Telia Q2'25 earnings preview: We expect good earnings growth for Q2, although slower than later in the year

Translation: Original published in Finnish on 07/14/2025 at 08:20 am EEST

Telia Company will publish its Q2 report on Friday at 8.00 am. We expect revenue to have grown slightly and profitability to have improved, driven by cost savings. In the big picture, earnings growth is slower in Q2 than in the rest of the year. We made small negative estimate adjustments ahead of the result, mainly due to the weaker-than-expected situation in Norway. We estimate that the company’s operational performance will be at the bottom of the guidance this year. We believe the stock is correctly priced at the moment. We reiterate our SEK 34 target price and Reduce recommendation for Telia.

Source: Inderes & Telia Company, 12-15 estimates (consensus)

We expect slight revenue growth in Q2

We forecast Q2 revenue to have grown by 1% to 20,317 MSEK, which is slightly below the medium-term target (average of 2%). The impact of price increases is expected to intensify in H2, as the increases take a broader effect. Overall, the 5G transition continues to support growth. No major changes are expected in geographical development, but there are some headwinds in Norway, to which the company has responded with efficiency measures.

We forecast EBITDA to have grown slower in Q2 than later in the year, driven by cost savings 

We forecast that Telia’s adjusted EBITDA will increase by 3% to 7,939 MSE. This result is supported by the massive cost savings achieved in Q4’24. We estimate the adjusted EBITDA margin has risen by just under 1 percentage point to 39%, supported by cost savings. By country, the earnings trend is clearly the weakest in Norway (-9%), while in Sweden and Finland, we expect earnings growth of approximately 5%. On other cost lines, we do not expect major changes compared to the comparison period or the previous quarter.

We fine-tuned our estimates by 0-2% annually

The largest forecast changes are geographically based in Norway. As a whole, 2025revenue forecasts fell by less than 1% and earnings forecasts by ~ 2%. The company expects comparable service revenue to grow by 2% and comparable EBITDA to grow by at least 5%. The company has appeared clearly positive in its comments regarding EBITDA growth, and if cost savings are successfully implemented, earnings growth could be even a good 5% faster. We expect that Telia's revenue will grow by 2% and EBITDA by 5% in 2025.

At the beginning of July, Telia announced that it had completed the divestment of the TV&Media business. The company intends to use the proceeds from the transaction to reduce debt. After the completion of the deal, Telia's net debt/adjusted EBITDA is at the lower end of the target range of 2.0–2.5x. Operationally, the business divestment has a positive impact on the group's profitability, as lower-margin business is removed.

The stock is correctly priced

We forecast Telia's adjusted P/E and EV/EBIT multiples for 2025e to be 17x and 16x, respectively. The multiples are some 15% below the Nordic peers and nearly 10% below the entire peer group. In absolute and relative terms, we see the valuation as neutral, given the improved earnings level in the current year's forecasts, previous disappointments, and the level of risk associated with earnings growth in the coming years. However, the dividend yield (6%) limits the stock's downside, but it is not sustainable and thus does not act as a safety cushion. A positive view on Telia would require better evidence of sustained performance growth without further setbacks.