Full focus on new strategic priorities

Third quarter summary

– Revenue decreased 0.9% to SEK 21,749 million (21,947) and like for like, revenue increased 0.9%.

– Service revenue decreased 0.6% to SEK 18,820 million (18,935) and like for like, service revenue increased 1.2%. For the Telco operations, service revenue increased 1.1% on a like for like basis.

– Adjusted EBITDA increased 0.1% to SEK 8,475 million (8,465) and like for like, adjusted EBITDA increased 1.7%. For the Telco operations, adjusted EBITDA increased 1.0% on a like for like basis.

– Operating income increased to SEK 3,892 million (3,516).

– Total net income increased to SEK 2,511 million (1,960) and total EPS increased to 0.59 SEK (0.46).

– Operational free cash flow declined to SEK 1,633 million (3,357) and the structural part of Operational free cash flow declined to SEK 3,099 million (3,660).

– The leverage ratio was 2.17x at the end of the quarter compared to 2.21x in the previous quarter.

– A dividend of SEK 0.50 per share was paid to shareholders.

– A change program was announced, aiming to simplify operations by implementing a new operating model, targeting annual savings of at least SEK 2.6 billion through an intended reduction of 3,000 positions. All changes are subject to customary union negotiations.

– The adjusted EBITDA and CAPEX outlooks for 2024 were updated and an outlook for 2025 as well as financial mid-term ambitions were announced.

Nine months summary

– Revenue decreased 0.2% to SEK 65,403 million (65,522) and like for like, revenue increased 0.4%.

– Service revenue increased 1.4% to SEK 56,857 million (56,081) and like for like, service revenue increased 2.0%. For the Telco operations, service revenue increased 2.1% on a like for like basis.

– Adjusted EBITDA increased 3.1% to SEK 23,475 million (22,763) and like for like, adjusted EBITDA increased 3.8%. For the Telco operations, adjusted EBITDA increased 2.4% on a like for like basis.

– Total net income increased to SEK 8,120 million (3,615) and total EPS increased to 1.93 SEK (0.80), mainly due to a capital gain from the divestment of the operations and network assets in Denmark.

– Operational free cash flow increased to SEK 3,614 million (-337) and the structural part of Operational free cash flow increased to SEK 5,163 million (4,925).

– Free cash flow per share, rolling twelve months, increased to SEK 2.34 (-0.17).

CEO comment

“Results for the third quarter were in line with our expectations. Service revenue and EBITDA grew slightly, compared to our strong Q3 last year. Mobile service revenue growth in all markets outpaced the decline in fixed legacy revenue, and customer satisfaction improved further. We also launched a change program targeting radical simplification, streamlined processes and improved ways of working, with annual savings of at least SEK 2.6 billion, and we set new mid-term financial ambitions at our Investor update in September.

Commercial progress

Service revenue growth in Sweden continues to be driven by Consumer which grew +3.9%, despite continued copper headwinds. This was mainly driven by TV growth of +22.4% and Broadband growth of +4.1%. The customer satisfaction trend continues in the right direction, and we are proud to report that Telia topped the SKI customer satisfaction survey among the main telco mobile brands. Fello made a strong debut, securing second place amongst all brands.

Swedish Enterprise service revenue declined -3.9% due to a weaker macro environment and licensing revenue from one customer last year which did not recur. We launched a new mobile portfolio for small businesses, bundled with a security service, which is part of our strategy to enhance our offerings and drive ARPU. Additionally, we signed the first agreements to sell real estate in Sweden linked to the fixed infrastructure modernization.

In Finland , service revenue was stable and, like in Sweden, the Consumer business is growing across both mobile and fixed services, while Enterprise is being held back by the macro environment, regulatory headwinds and legacy pressures. Simplification continues with the divestment of our webhosting business and the ramp-down of the e-invoicing service.

Norway had an expected slight decline in service revenue and EBITDA, as discussed in connection with our Q2 results. The Mobile Consumer customer base has had five consecutive months of growth, as our offerings are well received, partly offset by the ending of one Enterprise contract this quarter. Meanwhile, Phonero won the EPSI customer satisfaction survey for the third consecutive year, and we entered into collaboration agreements with several important Enterprise customers including the Norwegian defense.

Lithuania reported modest growth in both service revenue and EBITDA despite having had an outstanding Q3 last year on the back of the NATO summit. In Estonia , momentum improved slightly with all core product areas contributing. The Estonian Defense Forces tested Telia’s 5G private network solution, which ensures mission critical data communication independently of availability of electricity and land-based internet.

TV and Media ’s digital transition continued to proceed at speed, with 27% growth in digital advertising and 13% growth in direct-to-consumer streaming revenue. A strong first quarter for TV4 Media Manager, a new platform facilitating advertising purchases for smaller customers, contributed to the growth. EBITDA improved, despite content costs still being higher than the same period last year.

Sustainability progress

During the quarter, we held Climate Action meetings with our most important suppliers to discuss their agenda for emissions reductions. These meetings are crucial for aligning our efforts towards achieving our net-zero target by 2040. 56% of our supply chain emissions are covered by Science Based Targets, and we continue to work closely with our suppliers to drive further adoption.

Financial progress

I flagged in July that EBITDA growth this quarter would be limited, after a strong third quarter last year, and pick up again to an above-trend growth rate in the fourth quarter. This remains our view. As for service revenue, below-trend growth is expected to remain in the fourth quarter, related to pricing and macro cycles and to our decisions to step away from non-core and unprofitable service offerings. Year to date service revenue growth is 2.0%, in line with our ambition to grow service revenue by around 2% in 2025 and over time. Meanwhile, it is encouraging that operating margins are moving in the right direction even before savings from our recently launched Change program take effect.

The restructuring of our vendor financing program announced in September drove the negative working capital movement this quarter, as expected. The reduction aims to drive simplification, reduce cash flow volatility and increase balance sheet transparency, and we expect to complete it in the fourth quarter. Despite this, and the SEK 2 billion quarterly dividend payment, financial leverage improved to 2.17x.

Looking ahead

During our Investor update on September 26, we outlined our strategic priorities and financial ambitions for 2025-2027. We are determined to simplify our operations, drive innovation, achieve sustainable growth, and to reach service revenue and adjusted EBITDA CAGR of 2% and 4%, respectively, as well as a Free cash flow of at least SEK 10 billion by 2027.

Looking at the near-term, the Change program is progressing as planned, and we are on track to implement the new organization by December 1. This is intended to reduce the number of positions by 3,000, enable faster decision-making closer to our customers, improve commercial execution, while reducing layers of organizational complexity.

We still believe that EBITDA growth momentum will be stronger in the fourth quarter. Today, we are updating our full-year EBITDA guidance for 2024 to mid-single digit growth and CAPEX to below SEK 14 billion. We will also execute on the change program in this quarter, affecting many of our team members, and I would especially like to thank all employees for their continued focus and commitment during this transitory period.”

Patrik Hofbauer

President & CEO

In the CEO comment, all growth rates disclosed are based on the “like for like” definition and EBITDA refers to adjusted EBITDA, unless otherwise stated. See definitions for more information.

ABOUT TELIA

Telia Company (STO: TELIA) is a Nordic and Baltic telecommunications leader and Nordic media house, serving consumers, businesses and public sector customers with essential digital infrastructure, ICT services and entertainment. ** Our colleagues serve millions of customers every day in one of the world’s most connected regions. We’re the hub in the digital ecosystem, providing 26 million mobile, broadband and TV subscriptions that empower people, companies and societies to stay in touch with everything that matters 24/7/365. Learn more at www.teliacompany.com **