By Supantha Mukherjee
STOCKHOLM (Reuters) -Swedish telecom operator Telia on Friday trimmed its outlook for 2022 and 2023 citing high electricity costs that eroded its quarterly profit and said it expected energy costs to stay elevated for next year.
Electricity prices have hit record levels in Europe after Russia's invasion of Ukraine and a fall in nuclear power production in several countries.
"We basically saw a tripling of energy prices in the quarter on average, and we have got 70% hedge, but still got such volatility going on," CEO Allison Kirkby said in an interview.
The energy cost increase for full year 2022 is estimated to be around 900 million Swedish crowns ($80 million), which is 600 million crowns higher than expected three months ago, the company said.
Telia, which operates in the Nordic and Baltic countries, has hedged expects electricity costs to go up by 600 million crowns from 2.2 billion in 2022.
Despite higher energy costs, quarterly core earnings were broadly in line with market expectations as Telia's business grew in all its markets for the first time in a decade.
Third-quarter adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) rose to 8.07 billion Swedish crowns from 7.74 billion a year ago, while analysts had expected 8.13 billion crowns, according to a company-provided poll.
The electricity bill, however, is eating into Telia's long term plan of taking out 2 billion crowns in costs by end of 2023. In the latest quarter, the company saved 100 million crowns in costs.
Telia has raised prices for its telecom, broadband and TV services and would look at additional hikes next year.
The company now expects full-year comparable core earnings to be similar to last year, down from its earlier estimate of growing by low single digit.
($1 = 11.2971 Swedish crowns)