Telia Q2 2025 slides: EBITDA grows 6.2% despite revenue slowdown, portfolio reshaping continues

Telia Company AB reported robust Q2 2025 results, with adjusted EBITDA growing 6.2% and free cash flow increasing to SEK 2.3 billion, primarily driven by successful cost management and ongoing portfolio reshaping initiatives. Despite service revenue growth moderating to 1.0%, the Nordic telecom operator improved its leverage to 2.09x net debt to EBITDA and reiterated its full-year 2025 outlook. Strategic highlights include an offer to acquire Bredband2 in Sweden, expected to deliver over SEK 0.2 billion in annual synergies, while geographic performance showed strength in Sweden and the Baltics, offsetting challenges in Norway and Finland.

Analysis

Telia Company's Q2 2025 results demonstrate a successful execution of its cost-control and efficiency strategy, which is currently the primary driver of profitability. The company reported a robust 6.2% year-over-year increase in adjusted EBITDA, significantly outpacing the modest 1.0% growth in service revenue. This margin expansion is a direct result of disciplined operational expenditure management, with OPEX as a percentage of service revenue declining to 30.4% from 32.3% in the prior year. This operational strength translated into improved financial health, as free cash flow grew by SEK 0.4 billion to SEK 2.3 billion and net debt to EBITDA leverage improved to 2.09x from 2.18x in the previous quarter. Strategically, Telia is actively reshaping its portfolio through the pending acquisition of Bredband2 in Sweden, which is expected to deliver over SEK 0.2 billion in annual synergies, and the planned exit from Latvia. However, the overall positive picture is moderated by significant geographic performance disparities. Strong growth in Sweden and the Baltics, with Lithuania posting 11.0% EBITDA growth, was partially offset by persistent headwinds in Norway, where both revenue and EBITDA declined by 3.9%. Management's reiteration of its full-year 2025 guidance, including over 5% adjusted EBITDA growth, signals confidence that its efficiency program can continue to deliver results while it addresses underperforming markets.

Key Decisions for Investors

• Investors should weigh the company's proven ability to drive profitability through cost controls against the risk of stagnating top-line performance, as the investment thesis currently relies more on margin expansion than organic growth.
• Closely monitor the turnaround efforts in the Norwegian and Finnish markets, as continued underperformance in these regions could materially drag on consolidated results and offset the strong momentum seen in Sweden and the Baltics.
• The successful integration of Bredband2 and the realization of its projected SEK 0.2 billion in annual synergies represent a key near-term catalyst, making the progress of this M&A essential to track for future value creation.
• Consider the improving balance sheet, with leverage now at 2.09x, and strong free cash flow generation as key defensive attributes that support the potential for shareholder returns even amid mixed revenue growth.