Telia Delivers on Revenue, but EBITDA Remains Pressured Due to Energy Costs and TV Unit

Narrow-moat Telia's sales performed well during the second quarter (up 2.4% organically), but EBITDA growth was slightly disappointing, only growing 0.8% organically. Although we are pleased with the efforts the company is making in reducing costs (cost of sales were down 90 basis points and selling expenses down 100 basis points year over year), higher energy costs of SEK 100 million partially offset cost reductions. TV and media was also a drag, as it offset all the EBITDA growth recorded in the remaining divisions due to higher content costs during the quarter. Although reaching the overall 2022 guidance might be a bit challenging on the EBITDA front (we don’t expect challenges on the sales side), management maintained its outlook, which is still achievable if the second half of the year is slightly stronger. We are maintaining our SEK 40 fair value estimate.