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Telia Cost Savings and WC Changes Have Negative H2 Impact H2 But Look Credit Positive Over LT

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Baa1/BBB+


Telia has announced cost savings of SEK 2.6bn with a SEK 1.4bn restructuring charge this year while also announcing changes to their WC management that will see a 0.2x increase in leverage and a hit to FY24 op FCF equivalent to nearly the full FY23 amount in exchange for reduced volatility in cash flow going forward. Announcements look credit positive over the longer run.


  • Telia aims for annual savings of at least SEK 2.6bn through a restructuring program, targeting a reduction of 3,000 positions in 2024, primarily affecting group and common functions. Restructuring charges estimated at SEK 1.4bn in H2 2024, but expected to have no impact on the FY24 outlook. Aims is to simplify operations, increase efficiency, and maintain dividend policy. No timeline for cost savings given.
  • Separate announcement that their vendor financing program volumes are to be reduced by ~50% by end-2024 meaning, as a significant component of working capital, decreased cash flow volatility albeit with a negative SEK 6bn impact in H224 but no change to the FY outlook (guidance is a based on structural Op FCF which excludes WC changes). For context, total Op FCF was SEK 6.7bn in FY23. This will increase adj-EBITDA leverage by ~0.2x but keep leverage within 2-2.5x target range (2.21x at H123).
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