Telia today announced it has restructured its vendor financing program and reduced its volume by approximately 50 percent during H2 2024.
Telia, as part of its cost-cutting measure, also announced its decision to slash 3,000 jobs in order to save SEK 2.6 billion annually.
Telia in a statement said that the purpose of the restructuring is to drive simplification, reduce cash flow volatility and increase balance sheet transparency, while retaining the program’s benefits to Telia and its suppliers.
Telia Company’s vendor financing program is a valuable component of its working capital management, enabling extended payment terms for Telia while bringing benefits to Telia’s suppliers in the form of accelerated payments.
Accounts payable under vendor financing arrangements were SEK 11.5 billion at the end of December 31, 2023. The restructuring will assist Telia to reduce accounts payable under vendor financing by 50 percent by December 31, 2024.
The restructuring is estimated to result in reduced cash flow volatility over time and to have limited effects on net profit. The effect on the reported net debt to adjusted EBITDA is expected to be an increase of around 0.2x, but leverage is estimated to remain in the 2.0-2.5x target range.
The restructuring is expected to result in negative cash flow effects of up to SEK 6 billion in H2 2024, relating to working capital. Telia’s full-year financial outlook statements, which relate to service revenue growth, adjusted EBITDA growth, CAPEX excluding fees for licenses, spectrum and right of use assets, and the structural part of Operational free cash flow, remain unchanged.
Baburajan Kizhakedath
