• Telia has reported its 2023 full year financials
• It’s the final earnings report for CEO Allison Kirkby, who is about to move to London to be BT’s new CEO
• Kirkby has been working to get Telia ‘back to basics’ and focused on its core strengths  
• As she packs up her desk, the Swedish telco is leaner, greener and growing

Allison Kirkby’s near four-year tenure as CEO at Swedish telco Telia has been an interesting one to watch: She took on the role in May 2020, just as the Covid-19 pandemic was having an impact on the way the world lived and worked, and found herself in charge of a company struggling for a clear identity.

By the time she accepted the role as the next CEO at BT Group, a job she starts on 1 February when she hands over the Telia reins to Patrik Hofbauer, she had slimmed down the company’s portfolio, reduced its debt pile, focused the operator’s strategy on prime connectivity services and implemented a broad and impactful sustainability strategy.   

Kirkby summed up her time at Telia during a presentation at the DTW23 event in Copenhagen last September, when she noted that, when she sat in the CEO chair in early 2020, Telia was spending significant sums on Champions League soccer rights and advertising-funded TV – markets in which it couldn’t be a profitable market leader – while at the same time it didn’t have a capital allocation for 5G rollouts. That didn’t make sense to the Scot, who believes telcos need a solid and efficient network connectivity services portfolio on which to build a business. She also noted that, in 2020, Telia had a broad portfolio of assets, not all of which were critical to the business – the latest unit to be sold was the Danish operation in September this year – and legacy IT support systems that meant nothing could be done quickly. “It turned out we needed to change everything,” she noted. 

In essence, Kirkby’s main focus was on delivering optimal fixed and wireless connectivity, developing services that could be offered on top of that connectivity, investing in digital support systems that enabled easier customer interactions and delivering everything in a sustainable way – something that has become increasingly important to customers in the Nordics. 

So, has that approach paid off? It seems so. Telia, which now has operations in Finland, Norway, Lithuania and Estonia, as well as Sweden (it is in the final stages of selling its operations in Denmark), noted in its full year financials announcement that its revenues have increased by 3.7% to 88.8bn Swedish krona (SEK) ($8.54bn) while it’s adjusted EBITDA has increased 4.5% to SEK30.3bn ($2.9bn). The operator reported an operating profit of almost SEK5bn ($481m) compared with an operating loss in 2022. That operating profit was achieved despite being dragged down by full year non-cash goodwill impairment charges of SEK23.5bn ($2.26bn), including SEK4.1bn ($393m) that was announced earlier this week related to the value writedown of its business in Finland and its TV and Media unit. The news of those latest balance sheet revaluations came as speculation swirled in the Swedish media that Telia is in talks to sell its broadcast TV unit TV4 for less than half the SEK10bn ($960m) it paid for the business in 2019. 

In her parting financial commentary, Kirkby noted that Telia’s financials were improving and highlighted success related to a number of “key strategic priorities”, including: An improvement in customer satisfaction ratings, with six consecutive quarters of net promoter score (NPS) growth; consolidation of the telco’s “network leadership position”, with Telia’s 5G now reaching 89% of the Nordic/Baltic population, and its home market securing the strongest spectrum portfolio and awarded best network status; ongoing improved cost control; signs of a turnaround in the financial fortunes of the troublesome TV and Media division, which achieved a “positive EBITDA contribution” in the fourth quarter of 2023; and approval of Telia’s net zero target for 2040 by the science-based targets initiative (SBTi), as well as the share of total supply chain emissions covered by science-based targets reaching 52%. Falling advertising revenues at the TV and Media unit are a concern though, and news of that trend, along with a 2024 forecast that includes rising interest payments that will impact the company’s cash flow, put a dent in Telia’s share price, which dropped nearly 3% to SEK26.20 on the Stockholm stock exchange during trading on Friday.  

The CEO noted: “Looking ahead for 2024, the Telia management team expects the current business momentum to continue, and anticipates low single-digit service revenue growth, low-to-mid single-digit EBITDA growth,” and capital expenditure (capex, excluding fees for licences, spectrum and right of use assets) of around SEK14bn ($1.35bn), a little more than the company invested in its networks in 2023. “As I step down as CEO at the end of this month, I am proud to be handing over a business built on world-leading digital infrastructure, a well-deserved reputation for embedding sustainability in our sector and beyond, increasingly happier customers, and a team of talented, engaged and dedicated employees,” she added. 

So Kirkby is just days away from the end of her eventful time at Telia and she seems proud of what she has achieved. That was also the message shared by BT’s current CEO, Philip Jansen, who hands over to Kirkby next week. Jansen discussed his five-year tenure at BT during a fireside chat at TelecomTV’s recent Great Telco Debate, during which he noted the one thing he wasn’t happy about was that he was leaving BT with a share price that is lower than when he joined – see The future’s brighter for BT, says outgoing CEO Philip Jansen.

BT’s share price is almost 50% lower now than when Jansen took over in February 2019 and currently stands at 116.5 pence on the London Stock Exchange.

So how has Kirkby done in that regard at Telia? When she joined, the Swedish telco’s share price stood at SEK32.70, so it has lost about 20% of its value since early May 2020. 

As the telcos keep reminding everyone, it’s a tough sector to be in right now and the business outlook and investment prospects for communications service providers is not pretty, meaning such share price trends and lower valuations are not a big surprise. 

So what happens next? Patrik Hofbauer will occupy the Telia CEO’s chair from Wednesday, and at the same time Kirkby will start to stamp her authority on the BT domain (while Jansen heads off for a break from the world of work – or so he said…). 

Kirkby is very familiar with BT, not only because she is British but because she has been a member of BT’s board of directors since March 2019. 

So what can we expect to see from her – it’s unheard of for a new CEO to settle into a seat and change nothing – and what challenges does she face? CCS Insight analyst Kester Mann has shared his thoughts on the matter in this blog and notes that Kirkby has already stated she won’t be rocking the boat in terms of strategy – after all, as a director she would have played a part in shaping and approving it! However, Kirkby will face some uphill battles to get the large BT staff on her side, he adds, (as the operator has already announced a massive long-term headcount reduction programme), to improve the share price, deal with some larger-than-life investors, such as Patrik Drahi and Deutsche Telekom’s CEO Tim Höttges, improve the telcos’ enterprise services performance and help to reposition the consumer unit, which is trying to play a bigger role in the digital economy – see BT’s EE unveils its super app.

One thing Mann doesn’t mention, though, is Kirkby’s sustainability zeal. Is BT’s carbon footprint reduction track record good enough for the Scot? Might she introduce a more ambitious environmental, social, and governance (ESG) strategy at the UK national operator? I’d bet on it…

- Ray Le Maistre, Editorial Director, TelecomTV