Another posting of telco quarterly results means another chance to check where COVID-19 is doing the most damage (and what, if anything, can be done about it).
As expected, pay-TV operations bore the brunt of COVID-19 pain for Sweden's Telia. Canceled sporting events led to lower prices and advertisers reined in spending.
The upshot, said Telia, was that total negative service revenue impact from the pandemic is estimated to be around 100 million Swedish kronor (US$9.9 million) for the quarter ended March 31. EBIDTA and operating income were apparently chipped away by the same amount.
Bearing in mind Telia's reported Q1 net sales were SEK22.4 billion ($223 million), up 7.6% year-on-year, Telia's top brass may well be pleased with what appears a minimal impact on the top line. (On a like-for-like basis, though, once exchange rates, acquisitions and disposals are taken into account, net sales at Telia actually fell by 2.2%.)
As the Swedish operator warned in March, initial ambitions of an operational free cash flow (FCF) of around SEK0.5 billion ($49.5 million) from its TV & Media segment in 2020 have gone out the window.
At a Group level, operation FCF guidance for 2020 has been lowered from SEK10.5-11.5 billion ($1.04-$1.14 billion) to SEK9.5-10.5 billion ($0.94-$1.04 billion).
"We have identified several mitigating activities that will partially compensate for the decline within our TV & Media unit, but that will also support the traditional telco operation should they also be impacted," said Christian Luiga, Telia's acting CEO, in what looked like a rallying call to shareholders. "We continue to focus on the execution of our commercial agenda with loyalty and convergence as main tools to increase ARPU and protect our customer base. All in all, we expect that we can deliver an operational free cash flow in the range of SEK9.5-10.5 billion."
Apart from TV-related operations, maintained Luiga, COVID-19 impact on revenue, EBITDA and operating income "were not significant in the first quarter."
— Ken Wieland, contributing editor, special to Light Reading