We anticipate SEK200 million in annual synergies, split evenly between revenue and cost savings.
Q: Can you explain the strong net mobile subscriber intake in Sweden and the unexpected EBITDA growth in Q2? A: (Patrik Hofbauer, CEO) The subscriber growth was due to good team performance without special campaigns. (Eric Hageman, CFO) The EBITDA growth was driven by cost overperformance in Finland and Sweden, and savings from reduced ancillary costs.
Q: How do you plan to improve EBITDA growth in Q4 and into 2026? A: (Eric Hageman, CFO) We expect better Q4 performance due to continued momentum in Sweden, visibility on large enterprise projects, and pricing impacts. Finland's service revenue drag will lessen, contributing to improved EBITDA.
Q: What is your strategy regarding the Bredband2 acquisition and its impact on market share? A: (Erik Strandin Pers, Head of IR) The acquisition is complementary, with Bredband2 strong in areas where we are weak. We are optimistic about regulatory approval, as the asset fits well with our strategy and strengthens our core market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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