By Marta Frackowiak and Supantha Mukherjee
STOCKHOLM (Reuters) - Swedish telecom operator Telia said its struggling TV unit was now facing fewer challenges, after reporting third-quarter core earnings that beat estimates and hiking its full-year core profit outlook, sending its shares up as much as 8%.
Telia's TV and media business has been hit by weak advertising revenue, content commitments made in years go and costs related to the upcoming launch of its new hybrid TV4 Play service.
CEO Allison Kirkby told Reuters the company was still working to address these issues, but added that some of these challenges were not as big as in the previous quarter.
"We will come out as a much stronger business," she told Reuters.
The telecom operator has tried to bring the unit back into profit, discontinuing its unprofitable streaming service C More and launching in 2021 a restructuring plan to slash costs through 2025.
Kirkby said the recovery of working capital would be a key focus for the company in the following quarter and next year.
Telia's operating profit before depreciation and amortisation (EBITDA) adjusted for restructuring costs and other non-recurring items rose 10% to 8.5 billion crowns ($770.3 million) from 7.7 billion crowns a year earlier. Analysts expected a profit of 7.9 billion crowns, according to a mean estimate in LSEG an poll.
The company now expects its adjusted EBITDA, like for like, to grow by low single digits percentage in 2023. Its previous forecast was for flat to low single-digit growth.
Pareto Securities analyst Stefan Ward called the quarterly results "promising".
"All in all the results are clearly satisfactory and lowers the risk in both earnings and cash flow expectations," Ward said.
Telia shares were up 6% at 0706 GMT, after earlier rising as much as 8%.
Telia said it expects the structural part of its operational free cash flow for the current year to be about 7.5 billion crowns, after previously forecasting it in a range of 7-9 billion crowns.