CEO Kirby announces new strategy and purpose, intending to raise more revenue from better customer experience and reducing costs.
Along with Q4 results for 2020, Allison Kirkby, President & CEO of Telia announced an updated strategy to create a Better Telia.
As part of this strategy, and to “grow the value of our infrastructure assets we are…creating a new business unit, Telia Asset Management, that will own and manage selected assets opening up the opportunity to bring in external investors and accelerate infrastructure development.
“We have for some time been working to identify such assets within our portfolio where a special focus has been on our towers, in particular in markets where we act as a challenger, and we will now proactively identify relevant partners that could join us on this journey.”
Telia announced it would sell off Telia Carrier, its international wholesale business last October.
New purpose
Kirby also said the operator “will be led by our new purpose, reinvent better connected living: “We will pivot from being a somewhat passive facilitator of connectivity, to being an active orchestrator of connected living, reinventing ourselves in order to reinvent better for our customers, and our owners.”
The company is looking banking on better customer experience to yield an improved EBITDA less CapEx of SEK 3 billion (€0.29 billion) and SEK 5 billion by 2023 and 2025 respectively. At the same time, Kirby said the aim is to reduce operational expenses by SEK 2 billion until 2023 and SEK 4 billion until 2025.
More details will be forthcoming, but tor the period up to 2023, Kirby said, “We expect annual low single digit service revenue growth, low to mid-single digit EBITDA growth and a return to cash CapEx of around 15% of net sales by 2023.
Transiition
“For 2021 specifically, which will be a year of transition, we expect service revenue and EBITDA, excluding Telia Carrier, to show flat to low single digit percentage growth while cash CapEx is expected to be in the range of SEK 14.5-15.5 billion as we roll out 5G and modernise our systems and existing networks,“ she said.
According to Kirby,“All of this will create a strong base from which to sustainably grow our operational free cash flow going forward. This in turn will enable us to pay attractive returns to our shareholders whilst maintaining a robust capital structure. Our Board has therefore proposed an updated dividend policy under which Telia will distribute at least SEK 2.00 per share, with a firm ambition to grow dividends by a low to mid-single digit percentage.”
Q4 results
The final quarter of 2020 and the start of 2021 have been a challenge, but Telia is resilient Kirby stated. “Our fourth quarter results were again sound and, as you have seen from our pre-announcement on January 20, particularly strong from an operational free cash flow perspective.
“Service revenues declined by 2.1 percent to SEK 19.8 billion on account of lower roaming and advertising revenues. As anticipated, we also experienced an increase in our operational cost base in the quarter, leading to EBITDA of SEK 7.5 billion. Cash CapEx in the quarter totaled SEK 4.2 billion and operational free cash flow was SEK 2.9 billion.
“Beyond connectivity, Telia’s services, such as Crowd Insights, “have supported authorities and countries in gaining insights which have helped them fight the pandemic. A clear illustration of using our technology for the good of others,” Kirby concluded.