Swedish telecom giant Telia reported second-quarter earnings that narrowly beat analyst forecasts, as a combination of cost-cutting efforts and rising demand for secure connectivity helped push service revenue to its highest level in four years. The company also reaffirmed its full-year outlook, signaling confidence in its ongoing turnaround strategy.
Key Numbers
Telia said adjusted EBITDA — a measure of earnings before interest, taxes, depreciation, and amortization — came in at 8.38 billion Swedish crowns for the April-to-June period. That was slightly above the 8.34 billion crowns analysts had expected. The beat was fueled by a 2.8% rise in service revenue, which hit a four-year high, and ongoing cost reductions across the business.
Service revenue growth was led by Telia's operations in Sweden, Norway, and the Baltic countries. Finland, a market that had been struggling, returned to modest growth as customer churn — the rate at which subscribers leave — eased and more users signed up for fixed-term contracts.
What's Driving the Results
Telia has been under pressure in recent years to improve profitability in a mature telecom market where competition is fierce and revenue growth is hard to come by. The company has responded with a broad cost-cutting program, including streamlining operations and reducing headcount. Those efforts are now showing up in the bottom line.
At the same time, demand for secure and reliable connectivity has been rising, particularly from business customers and government clients. Telia, which operates in the Nordic and Baltic regions, has positioned itself as a provider of secure digital infrastructure, a niche that has gained importance amid heightened geopolitical tensions and cybersecurity concerns.
For context, telecom operators across Europe have been grappling with similar challenges: slow revenue growth, high capital spending on network upgrades, and pressure from regulators. Companies that can cut costs while maintaining or growing service revenue are generally viewed more favorably by investors. Recent earnings beats from other firms, such as Skanska, also highlight the broader trend of Nordic companies managing to outperform expectations through operational discipline.
What It Means for Investors
For everyday investors, Telia's results offer a few takeaways. First, the company's ability to beat profit estimates, even by a small margin, suggests its cost-cutting strategy is on track. Second, the rise in service revenue — the core income from phone, internet, and TV subscriptions — indicates that Telia is holding onto customers and even growing in key markets.
The fact that Telia kept its full-year outlook unchanged is also notable. In the earnings season, companies often revise guidance when results surprise. By holding steady, Telia signals that it sees the current trajectory as sustainable, without needing to raise expectations that might be hard to meet later.
However, investors should keep an eye on the Finnish market. While Finland returned to modest growth, it remains a weaker spot compared to Sweden and the Baltics. If Telia can sustain that recovery, it could provide an additional tailwind. On the other hand, any renewed weakness in Finland could weigh on the stock.
Telecom stocks are often seen as defensive plays — they tend to generate steady cash flows and pay dividends, even during economic downturns. Telia's focus on secure connectivity and cost efficiency could make it more resilient than some peers. But the sector also faces headwinds, including high capital expenditure for 5G rollout and potential regulatory changes.
For comparison, other companies in the region have also been navigating similar dynamics. For instance, Berenberg recently raised its price target for Sobi after a strong revenue beat, while RBC cut forecasts for TotalEnergies due to weaker gas trading. These contrasting moves highlight how company-specific factors, rather than broad market trends, are driving results this earnings season.
Looking Ahead
Investors will be watching Telia's next quarterly report for signs that the cost-cutting momentum is continuing and that service revenue growth can be sustained. The company's ability to maintain or grow its dividend will also be a key focus, given that income-seeking investors are a major part of the shareholder base.
In the meantime, Telia's performance adds to a mixed earnings picture in Europe, where some companies are beating expectations through operational improvements while others are struggling with weaker demand. For those invested in telecom or considering it, Telia's results suggest the sector can still deliver steady returns, but the margin for error remains thin.
