Telia Company's Q2 2025 Performance and Strategic Moves: Navigating Geographic Imbalances to Sustain EBITDA Growth

Telia Company AB's Q2 2025 results underscore a compelling narrative of disciplined cost management, strategic divestitures, and selective geographic focus. Despite a 60% year-over-year drop in net income due to the absence of a one-time gain, the company's adjusted EBITDA surged 6.2% to SEK 7.97 billion, outpacing service revenue growth of just 1.0%. This divergence highlights Telia's ability to leverage operational efficiency to drive profitability—a critical trait for investors seeking resilience in a competitive telecom landscape.

The EBITDA Growth Story: Efficiency Over Revenue

Telia's EBITDA expansion is driven by aggressive cost management and the “Change” efficiency program, which has reduced operating expenses while maintaining service quality. Free cash flow of SEK 2.3 billion in Q2 (up 20% year-over-year) further reinforces this trend, demonstrating the company's capacity to convert cost savings into liquidity.

However, the broader telecom sector faces headwinds. would reveal whether Telia's margin expansion is a unique strength or part of a sector-wide shift. For now, Telia's EBITDA margin of ~47% (calculated from Q2 figures) remains robust, outperforming peers like Telenor and Orange in certain markets.

Geographic Imbalances: Strengths and Weaknesses

Telia's regional performance is a mixed bag. Sweden and the Baltics (Lithuania, Estonia) delivered strong results, with Lithuania's 11% EBITDA growth and Sweden's 7.8% growth driven by fixed services and convergent offerings. These markets exemplify Telia's strategic focus on high-margin, customer-centric solutions.

In contrast, Norway's 8.6% EBITDA decline exposes vulnerabilities. Weakness in fixed and mobile wholesale and TV revenue—segments critical to scaling economies of scale—suggests structural challenges. would clarify whether this is a cyclical dip or a deeper issue tied to market saturation or pricing pressures.

Strategic Moves: Pruning, Acquiring, and Future-Proofing

Telia's recent strategic actions aim to address these imbalances. The sale of its TV and Media business to Schibsted Media and the planned divestiture of Latvian stakes (Tet and LMT) signal a shift toward core markets where it can dominate. Meanwhile, the SEK 3.1 billion acquisition of Bredband2—a Swedish broadband provider—aligns with Telia's ambition to strengthen its fixed-line dominance. Analysts estimate this move could unlock SEK 0.2 billion in annual synergies, further bolstering EBITDA.

The company's 2025–2027 financial ambitions—2% service revenue CAGR, 4% EBITDA CAGR, and free cash flow exceeding SEK 10 billion by 2027—hinge on these strategic pivots. With CAPEX capped at SEK 14 billion and a focus on sustainability (50% emissions reduction by 2025), Telia is positioning itself as a lean, green operator.

Investment Implications

For investors, Telia's Q2 performance offers both optimism and caution. The company's ability to grow EBITDA without relying on revenue surges is a testament to its operational discipline. However, geographic imbalances—particularly in Norway—pose risks that could temper long-term growth if unaddressed.

The share price's 0.91% post-earnings gain on the Stockholm exchange suggests market confidence in Telia's strategic clarity. Yet, reveals volatility tied to macroeconomic trends and sector-specific uncertainties. A buy-and-hold strategy may suit long-term investors who value Telia's efficiency-driven model and its pivot toward high-growth segments like converged services.

Conclusion

Telia's Q2 2025 results affirm its status as a telecom operator that prioritizes profitability over mere scale. While regional disparities persist, the company's strategic pruning of non-core assets and targeted acquisitions signal a focus on quality over breadth. For investors, the key will be monitoring Norway's performance and the success of initiatives like the Bredband2 integration. If Telia can replicate its Baltic and Swedish success stories in weaker markets, its EBITDA growth trajectory—and its stock—could remain compelling.