5G and Beyond

Telia’s turnaround strategy gains traction

Telia Company signaled that the new strategy it introduced at the beginning of 2021 is showing early signs of improving the Sweden-based group's fortunes, after a torrid period in 2020.

Allison Kirkby, president and CEO, said the group is now "firmly in execution mode and our transformation program is fully under way."

Telia returned to EBITDA growth in the first quarter of 2021, making "a positive start on our journey to create a better Telia, despite the pandemic continuing to impact our customers and our colleagues," Kirkby said.

Telling you: Telia says it's back in control after a rocky 2020, posting a return to growth in Q1.  (Source: Hakan Dahlstrom on Flickr CC2.0)
Telling you: Telia says it's back in control after a rocky 2020, posting a return to growth in Q1.
(Source: Håkan Dahlström on Flickr CC2.0)

She said the group had remained relatively resilient during the first quarter, even as COVID-19 restrictions increased across its footprint.

On a like-for-like basis, adjusted EBITDA increased by 2.2% year-on-year to 7.2 billion Swedish kroner (US$855 million). Also on a like-for-like basis, net sales were unchanged at SEK21.8 billion ($2.6 billion).

Service revenue fell 2.3% to SEK18.7 billion ($2.2 billion), with half of the decline attributed to lower roaming revenue because of the pandemic.

Operational free cash flow was described as "very strong at SEK4.0 billion ($475 million), a similar level to last year."

Telia also reiterated its outlook for 2021: Service revenues and adjusted EBITDA, in constant currency and excluding Telia Carrier, are expected to be flat or grow by low single-digit rates.

Cash capex, excluding Telia Carrier and fees for licenses and spectrum, is expected to be in the range of SEK14.5 billion-SEK15.5 billion ($1.7 billion-$1.8 billion).

The group agreed to sell Telia Carrier to Polhem Infra for SEK9.45 billion ($1.12 billion), as part of efforts to streamline its operations and strengthen its financial base. The transaction is now due to close on June 1, 2021.

Of course, much will depend on the development of the coronavirus pandemic during 2021. In the first quarter, the negative impact on roaming revenues was estimated to be around SEK250 million ($29.7 million) compared to the corresponding quarter last year. Telia has already indicated that 2021 is expected to be a "year of transition.”

New strategy in play

Telia launched its updated strategy in January with the aim of returning the company to growth and delivering "sustainable value creation to our shareholders."

"We have only just started, and I am happy to see the initial effects coming through," Kirkby said.

Speaking during the group's earnings call, she said it will be a "multi-year journey. It will take time and investment, but I am encouraged by some of the early progress."

As part of that strategy, a new business unit, Telia Asset Management, was also created to own and manage selected assets, opening up the opportunity to bring in external investors and accelerate infrastructure development. Kirkby said the unit is now up and running.

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"Our initial focus is in identifying partners for our tower portfolios in Norway and Finland. I think we can safely say that interest from external partners is very strong."

Key focus areas for the future include 5G and the further development of TV services, with more content offers, and convergence packages, underpinned by continuing efforts to streamline the product portfolio and simplify and automate IT infrastructure.

The group's domestic market, Sweden, accounts for the bulk of sales at around SEK8.4 billion ($999 million) in Q1 2021.

Among recent developments here, Telia has signed a multiyear deal with the Swedish housing developer Familjebostäder, and will offer broadband, TV and Internet of Things services throughout the developer's properties.

In terms of 5G, in January Telia Sweden secured a 120MHz frequency block in the 3.5GHz band which, together with its existing 700MHz spectrum, will help it reach its target of 90% population coverage by the end of 2023.

Its next-biggest markets are Finland, Norway and Denmark. In April, Telia Denmark also secured spectrum in the 1,500MHz, 2,100MHz, 3.6GHz and 26GHz bands, via the joint venture TT-Netværket.

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— Anne Morris, contributing editor, special to Light Reading

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