Translation: Original published in Finnish on 4/27/2026 at 8:46 am EEST.

We raise the target price of Telia’s share to SEK 41.0 (was SEK 38.0), driven by its convincing execution of strategy and efficiency measures, which has decreased operational risk. At the same time, we reiterate our Sell recommendation. Telia's Q1 revenue was slightly below expectations, and earnings grew in line with our expectations. In the big picture, confidence in earnings growth and particularly in cash flow has improved over a little more than the past year. However, the slope of earnings growth is insufficient to turn the valuation positive, as the valuation picture is very tight.

No major drama in Q1, which is a good thing

Telia's Q1 revenue was at the level of the comparison period at 19,969 MSEK, which was slightly below our and consensus estimates. Like-for-like service revenue grew by 2.1%, exactly in line with the guidance. Adjusted EBITDA increased by 1.8% and was in line with our and consensus expectations. Like-for-like earnings increased by 4.0%. This figure is adjusted for currencies and divestments but, to our understanding, still includes acquisitions, i.e., the earnings impact of the recently acquired Bredband2. Thus, in our view, this is not purely organic earnings growth. The adjusted EBITDA margin was 39.8%, with the improvement driven by continuous cost savings. Adjustment items exceeded expectations by 250 MSEK, which, in practice, directly explains the shortfall in lower-line earnings.

Geographically, Sweden continued to perform strongly and Finland improved, while Norway still faced challenges

In geographical terms, Sweden was the most important market and continued to drive growth in revenue and earnings. The small Baltic markets also performed well. Finland and Norway have been the main sources of concern in recent years. The outlook for the Finnish market is now somewhat brighter, as competition has returned to more normal levels and efficiency measures are taking effect. However, competition for consumer customers in Norway remains fierce, though the decline in earnings slowed to -3% (Q4’25: -9%). There is no detailed information yet on the economic impact of the RAN partnership in Norway, as it is still awaiting approval from the competition authorities.

Telia reiterated its guidance as expected

The company expects comparable service revenue to grow by 2% and comparable EBITDA to grow by some 3% in 2026. In addition, Telia guides for cash flow of around 9 BSEK in 2026, assuming normalized spectrum CAPEX of 650 MSEK. Based on the Q1 report, we only made minor adjustments to our operational estimates (0-2%). Overall, however, the risk level associated with earnings growth has decreased as the company has systematically implemented its strategy without any major disappointments, unlike in the past. We forecast revenue to grow by 2.1% and adjusted EBITDA by 2.7% in 2026 (consensus before Q1 report +3.0% and 3.6%). In 2027-2028, we expect revenue to grow by ~2%, with no change in profitability. Earnings growth is mainly supported by growth in service revenue and, geographically, the gradual recovery of weak markets (Finland and Norway).

Valuation picture remains very strained

In recent years, Telia has clearly improved its operational performance and delivered on its promises more consistently. This means that the recurring disappointments of the past 10 years have clearly decreased. The share price (2026e, adj.  EV/EBIT 18x and P/E 20x), however, anticipates continued strong performance. The valuation is 13% higher than that of its closest Nordic peers and Elisa, which we consider to be very tight. In our view, however, maintaining the growth rate of earnings is challenging now that significant efficiency measures have already been implemented. Although Telia’s risk profile has declined due to its improved focus, a more positive view of the stock would require signs of a faster earnings growth rate (~2%) than we are forecasting in the coming years.