News
Swedish operator reaffirms full-year outlook, expects flat to slightly increased earnings compared with 2015.
Telia on Wednesday reported declines in revenue at many of its operations in the second quarter of the year and further wrote down the value of some of its Eurasian assets, but confirmed its guidance for the full year.
The Sweden-based operator posted net sales of 21.13 billion kronor (€2.2 billion) in the three months to the end of June, down 2% on the year-ago quarter and a decline of 1% in local currency terms, excluding acquisitions and disposals.
EBITDA excluding non-recurring items increased by 4.1% to SEK6.39 billion, or 5.1% organically, while net income grew by 5.5% to SEK3.9 billion, although net income attributable to owners of the parent company fell by a massive 55.8% to SEK1.44 billion.
The overall net income figure was impacted by Telia’s Eurasian operations, which it classes as assets held for sale, having announced its intention to exit the region last year. Net income from discontinued operations fell by 33.6% to SEK1.05 billion, hit by an impairment charge of SEK1 billion related to the value of the telco’s operations in Uzbekistan, Tajikistan and Afghanistan.
Net income from continuing operations rose by 34.8% to SEK2.85 billion, as Telia channels its focus on its core Nordic and Baltic markets.
Revenues dipped by 0.1% in Sweden, with mobile service revenues and turnover from fixed broadband and TV services on the up, but fixed-line telephony sales falling. EBITDA dropped by 2% to SEK3.51 billion though.
The telco performed well in the SME and SoHo segments in Sweden, but still faces challenging conditions in the large business and public sector markets, Telia CEO Johan Dennelind said.
"We are continuously broadening our ICT capabilities and aim to expand further via partnerships and M&A to drive differentiation and increase customer relevance," he said.
Revenues also fell in Finland, but the market reported 1% EBITDA growth, while Norway and Denmark witnessed declining sales and earnings.
"We continue to optimise our portfolio in line with the ambition to increase focus on our operations in the Nordic and Baltic regions and new milestones have been reached in the past months," Dennelind said, referring to the divestments of Yoigo in Spain and cash management operation Sergel, both announced last month.
Telia generated revenues of SEK1.95 billion in Spain in Q2, up 2.1% in local currency terms, with service revenues growing by 6.3%, driven by an increase in postpaid subscriptions and related ARPU gains. Yoigo had 3.26 million mobile customers at the end of June, down from 3.43 million a year earlier.
"We continue to work hard to solve our issues surrounding Uzbekistan and to responsibly reduce our presence in region Eurasia," Dennelind said.
Telia’s Eurasia business includes operations in Kazakhstan, Azerbaijan, Georgia, Moldova, Tajikistan and Uzbekistan; partner Turkcell has submitted a binding bid for the first four of those markets. It completed the sale of its Nepalese arm Ncell to Malaysia’s Axiata in April, affecting both net sales and EBITDA at the remaining Eurasia operations in Q2.
The Eurasia business saw net sales fall by 39.8% to SEK3.34 billion, while EBITDA was down by 54.4% to SEK1.39 billion. The figures were also impacted by currency effects and a weak operational performance from Kcell, Telia said.
Telia reaffirmed its outlook for 2016 as a whole. It expects EBITDA from continuing operations to remain flat or slightly ahead of its 2015 figure, in local currency terms. Capex will come in at SEK14 billion-SEK15 billion, because "2016 is the peak year of the increased investments in fibre, mobile coverage and transformation," it said.
Shareholders can expect a minimum payout of SEK2 per share for the full year.
