Telia Company AB Q4 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Lee - Goldman Sachs - Analyst : Good morning, everyone. I think following, obviously, your CMD in September and the fact that your cost cutting will start to impact in Q1, today, it was all about looking at your underlying service revenue growth for the Nordic telcos. And I guess, what we saw is it was pretty muted as anticipated. So the question is on the reacceleration there. It's three questions, but kind of all very interrelated. One, should we expect an acceleration in your service revenue growth in the first quarter of 2025 for Sweden, Norway, and Finland? Two, what is driving that service revenue growth reacceleration? And then, three, when do you think your Nordic telcos will start delivering to their structural service revenue growth potential of 2%-plus? Thank you.

Question: Andrew Lee - Goldman Sachs - Analyst : I think that's pretty much all of it. That was really helpful. And so it sounds like less of a swing maybe than we expected between 1H and 2H, and the reacceleration starting in Q1.

Question: Andrew Lee - Goldman Sachs - Analyst : Thank you very much.

Question: Maurice Patrick - Barclays - Analyst : Good morning, guys. Thanks for taking the questions. Just from my side, if you could add some more commentary on the impact of the change program on your overall business? I mean, you've indicated in the prepared remarks that you completed that on plan at the beginning of December. And you're seeing those cost benefits coming through. I'm just curious to understand the impact, if any, on the operating performance over the time, clearly, a period of large change for you, with 15% of employees leaving the business. Investors do ask about the net and gross impact of that SEK2.6 billion cost reduction. Your updated thoughts on that would be very helpful. Thank you. And just a sort of a small second question. I noticed the SEK0.2 billion, I think it is, of copper-related real estate sales, which I suspect is less about the copper itself, maybe the local exchanges. Just thoughts in terms of what we could expect from copper-related estate inflows in the next couple of years would be very helpful. Thank you.

Question: Maurice Patrick - Barclays - Analyst : (multiple speakers)

Question: Maurice Patrick - Barclays - Analyst : Thank you.

Question: Stefan Gauffin - DNB Markets - Analyst : Yes, a couple of questions, please. So first on Sweden Mobile, where end-user service revenue was declining despite what I think is an okay market environment. I know you gave some comments on business Mobile, are seeing some improvement there. But are you happy with your strategy in Sweden? And do you see that your pricing initiatives will support a return to healthy growth for the Mobile business? Secondly, on TV and Media, your -- the TV revenues exceeded my forecast, compensating for weaker-than-expected advertising revenues. So how do you see the advertising revenues playing out in 2025? Do you still see structural headwind for the linear TV resulting in declining advertising revenues despite improving macro? What's included in your forecast? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:30AM, TELIA.ST - Q4 2024 Telia Company AB Earnings Call

Question: Maurice Patrick - Barclays - Analyst : Okay. Thank you.

Question: Siyi He - Citi - Analyst : Hello. Good morning. Thank you for taking my questions. I have two, please. The first question is really on your guidance on the EBITDA growth for '25. I think at your Capital Markets Day, I mean, the same question was asked, why are you targeting just above 5% and not a bolder guidance. I think the answer given then was that you are still going to implement the changing program. And now we have successfully completed that. And just a question is why you still maintain the initial EBITDA guidance as given in Capital Markets Day? And the second question is really also about the guidance on free cash flow. Looking at the cash outflow in Q4, it seems that you have paid some of the restructuring costs in Q4. I'm just wondering will this give some headrooms for your free cash flow for next year? And maybe some comments on how should we think about net working capital going forward. Thank you.

Question: Siyi He - Citi - Analyst : Thank you very much.

Question: Andreas Joelsson - Carnegie Investment Bank AB - Analyst : Thank you. Good morning, everyone. A question for Patrik and a little bit sort of overall question. But you've been in the company for a year now, and you have done a lot of action on costs. You have done some management changes. And I guess, you also have had plenty of dialogue with customers. And given that, what do you see that customers say that they would like you to do that you're not doing in order to give you more trust with their business? Sort of have they given you new ideas how to be able to grow this business for beyond 2025 and so on? A difficult question, but it would be great to hear your thoughts on this. Thanks.

Question: Andreas Joelsson - Carnegie Investment Bank AB - Analyst : Absolutely. Thank you.

Question: Fredrik Lithell - Handelsbanken Capital Markets - Analyst : Thank you very much for that. I had a follow-up question maybe to Eric on the free cash flow guidance, around SEK8 billion for the year, and a guidance you provided on the Capital Markets Day. You have now or in the process of selling Marshall will contribute SEK1 billion or so. Is that -- did you sort of know about that? Or did you have a hunch about that, so you have already added that into the free cash flow guidance? Or should we think about that you will sort of change the guidance when that is settled? That's really my question. Thank you.

Question: Fredrik Lithell - Handelsbanken Capital Markets - Analyst : Okay, thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 30, 2025 / 8:30AM, TELIA.ST - Q4 2024 Telia Company AB Earnings Call

Question: Viktor H÷gberg - Danske Markets - Analyst : Yeah, two questions from me. On the cost program, it's kind of interesting to see that Tele2 yesterday also announced a similar cut 15% FTEs. Might be unfair, of course, to call it comparable, but mindful of what you've done. But I would imagine that Tele2 would have a bit leaner organization to begin with. Just thinking, does this imply that when it comes back to the EBITDA growth guidance, maybe you have more efficiencies to draw out the Telia organization this year and next year? Is that something that we can infer from what Tele2 is doing? Of course, not fully comparable. But just thinking if you are a bit conservative on the 5% -- at least 5% EBITDA growth. That's the first question. I have another one after that.

Question: Viktor H÷gberg - Danske Markets - Analyst : Could I ask another question, or should I go back in line?

Question: Viktor H÷gberg - Danske Markets - Analyst : Thank you. You paid up more in dividends than the cash flow has allowed to reiterate the guide for SEK8 billion this year. Finally, covers the SEK2 dividend. Given the balance sheet is in decent shape, the divestments you're doing -- of course, this is a Board question -- but just is it too early to talk about a possible dividend hike already for the year of 2025, announced in one year, would follow the logic over the past years? Or do you just want to get to this level, confirm SEK2 for 2025 and then in 2026, the dividend growth? Just some thoughts around that would be good.

Question: Keval Khiroya - Deutsche Bank - Analyst : Thank you. We've got two questions, please. So firstly, going back to Swedish Mobile, I appreciate the Q4 issues. But even when we look historically, there's limited evidence of service revenue growth over the past two years. So to what degree do you think the price rises have been sticking so far? And how much do you think this has been going away in spin down to the low end of family plans? And secondly, underlying EBITDA in Norway was slightly positive, excluding the comp issue that '25 will obviously see the loss of the ICE revenues. So to what degree do you think you can compensate for the ICE loss? And how should -- how are you thinking about Norwegian EBITDA growth in 2025? Thank you.

Question: Joshua Mills - BNP Paribas Exane - Analyst : Thanks, guys. A couple of short ones for me. You've talked a lot about your own pricing initiatives. And the commentary from Tele2 management, yes, that was also quite supportive. So my question firstly would be, are you seeing any change in price activity, price increases, from your competitors in the market? And that would be the first one. And then, secondly, on B2B, obviously, a headwind this quarter, and you're talking about the improvement expected in Q1 and later in 2025. My question is, would this improvement coming through has just to do with phasing? Or has there been any change in the competitive environment, which makes you more confident in the B2B outlook this year? Thanks.

Question: Joshua Mills - BNP Paribas Exane - Analyst : Great. Thanks very much.

Question: Ajay Soni - JPMorgan - Analyst : Thanks for taking the question. Two from me, please. You highlighted in the presentation that your Finland EBITDA benefited from the change program. You didn't highlight this within other markets. So is there something specific within Finland, which means you saw the benefit in Q4? And my second question is just around pricing that you highlighted within Sweden and Norway. Can you give details on what pricing adjustments you've made and any subsequent impact on your subscriber base? Thank you.

Question: Ajay Soni - JPMorgan - Analyst : Okay. Thanks very much.

Question: Steve Malcolm - Redburn Atlantic - Analyst : Yes, thanks, everyone. I'm very honored to get the last question. Just a couple on service revenues and maybe one very quick one on interest as well. Just sort of coming back to the questions that you've been asked on service revenue, just wanted to understand, it seems like your view of the SKU between 1H and 2H has softened a bit since the CMD in Q3. Is that right, in terms of the uplift required in Q2? And if so, could you sort of just lay out the reasons why you don't think the SKU is going to be quite as stark? And then, secondly, just on service revenues, the comments you've made on kind of your mission-critical revenues in Sweden. Is it a reasonable assumption that given the kind of changing geopolitics -- you've seen a lot of cable cutting in the Baltics. Clearly, we've had Trump in the States and like in the States, that you're seeing greater urgency from the Swedish authority in terms of defense spending. Is that something that you think is going to come through a bit quicker than previously? And then, finally, Eric, just on interest, a lot of moving parts this year with a bond refi. We had a rate cut yesterday in Sweden. Can you just give us an idea of the sort of step that interest costs we should expect for '25? That would be very helpful. Thank you.

Question: Steve Malcolm - Redburn Atlantic - Analyst : (technical difficulty) reasonable.

Question: Steve Malcolm - Redburn Atlantic - Analyst : So you haven't seen any sort of --

Question: Steve Malcolm - Redburn Atlantic - Analyst : No particular evidence of greater urgency in the last few months, just joined the dots, I guess, on the geopolitics?

Question: Steve Malcolm - Redburn Atlantic - Analyst : Okay. Thanks so much. (inaudible)