Company TLTZF's Strategic Investments in 5G and IT Transformation to Strengthen Position in Swedish Market
2023-07-25
In the recent earnings call meeting, the company discussed its plans to invest in 5G, Remote-PHY, and IT transformation as part of its strategy to strengthen its position in the Swedish market. The management emphasized the importance of balancing these investments with meeting dividend expectations and maintaining a strong balance sheet.
During the meeting, the company highlighted its focus on growth after stabilizing its B2B sector. To achieve this, they aim to strengthen their position in the Swedish market through investments in capabilities such as 5G, Remote-PHY, and IT transformation. These investments are being approached in a measured and controlled manner, taking into consideration the company's balance sheet health and dividend expectations. The management expressed confidence in their ability to navigate the evolving industry landscape and achieve future success.
The key drivers of the company's business strategy include monetization, stabilization and growth, strengthening their position in the Swedish market, financial stability, and effectively navigating the industry landscape.
In terms of product and service expansion, the company plans to invest in capabilities such as 5G, Remote-PHY, and IT transformation. These investments are aimed at strengthening their position in the Swedish market and competing with rivals. The company intends to approach this expansion in a measured and controlled manner, carefully considering their balance sheets and dividend expectations. They are confident in finding the right mix of strategies to navigate the evolving landscape and continue their growth trajectory.
During the meeting, several important numbers were cited. Last year, the company highlighted a drag of SEK 1.2 billion in terms of free elements in working capital. For this year and the next, the consensus estimate for working capital drag is SEK 300 million. There is an implied increase of 20% to 30% in absolute figures for capital expenditure (CapEx) for this year and next year. Higher-than-expected costs related to 5G base stations contribute to the increase in CapEx. Additionally, the question of whether there are any investments planned to manage lease exposure was raised in relation to EBITDAaL.
As the company invests in capabilities such as 5G, Remote-PHY, and IT transformation to strengthen its position in the Swedish market, the competitive landscape is evolving. The company is taking a proactive approach to adapt to these changes and enhance its offerings, aiming to stay ahead of its competition.
Looking ahead, the company's outlook for the quarter and year includes a low to mid-single-digit growth in end-user service revenue for 2023. The guidance for underlying EBITDAaL remains unchanged with low single-digit growth. The company also expects its CapEx to be less than 14% of sales in 2023. The financial guidance for 2024 will be announced in relation to the full year 2023 results presentation. Additionally, the company has midterm ambitions for low to mid-single-digit growth in end-user service revenue.
Based on the information provided in the earnings call, it is evident that the company has stabilized its B2B operations and experienced growth in the past two years. Their plans to invest in capabilities such as 5G, Remote-PHY, and IT transformation reflect their commitment to strengthening their position in the Swedish market. The company is approaching these investments in a measured and controlled manner, taking into consideration their balance sheets and dividend expectations. They express confidence in finding the right strategies to navigate the evolving landscape.
Furthermore, the company's capital spending plans involve collaborating with Telia to build a 5G network and focusing on building more fiber rather than leasing. While specific figures or percentage increases in capital expenditure were not mentioned, the company believes that the rollout of capital expenditure is both affordable and strategically advantageous. A decision on the capital spending plans is expected to be made in February.
Overall, the company's earnings call meeting provided insights into their strategic initiatives, investment plans, and outlook for the future. With a focus on growth and strengthening their position in the Swedish market, the company aims to navigate the evolving industry landscape while maintaining financial stability and meeting dividend expectations.