Telia chief hails 'solid' first half, but cautious on H2 comparisons

Telia president and CEO Johan Dennelind warned that the company faces headwinds in the latter half of 2016 that could impact year-on-year earnings comparisons after what he termed a "solid first six months".

The Sweden-headquartered operator today announced a marginal 0.1 per cent year-on-year rise in overall net income in the first half of 2016 to SEK7.81 billion (€824 million/$907 million) compared to SEK7.8 billion in the first six months of 2015. Operating income excluding non-recurring items grew 19.6 per cent year-on-year to SEK8.64 billion in the first half of 2016, and net sales in reported currency fell 1.5 per cent to SEK41.52 billion.

Despite warning that year-on-year comparisons in the second half of 2016 may be less favourable, Dennelind reiterated Telia's full-year guidance of "EBITDA on a comparable basis to be in line or slightly above the level in 2015 for the continuing operations," and capex excluding licence and spectrum fees of between SEK14 billion and SEK15 billion for continuing operations.

The CEO noted that Telia is well positioned in key Nordic and Baltic markets, which he said are "very much the cradle of digitisation" that have the "potential to lead the way in the so called 4th industrial revolution."

Telia is in the process of exiting Eurasian markets as part of a previously announced strategy to focus on core regions. The company has already begun to report its Eurasian operations as discontinued operations. While Dennelind noted that its remaining operations in the area "were still impacted by high competition and negative currency effects" in the opening six months, he added that the company saw "some early signs of market stabilisation"

During the second quarter, Telia increased net income 5.5 per cent year-on-year to SEK3.9 billion; operating income excluding non-recurring items increased 20.1 per cent to SEK4.44 billion; and net sales declined 2 per cent to SEK21.1 billion.

EBITDA in the second quarter grew 4.1 per cent year-on-year to SEK6.3 billion, which Reuters reported was inline with the average figure predicted in a poll of analysts. Telia's second quarter sales were marginally below the SEK21.2 billion the analysts' forecast.

For more:
- see this Telia announcement
- read the company's full earnings report (PDF)
- view this Reuters report

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