Telia management conceded it was taking time for the operator to truly show it is on the road to financial recovery, as a marginal rise in revenue during the second quarter failed to stem a significant drop in net income.
President and CEO Johan Dennelind (pictured) remained confident about the Sweden-based operator’s prospects for the second half of the year, when it expects to benefit from traction in revenue-generating initiatives along with moves to rein in costs. But he admitted the “recovery curve is slow” even though figures are moving in the right direction.
In Telia’s earnings statement, the executive cited “a soft mobile B2C [business to consumer sector] in Norway and a negative service revenue mix in Finland” as factors affecting its recent performance. However, he also noted positives including stability in its operational free cash flow, along with a lesser decline in group service revenue of 1 per cent year-on-year during Q2, compared with a 3 per cent drop in the opening quarter.
While noting adjustments to its domestic mobile portfolio and changes in the pricing of its fixed services “should contribute to the improved service revenue trends” in the back half of the year, Dennelind added “operational expenses in Sweden are still too high”. Nevertheless, improving trends in the second quarter means Telia maintained its full year goal of cutting domestic expenditure by 3 per cent, an objective which “will primarily be driven” by lowering resource costs.
In the second quarter, net profit attributable to shareholders stood at SEK1.6 billion ($171 million), down 25.9 per cent year-on-year, on revenue of SEK21.3 billion, a 2.2 per cent improvement on the comparable 2018 quarter.
It recorded revenue declines in Sweden and Denmark; increases in Finland, Norway and Estonia; while Lithuania was flat. The company recorded a higher operating loss in Denmark, with Estonia the only country to generate a rise in operating income during the quarter.
At group level over the first half, net income attributable to shareholders increased 134.1 per cent year-on-year to SEK3.4 billion on revenue of SEK42.1 billion, up 3.6 per cent.Subscribe to our daily newsletter Back