STOCKHOLM (Reuters) - Telia Company (TELIA.ST) expects reforms in Sweden to take a year longer than planned, the Nordic telecoms company warned on Friday, sending its shares lower despite beating quarterly profit forecasts and raising its outlook.
“The real significant benefits are to come in 2020 rather than as expected in 2019,” Chief Executive Johan Dennelind said regarding reforms in Sweden, a market which accounts for half of its core earnings and nearly half of its revenue.
The company said it was on track to deliver cost reductions of 1.1 billion Swedish crowns ($122 million) this year but was not happy with the pace of cost reductions in Sweden.
For the third quarter to Sept 30, Telia posted a 6.4 percent rise in adjusted profit before interest, tax, depreciation and amortisation (EBITDA) to 6.98 billion crowns, topping the 6.77 billion forecast by analysts in a Reuters poll.
Core profit in Sweden was nearly 5 percent lower than expected at 3.3 billion Swedish crowns.
Telia said it now expected overall 2018 earnings slightly above those of last year, raising a forecast that had seen earnings in line with or slightly above.
Since reforms in Sweden, which include replacing outdated IT systems, are delayed, CEO Dennelind said the company would need to “improve cost efficiency in other areas”.
Telia shares were down 5.5 percent at 39.64 crowns at 1038 GMT, hurt partly by trading ex-dividend of 1.15 crowns.
A fund manager said the Swedish delay and weaker performance there had hurt the shares.
Finland, Norway and central units were the main drivers for Telia’s profits in the quarter.
($1 = 9.0246 Swedish crowns)
Reporting by Olof Swahnberg