Will Telia regain revenue growth under CEO Johan Dennelind?

Telia smartphone users
Under the leadership of Johan Dennelind, Telia reported one more quarter of declining revenue.

Handling regulatory issues, investigations, reducing investment in networks, improving revenue and profit and retaining wireless subscribers are some of the top challenges for the management of Telia. The telecom operator is already in the process of exiting from several countries to focus on more viable business.

Sales of Telia fell 8.8 percent to SEK 19,628 million in the third quarter of 2017. Service revenues of Telia, excluding acquisitions and disposals, dropped 0.9 percent.

Adjusted EBITDA decreased 3.6 percent to SEK 6,604 million. The adjusted EBITDA margin rose to 33.6 percent from 31.8 percent.

In September, Telia Company agreed to pay fines and disgorgements worth $965 million and already paid $757 million during the third quarter.

Adjusted operating income fell 19.6 percent to SEK 3,812 million negatively impacted by the sale of Turkcell shares.

Net income of Telia improved to SEK 2,268 million from a net loss of SEK 8,810 million.

Telia divested shares in Turkcell and MegaFon, adding SEK 7.3 billion to its cash position. Telia still holds 24 percent indirect stake in Turkcell. Telia is the second largest stake holder in MegaFon.

Johan Dennelind, president and CEO of Telia, said the company will bring 5G in 2018 for customers in Stockholm, Helsinki and Tallinn.

Cost reduction

The good news is that Telia achieved 6 percent cut in operational expenses in the third quarter. Telia aims to achieve 5 percent reduction in operational expense in the second half of 2017.

“Lower fiber installation fees burden our EBITDA, but at the same time cash flow is improving due to lower fiber related Capex,” Johan Dennelind said.

Johan Dennelind said its target to reduce cost base amounting to an expected SEK 38 billion in 2017 by 3 percent, on a net basis in 2018 over 2017, is on track.

Capex

Capex declined to SEK 2,956 million from SEK 3,648 million and Capex-to-service revenue ratio to 17.5 percent from 19.8 percent.

Telia said its Capex excluding license and spectrum fees dropped to SEK 2,960 million from SEK 3,647 million and the Capex-to-service revenue ratio, excluding license and spectrum fees to 17.5 percent from 19.8 percent.

Net debt, in continuing and discontinued operations, was SEK 42,622 million at the end of the third quarter against SEK 40,833 million at the end of the second quarter of 2017. The net debt/adjusted EBITDA ratio was 1.43x against 1.36x at the end of the second quarter of 2017.

Capex in Sweden fell 19.7 percent to SEK 1,400 million (1,743) and Capex, excluding licenses and spectrum fees fell to SEK 1,400 million (1,743).

Capex in Finland declined to SEK 412 million (423) and Capex excluding licenses and spectrum fees declined to SEK 412 million (423).

Capex in Norway fell 24.2 percent to SEK 193 million (255) and Capex excluding licenses and spectrum fees, fell to SEK 196 million (255).

Capex in Denmark was flat at SEK 83 million (83) and Capex excluding licenses and spectrum fees was flat at SEK 83 million (83).

Capex in Lithuania increased to SEK 131 million (120) and Capex excluding licenses and spectrum fees increased to SEK 131 million (119)

Capex in Estonia increased to SEK 98 million (97) and Capex excluding licenses and spectrum fees increased to SEK 98 million (97).

Baburajan K

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