Telia’s net profit plummeted during Q4 2017 as sales stagnated, but the result failed to stem overall earnings growth for the full year.
Johan Dennelind, president and CEO (pictured) suggested an ongoing transformation strategy played a part in the mixed bag of results across both periods. In an earnings statement, he highlighted reductions in operating expenses in its home market of Sweden and noted the company is on track to deliver an overall reduction in costs of SEK1.1 billion ($139 million) in 2018.
“Our cash capex level was reduced in 2017 without compromising on our superior network ambition. We expect a further reduction in 2018 thanks to better coordination in our group and due to lower fibre deployments,” Dennelind said.
The results of Telia’s cost-cutting programme are perhaps best reflected by its full year 2017 earnings: net income of SEK10.1 billion was 56.2 per cent higher than in 2016, despite revenue dropping 5.1 per cent to SEK79.8 billion.
Telia is in the process of refocusing its business on its core Nordic and Baltic markets. Dennelind noted it largely maintained its market share in those regions during 2017, adding the operator is also seeing “good signs in increasing revenues close to the core as the organic IoT revenue growth doubled in 2017”. IoT sales are “projected to take another step in in 2018.”
A sale of Telia’s holding in Russia-based operator MegaFon “brought SEK11.8 billion in cash” during Q4, Dennelind said. However, the transaction failed to halt an 89.5 per cent year-on-year drop in net income during the quarter to SEK768 million. Revenue of SEK21.1 billion was flat compared with Q4 2016 (up a marginal 0.3 per cent year-on-year).
The company today (26 January) announced another step in its restructuring journey: in a separate statement it said Fintur Holdings, which it jointly owns with Turkcell, had agreed to sell its entire stake in Georgian operator Geocell to JSC Silknet, the country’s largest fixed network operator, for $153 million.