Telia Company attempted to draw a line under a year that was ravaged by the coronavirus pandemic with a new strategy aimed at improving the long-term fortunes of the Sweden-based group.
Allison Kirkby, president and CEO, acknowledged that the final quarter of 2020 and the start of 2021 have "continued to be challenging," and conceded that 2021 is expected to be a "year of transition" with flat to low single-digit growth in sales and operating profits (EBITDA) and cash capex of SEK14.5 billion to SEK15.5 billion ($1.7 billion to $1.8 billion).
However, she said an "updated strategy" launched today to create a "better Telia" is designed to "return the company to growth and deliver sustainable value creation to our shareholders."
Amid some catchy but somewhat baffling soundbites, such as "reinvent better connected living," the main thrust of the plan appears to be the tried-and-trusted technique of reducing costs to improve profits as well as seeking ways of monetizing network assets.
Kirkby said the objective is to reduce operational expenses by 2 billion Swedish kronor (US$239 million) by 2023 and SEK4 billion ($478 million) by 2025 in order to achieve EBITDA less capex of SEK3 billion ($359 million) and SEK5 billion ($598 million) by 2023 and 2025 respectively.
"For the period up to 2023 we expect annual low single-digit service revenue growth, low to mid-single-digit EBITDA growth and a return to cash capex of around 15% of net sales by 2023," she said.
Telia also looks set to follow in the footsteps of its European peers by seeking ways to exploit infrastructure assets, such as towers. A new business unit, Telia Asset Management, has been created to own and manage selected assets, "opening up the opportunity to bring in external investors and accelerate infrastructure development," Kirkby said.
"We have for some time been working to identify such assets within our portfolio where a special focus has been on our towers, in particular in markets where we act as a challenger, and we will now proactively identify relevant partners that could join us on this journey," she added.
The group has already agreed to sell Telia Carrier to Polhem Infra for SEK9.45 billion ($1.13 billion), as part of efforts to streamline its operations and strengthen its financial base. The transaction is expected to be completed in the first half of 2021.
2020 ends with a big loss
As for 2020, the final quarter continued to be adversely affected by the pandemic, with an estimated negative impact of SEK400 million ($48 million) on service revenue and SEK200 million ($24 million) on adjusted EBITDA.
The operator also revealed that operating income in Q4 was hit by an SEK7.8 billion ($933 million) goodwill impairment charge in Finland, as well as a capital loss of SEK17.95 billion ($2.1 billion) from the sale of Turkcell Holding.
On a like-for-like basis, Q4 2020 sales fell 1.9% to SEK23.46 billion ($3.2 billion) and service revenue fell 2.1% to SEK19.76 billion ($2.4 billion). Adjusted EBITDA declined 6.6% to SEK7.48 billion ($895 million).
In 2020 as a whole, on a like-for-like basis net sales fell 3.4% to SEK89.2 billion ($10.68 billion). The group posted an operating loss of SEK17.75 billion ($2.1 billion) and a net loss of SEK22.76 billion ($2.7 billion). The company plans to propose a dividend of SEK2 ($0.24) per share for 2020.
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— Anne Morris, contributing editor, Light Reading