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Telia’s core earnings top expectations on cost-cutting drive

© Reuters.

By Supantha Mukherjee

STOCKHOLM (Reuters) -Nordic telecom operator Telia reported quarterly core earnings ahead of market expectations on Wednesday as its plan to streamline operations led to lower costs, and the company backed its full-year outlook.

The company also expects more demand for secure communications products as governments across the region raise defence budgets and public companies enhance security.

“The government is a very important customer to us in all our markets… as they have more funding available, we would hope to be able to take advantage of that,” Chief Executive Officer Allison Kirkby said in an interview.

The conflict in Ukraine has forced Sweden and Finland to examine their longstanding military neutrality, including considering joining NATO, and have increased their defence budgets.

Western governments have warned about a potential threat of increased malicious cyber activity by Russia against critical infrastructure as a response to sanctions imposed as punishment for its actions in Ukraine.

The company, which operates telecom networks in the Nordics and the Baltics, laid out plans last year to cut billions in costs through 2025, including shedding staff, divesting assets and streamlining operations to spur growth.

Savings in the first quarter amounted to 200 million crowns and on track for 2 billion savings by the end of 2023, Kirkby said.

Despite high inflation, operational expenses in the quarter fell 3%.

The company’s first-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) rose 0.3% to 7.20 billion Swedish crowns ($734 million) from a year earlier, beating the mean forecast of 7.04 billion crowns, according to Refinitiv estimates.

Comparable net sales increased 2.1% in the quarter.

($1 = 9.8095 Swedish crowns)

Telia’s core earnings top expectations on cost-cutting drive

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