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Introduction & Market Context
Telia (ST:TELIA) Company AB reported its second quarter 2025 results on July 18, showing continued EBITDA growth despite slower service revenue expansion. The Nordic and Baltic telecom operator demonstrated progress on its strategic initiatives, including significant portfolio reshaping and efficiency improvements, while navigating varying market conditions across its footprint.
The company reported a 6.2% increase in adjusted EBITDA, significantly outpacing its 1.0% service revenue growth, highlighting successful cost management initiatives. Free cash flow reached SEK 2.3 billion, representing a SEK 0.4 billion increase compared to the same period last year.
"Q2 trends show solid efficiencies with momentum in Sweden and Baltics confirmed, though headwinds persisted as expected in Norway," the company noted in its presentation, while reiterating its full-year 2025 outlook.
Quarterly Performance Highlights
Telia’s financial performance in Q2 2025 showed mixed results across key metrics. Service revenue grew by 1.0%, supported by strong performance in Sweden and the Baltics, while facing pressure on fixed and mobile wholesale in Norway. Mobile service revenue increased by a modest 0.1%, while fixed service revenue showed stronger growth at 1.8%.
As shown in the following chart of quarterly financial highlights, adjusted EBITDA grew by 6.2%, with Sweden, Finland, and Lithuania all delivering strong performances, though Norway was impacted by lower revenue and challenging cost comparisons:
The company maintained disciplined capital allocation, with CAPEX at SEK 12.6 billion on a rolling 12-month basis, remaining well below the full-year outlook. Free cash flow reached SEK 2.3 billion, increasing by SEK 0.4 billion compared to last year, primarily due to reduced capital expenditures.
Telia’s leverage position improved, with net debt to EBITDA declining to 2.09x from 2.18x in Q1 2025. This improvement was driven by strong free cash flow generation that more than covered the outgoing dividend.
The following chart illustrates the service revenue and EBITDA trends over recent quarters, showing a slight moderation in service revenue growth while EBITDA growth remains robust:
Cost efficiency initiatives continued to yield results, with resource costs decreasing by 5.1%, though this was partially offset by increased marketing spend and higher IT costs. Overall, OPEX in relation to service revenue declined to 30.4% compared to 32.3% in Q2 2024.
The detailed free cash flow analysis reveals strong operational cash generation despite higher interest payments:
Strategic Initiatives
Telia made significant progress on its portfolio management strategy during the quarter. The company completed its TV and Media transaction, signed a Memorandum of Understanding for exiting its Latvia operations with its co-owner, and launched an offer to acquire Bredband2 in Sweden.
The Bredband2 acquisition, valued at an enterprise value of SEK 3 billion, has been recommended by Bredband2’s board and has received undertakings from the top five owners representing 50.2% of shares. The transaction is expected to deliver run-rate synergies exceeding SEK 0.2 billion per year, with integration costs of approximately SEK 0.2 billion.
The strategic rationale for the Bredband2 acquisition is illustrated in this breakdown:
In Sweden, Telia’s convergence strategy continues to gain traction, with the total number of convergent customers now exceeding 1 million. The company noted that household churn is reduced by approximately 50% with each additional service added, while average revenue per household growth is averaging over 5%.
The company’s NorthStar innovation program is expanding, with the Swedish Armed Forces joining to test advanced 5G capabilities, strengthening Telia’s position in mission-critical communications.
Geographic Performance
Telia’s performance varied significantly across its geographic markets, with Sweden and the Baltics showing strength while Norway faced challenges.
Sweden delivered continued solid performance with 7.8% service revenue and adjusted EBITDA growth. The market showed strong TV momentum, launched new consumer mobile portfolios, and improved Net Promoter Score. Enterprise momentum was driven by non-subscription-based revenue, and EBITDA growth remained strong supported by profitable growth and the change program.
Lithuania was another standout performer with 11.0% service revenue and adjusted EBITDA growth, driven by solid commercial development across mobile, fixed broadband, TV, and ICT services:
Finland showed improved performance with EBITDA growth accelerating due to solid efficiency work, though service revenue remained slightly negative at -0.7%, hampered by continued macroeconomic headwinds and e-invoicing ramp-down:
Norway faced the most significant challenges, with service revenue and adjusted EBITDA declining by 3.9%. The company cited weak development in fixed and mobile wholesale, and has implemented a new fixed services division to increase focus and drive quality and customer experience:
Estonia maintained stable and solid performance with service revenue and EBITDA growth between 3-4%, and the company acquired a long-term IT partner to strengthen its ICT proposition for large corporate customers.
Forward-Looking Statements
Telia reiterated its 2025 outlook, projecting service revenue growth of approximately 2%, adjusted EBITDA growth exceeding 5%, CAPEX below SEK 14 billion, and free cash flow of approximately SEK 7.5 billion.
The company’s summary and outlook is presented in the following slide:
Looking further ahead, Telia maintained its 2025-2027 financial ambitions, targeting service revenue compound annual growth rate (CAGR) of 2%, adjusted EBITDA CAGR of 4%, CAPEX below SEK 14 billion per year, and free cash flow exceeding SEK 10 billion by 2027.
The company emphasized that its change program is delivering impact as expected, and free cash flow is on track with SEK 4.0 billion generated in the first half of 2025. Management noted that while Sweden and the Baltics remained strong, there is high activity underway to improve revenue trends in Norway and Finland.
Telia also highlighted its sustainability commitments, including goals to reduce greenhouse gas emissions in its own operations by 50% by 2025 and 90% by 2030, with an ultimate goal of achieving Net Zero by 2040.
Full presentation:
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