By Alessandro Parodi
(Reuters) -Telecom operator Telia slightly raised its profit outlook for 2024 on Thursday, and cited a newly launched cost-cutting overhaul, sending shares up over 3% in early trade.
The Swedish-listed group that provides telecom services and operates TV channels in the Nordic and Baltic region last month presented a plan to achieve 3,000 job cuts or about 15% of its workforce in 2024. The aim is to reduce costs in a slowing market and increase its free cash flow.
The plan includes increased use of artificial intelligence, to boost the group’s sales, marketing and customer support operations, and a sharper focus on digital revenue in TV and media, Chief Executive Patrik Hofbauer told Reuters.
“I think it will be a bit up and down when it comes to the revenues, but the most important for them is to mitigate the loss in linear TV revenues with digital revenues,” he said.
Telia said it sees mid-single digit like-for-like growth in adjusted operating profit before depreciation and amortisation (EBITDA) this year, and capital expenditure (CAPEX) below 14 billion Swedish crowns ($1.32 billion).
Its previous guidance, given in January and repeated in July, was for low to mid-single digit growth in adjusted EBITDA and CAPEX of around 14 billion crowns.
Its quarterly adjusted EBITDA edged up to 8.48 billion crowns from a year-earlier 8.47 billion.
Analysts had on average forecast a decline to 8.39 billion crowns, according to a poll provided by Telia.
“There is uncertainty around TV & Media, but management have guided for an improving EBITDA trajectory,” J.P. Morgan said in a post-earnings comment.
Citi said in a note the quarterly EBITDA beat and lower content costs should help EBITDA growth to rise above 5% in the fourth quarter, adding lowered capital expenditure guidance could lead to a modest upgrade to the group’s free cash flow.
The group repeated a full-year forecast for low single-digit like-for-like growth in service revenue and said it expected low to mid-single digit percentage growth in its dividends, from a floor of 2 Swedish crowns per share it paid on its 2023 results.
($1 = 10.5869 Swedish crowns)
(Reporting by Alessandro Parodi in Gdansk; Editing by Muralikumar Anantharaman, Stephen Coates and Barbara Lewis)
