Telia Q4 reports ad revenue fall, expects slower growth

STOCKHOLM (Reuters) -Sweden's Telia on Friday warned growth this year could slow after posting a 7.4% rise in fourth-quarter core earnings that showed a fall in advertising revenue, knocking its shares.

The telecom operator had said earlier this week that the results would be hit by non-cash impairment charges totalling $393 million due mainly to investment plans and market conditions.

The company, which offers telecom services in the Nordics and Baltics and also operates television channels, said its quarterly advertising revenue declined by 14.4%.

"2023 has been one of the worst years on record for advertising," outgoing CEO Allison Kirkby told Reuters, pointing to weak consumer and economic sentiment.

"We're not expecting it to really recover until the second half of the year ... the first half will still be a fairly tough half year for the ad market," said Kirkby, who will remain in her role until Jan. 31, before becoming the CEO of BT Group.

Under Kirkby, Telia launched a restructuring plan to slash costs through 2025, laid off staff, divested assets and streamlined operations to boost growth.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 7.49 billion Swedish crowns ($717.25 million) in the quarter from 6.98 billion a year earlier, while analysts polled by LSEG expected 7.47 billion.

For 2024, the company expects low-single digit service revenue growth, low-to-mid single digit EBITDA growth, and capital expenditure (CAPEX) of around 14 billion crowns.

Shares in Telia were down 6.5% in early trade, with Citi analysts pointing to its EBITDA outlook being a touch below consensus and a disappointing forecast for the company's free cash flow.

Telia said it expects a 2024 free cash flow of 7-8 billion crowns, which includes a headwind from an increase in interest payments.

(Reporting by Supantha Mukherjee in Stockholm, writing by Stine Jacobsen; editing by Terje Solsvik and Jason Neely)