A strong end to the year
Fourth quarter summary1
- Revenue increased 0.9% to SEK 23,098 million (22,894) and like for like, revenue decreased 0.4%.
- Service revenue increased 2.8% to SEK 19,666 million (19,123) and like for like, service revenue increased 1.7%. For the Telco operations, service revenue increased 3.3% on a like for like basis.
- Adjusted EBITDA increased 7.4% to SEK 7,491 million (6,977) and like for like, adjusted EBITDA increased 7.3%. For the Telco operations, adjusted EBITDA increased 5.4% on a like for like basis.
- Operating income amounted to SEK -2,398 million (-17,379), both periods were impacted by non-cash impairment charges of SEK -4,062 million and SEK -19,276 million, respectively.
- Total net income2 amounted to SEK -2,718 million (-18,818), both periods impacted by non-cash impairment charges.
- Operational free cash flow increased to SEK 6,993 million (297) and the structural part of Operational free cash flow increased to SEK 2,329 million (274).
- The leverage ratio2 was 2.32x at the end of the quarter.
- Outlook 2024: Service revenue, like for like, is estimated to grow by low single digits, adjusted EBITDA, like for like, is estimated to grow by low to mid-single digits, CAPEX, excluding fees for licenses, spectrum and right of use assets, is estimated to be around SEK 14 billion and the structural part of Operational free cash flow is estimated to be between SEK 7-8 billion.
- For 2023, the Board of Directors proposes to the Annual General Meeting a dividend of SEK 2.00 per share (2.00).
Full year summary1
- Revenue increased 3.7% to SEK 88,785 million (85,580) and like for like, revenue increased 1.8%.
- Service revenue increased 3.9% to SEK 75,912 million (73,047) and like for like, service revenue increased 2.0%. For the Telco operations, service revenue increased 3.3% on a like for like basis.
- Adjusted EBITDA increased 4.5% to SEK 30,254 million (28,954) and like for like, adjusted EBITDA increased 3.6%. For the Telco operations, adjusted EBITDA increased 5.3% on a like for like basis.
- Operating income increased to SEK 4,980 million (-9,214) and total net income2 increased to SEK 897 million (-14,165), both periods impacted by non-cash impairment charges.
- Operational free cash flow increased to SEK 6,656 million (5,124) and the structural part of Operational free cash flow increased to SEK 7,254 million (6,092).
1) Continuing operations if not otherwise stated. Telia Denmark classified as discontinued operations from the third quarter 2023. 2) Refers to continuing and discontinued operations.
CEO comment...
"Our primary objective throughout 2023 was to build profitable growth momentum in our Telco operations, increasing value creation across the business by optimizing capital allocation and cash conversion.
Our full year and fourth quarter results confirm that we delivered what we set out to achieve, despite the ongoing impact of macro factors including rising financing costs and contracting advertising markets.
Since the second quarter, our Telco business has returned to mid-single digit EBITDA growth and our annual and fourth quarter results are a clear improvement on the previous year.
Delivery against key strategic priorities continued, and I would like to highlight the following:
- Customer satisfaction is progressing in the right direction with six consecutive quarters of NPS growth
- Further consolidation of our network leadership position with Telia's 5G now reaching 89% of the Nordic/Baltic population, and our home market securing the strongest spectrum portfolio and awarded best network status
- Continued structural cost transformation enabling positive operational leverage
- Our strategy for returning TV and media to profitability has started to deliver tangible result
- Our net zero target for 2040 was approved by the SBTi, and the share of total supply chain emissions covered by SBT reached 52%
- The deal to sell Telia Denmark to Norlys marks another significant milestone in capital allocation efficiency
Business momentum in the final quarter of the year remained solid across our Telco operations, with revenue and EBITDA growing in line with our stated ambitions, meaning that - excluding the effects of energy prices - Telco EBITDA has grown consistently in the past nine quarters.
Telco service revenue growth of 3.3% was mainly driven by mobile, although Consumer, Enterprise and Wholesale all contributed. Telco EBITDA growth of 5.4% was driven mainly by higher service revenues.
The Nordic advertising markets, however, remain challenging and continued to decline, but our TV and Media business unit reverted to a positive EBITDA contribution, despite that much of the turnaround still lies ahead of us.
Breaking down the results by country, Sweden's service revenue increased 2.8%, despite continued headwinds from the declining copper legacy. Growth was broad based, with mobile at +1.5%, broadband at +5.5% and TV at a record +21% growth, the latter helped by price increases and 6% growth in the subscriber base compared to a year ago. EBITDA was impacted by higher costs for TV content, Viaplay being off air for most of the fourth quarter last year, and investment in customer care during the transition from C More to TV4 Play+, but still grew 0.8%. Telia Sweden's leading infrastructure position was re-confirmed with the award of best network in the umlaut mobile network test, while 5G roll-out continues with population coverage now reaching 82%.
Finland's service revenue grew 2.1%, despite a decline in legacy fixed revenue. This was underpinned by mobile growth of 4.1%, which was driven by double digit ARPU growth in Consumer, partly offset by a slight ARPU decline in Enterprise. Churn remained below last year's level, at 20%. Network modernization continued, and 5G coverage now exceeds 90%, underpinning further improvement in customer experience metrics and brand consideration. Cost reduction remained strong, resulting in double digit EBITDA growth. Excluding energy cost reductions, EBITDA grew by 6%.
Norway's service revenue grew 4.2%, driven by our leading mobile Wholesale business, with positive contributions from both Consumer and Enterprise. Network modernization continued in line with our plans, with 5G population coverage at close to 95%. Telia's position as a key partner to critical public services was further strengthened with the awarding of a contract from the Norwegian Tax Authority and the installation of an Enterprise Mobile Network (EMN) with the Norwegian Post. EBITDA outgrew revenue, increasing by 8.1%.
Having started the year with three strong quarters, Lithuania grew service revenue at a more modest 4.3% in Q4, following a slight decline in fixed services. Mobile growth continued to be strong at 10.1%, and the business remains a clear digital infrastructure leader with over 99% 5G population coverage. EBITDA grew 0.7%, also impacted by higher costs for employee bonuses due to the improvement in business performance, and especially from an improved customer experience.
Estonia continued to grow service revenue in line with previous quarters at 6.2%, driven by both mobile and fixed services, with a continued strong conversion into EBITDA, which grew by 11%.
TV and Media was challenged by further deterioration in advertising markets. However, a 14% reduction in advertising revenue was partly offset by 6.5% growth in pay TV revenue. C More customers were successfully migrated to TV4+ and MTV Katsumo in the quarter - a significant milestone. EBITDA was positive, despite continuing advertising headwinds and the stiff competition and costs for Champions League content, as structural cost transformation and content rationalization take effect.
Cash flow for the fourth quarter was, as expected, significantly higher than the same period last year, with operational free cash flow of SEK 7.0 billion (0.3 billion in Q4 2022) and the structural part at SEK 2.3 billion (0.3 billion in Q4 2022). This led to structural operational free cash flow for the full year of SEK 7.3 billion, of which Telco operations delivered SEK 7.9 billion and TV and Media SEK -0.6 billion.
With leverage back within our 2.0-2.5x range, and the proceeds from the sale of Telia Denmark due in the first half of this year, the Board of Directors intend to propose to maintain a dividend of SEK 2.00 per share, in line with our policy and last year, and again divided into tranches of SEK 0.50 per share paid every quarter.
Looking ahead for 2024, the Telia management team expect the current business momentum to continue, and anticipate low-single digit service revenue growth, low-to-mid single digit EBITDA growth, and CAPEX of around SEK 14 billion. The structural part of operational free cash flow is forecasted at SEK 7-8 billion, which includes the headwind from an increase in interest payments.
As I step down as CEO at the end of this month, I am proud to be handing over a business built on world-leading digital infrastructure, a well-deserved reputation for embedding sustainability in our sector and beyond, increasingly happier customers, and a team of talented, engaged and dedicated employees. I would therefore like to extend my huge thanks to the whole Telia team for the journey we have started, creating a better Telia for all. With solid foundations now in place, I have every confidence that under Patrik's leadership, the Telia team will build upon these foundations through 2024 and beyond, and I wish all of them every success."
Allison Kirkby
President & CEO
In 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.
This information is information that Telia Company AB is obliged to make public pursuant to the EU Market Abuse Regulation and the Securities Market Act. The information was submitted for publication, through the contact person set out below, at 07.00 CET on January 26, 2024.
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Forward-Looking Statements
Statements made in the press release relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Telia Company.
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