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Telia sees $110M impact on Q2 revenue from COVID-19

Swedish operator reports net loss for both the Q2 and six-month period due to impairment costs on Turkcell stake.

Anne Morris

July 17, 2020

3 Min Read
Telia sees $110M impact on Q2 revenue from COVID-19

It's fair to say that second-quarter results are proving to be something of a minefield for operators this year, as they count the cost to their businesses of the COVID-19 crisis.

Sweden's Telia is no exception, reporting an estimated 1 billion Swedish kronor (US$110 million) impact on service revenue and SEK0.5 billion on EBITDA in the Q2 period, primarily due to lower roaming, pay-TV and advertising revenue.

The operator also reported a net loss of SEK2 billion ($220 million) for the second quarter and SEK883 million ($97 million) for the first six months, attributing this to an impairment of SEK3.45 billion ($378 million) on soon-to-be-divested Turkcell Holding.

Telia had previously warned investors it will miss profit targets for the current fiscal year due to the worsening pandemic.

Yet despite the impact on revenue and earnings figures, some operators have also been cautiously optimistic, describing their networks and operations as "resilient" in the face of such a crisis and seeing an opportunity to capitalize on the critical role that operators have played in keeping people and businesses connected.

Telia is certainly sending out that message. The operator's CEO, Allison Kirkby, said the second-quarter results "were better than our expectations," attributing this in part to efforts to address the cost base. "I am excited about the new opportunities that Telia will enable, as a result of the rapid acceleration in digitalization that we are now seeing," she added.

In the second quarter, net sales rose 2.7% to SEK21.7 billion ($2.3 billion), while service revenue was up 4.7% at SEK19.1 billion ($2.1 billion). On a like-for-like basis, service revenue fell by 5.6%, however. Adjusted EBITDA grew by 3.6% to $7.7 billion ($848 million) and was flat on a like-for-like basis. In the first six months, net sales increased 5.2% to SEK44.2 billion ($4.86 billion).

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Looking ahead, Telia still expects the second half of the year to remain challenging. "We therefore expect the adjusted EBITDA generation in the second half of the year to be similar to the level reported in the first half. Importantly, we maintain our prior guidance of an operational free cash flow for the full year in the range of SEK9.5 billion to SEK10.5 billion," said Kirkby.

Telia's board also feels it is too early to decide on any potential additional dividend during the autumn, "which is why we maintain the previously communicated dividend of SEK1.80 per share," the CEO said.

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— Anne Morris, contributing editor, special to Light Reading

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About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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