Svenska Telia sees revenue reduction during the third quarter by 36%
Winter came early for Sweden’s telco Telia, whose net profit during the third quarter fell to SEK 1.64 billion ($ 186.2 million) from SEK 2.57 billion a year ago. Sales also decreased by 1.2% to SEK 21.27 billion.
But there were sunspots in the Swedish sky. The company’s EBITDA (profit before interest, tax, depreciation and amortization), of SEK 7.81 billion ($ 908.81 million), beat the analysts’ consensus forecast of SEK 7.75 billion.
It was 4.9% lower than a year ago, but the company says that the full-year figure will be unchanged or show single-digit growth.
At the towers of Brookfield
The Nordic operator faces headwinds as it tries to restructure itself, admits its CEO Allison Kirkby, a veteran of the Scandinavian telecom industry who took over in May 2020. Its new strategy, which Kirkby presented earlier this year, involves a new unit called Telia Asset Management will own some of the company’s 25,000 towers and roof sites in the Nordic and Baltic countries.
Telia’s tower footprint is the largest in the region. It has about 4,700 towers in Finland and Norway. A share of 49% in these Finnish and Norwegian towers was then sold to the infrastructure investment company Brookfield and the Swedish pension fund Alecta, for 722 million.
That deal then reduced its net debt to about 2.1x Ebitda.
The European Commission has approved the transaction, as “pending final regulatory approval”, and should be completed in the last three months of 2021, the company said today. Telia also sold its Telia Carrier Internet backbone network operations in June, as part of a general liquidation from the company’s non-core investments.
Polhem Infra, an investor owned by three Swedish pension funds, paid SEK 9.45 billion for the business. Telia once owned an international business that stretched from Turkey to a base station located 5,000 meters up Mount Everest. But these global ambitions have faltered at the foot of low returns and fines of nearly $ 1 billion in 2017 in connection with allegations that they had paid $ 330 million in bribes to break into the Uzbek market.
It recorded a capital loss of approximately $ 350 million of the $ 530 million divestment of its 47.1% stake in Turkcell.
Telia TV and chill
It has also splashed a lot on sports rights, for tournaments such as the UEFA Champions League where it acquired the Swedish and Finnish rights in May. This has been a good game for telecom. Its on-demand subscription video (SVOD) offerings, Telia TV and C More, ended the third quarter with 835,000 subscribers, an increase of 29.1% from the previous year.
On its streaming service C More, “we have seen a growth of 40% in sports-related subscriptions”, says Kirkby, who also sits on BT Group’s board. The C More service has been at a loss and the company had tried to get it out of its TV4 Media division.
Telia launches HBO Max on October 26 and replaces HBO Nordic, with which Telia has a ten-year collaboration.
5G all you can be
The company’s 5G subscription is “starting to move” as well. These are up to 145,000 of its subscribers in Finland, although this is only 4.5% of its total base, notes telecom analyst Phil Kendall on Twitter. But Telia’s network now covers 54% of the Finnish population and 31% in Norway. In Estonia, it is the only 5G provider.
Easy reading.
Its 5G customers use 40% more data than 4G. Kirkby will be grateful today for being able to point to growth spots as a 2.3% gain in service and positive trends in Norway.
But whether her new strategy, full of buzzwords about “Reinvent a Better Telia” and “Connect Everyone”, will actually revive the fortunes of the debt junkie carrier remains to be seen.
Related posts:
Pdraig Belton, contributing editorial special for Light Reading