Telia Company president and CEO Allison Kirkby made no bones about the fact that operating under current conditions is going to test the Sweden-based operator in the coming few months.

Commenting on the group's second-quarter (Q2) results for 2022, Kirkby noted that it "has been decades since the world last saw the macro-economic conditions of today, with high-single-digit inflation, and the telecom industry as we now know it did not exist at that time."

Energy prices are also going up as a result of the war in Ukraine, costing the operator an additional almost 200 million Swedish kronor (US$19.6 million) in the first six months of 2022.

Figure 1: Sweden-based group Telia Company has maintained its outlook for 2022 despite worrying macro-economic trends.
(Source: Håkan Dahlström on Flickr CC2.0)

In the full year, Telia expects energy costs to increase by around SEK300 million ($29.4 million). However, the operator is maintaining its revenue and earnings outlook for 2022 as a whole, with like-for-like service revenue and EBITDA both estimated to grow by a low single digit.

Telia is also on track with its program to reduce operational expenses by at least SEK2 billion ($195 million) by 2023, "although now excluding the impact from energy, which we expect to mitigate through a combination of both cost and pricing initiatives," Kirkby said.

The group recently entered into Power Purchase Agreements (PPAs) in Denmark and Estonia to safeguard the supply of renewable energy in the coming years.

Telecom business shines

The CEO otherwise provided an optimistic assessment of Telia's performance in the year to date.

In Q2, the group's core telco business (excluding TV and media) performed particularly well with a 4.3% increase in EBITDA (earnings before interest, tax, depreciation and amortization) and a 2.5% rise in service revenue. Total group adjusted EBITDA increased 0.3% to SEK7.68 billion ($753 million).

Net income for the April-June period was somewhat lower at SEK1.68 billion ($165 million) compared to SEK8 billion ($783.5 million) in the same period of 2021. However, Telia noted that the previous year's figure was boosted by proceeds from the sale of Telia Carrier.

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Q2 net sales rose by 1.9% to SEK22.3 billion ($2.2 billion), while service revenue was up 1.5% at SEK19.2 billion ($1.9 billion). All units except Finland contributed towards the growth. Kirkby said turning around Telia Finland remains a high priority in 2022.

In terms of network investments, capex amounted to SEK3.98 billion ($391 million) excluding fees for licenses and spectrum. Total capex was SEK4.53 billion ($421 million).

In the first half of the year to the end of June, net sales increased 1% to SEK44.1 billion ($4.3 billion). Adjusted EBITDA increased 0.3% to SEK14.88 billion ($1.5 billion). The core telco business produced a 2.7% rise in service revenue and a 4.4% increase in EBITDA.

Kirkby particularly hailed progress with 5G deployments, noting that 5G networks now cover 49% of the population across its footprint. In Finland and Norway, the percentage rises to 70%. Furthermore, a standalone 5G core network is being rolled out across Finland. In Sweden, the 5G network covers 34% of the population and is available in 75 cities.

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— Anne Morris, contributing editor, special to Light Reading