Last Update 22 Jan 26

Fair value Increased 5.01%

TELIA: Cost Discipline And Capital Allocation Will Likely Support Fairly Valued Shares

Narrative Update

Analysts have lifted their fair value estimate for Telia Company from SEK 37.71 to about SEK 39.60, citing updated assumptions for revenue trends, profitability, discount rate, and future P/E following recent price target increases and changes in ratings across the Street.

Analyst Commentary

Recent Street views on Telia Company are mixed, with some analysts focusing on improved profitability and capital discipline, while others see limited upside at current levels. Here are the key themes they are watching and how those could tie back to valuation and execution risk.

Bullish Takeaways

Bullish analysts highlight the company’s focus on cost efficiency and disciplined capital allocation as supports for profitability, which they see as important for justifying higher fair value assumptions.
Price targets raised into the mid SEK 30s and low SEK 40s suggest some analysts see room for the shares to better reflect these profitability and capital allocation efforts, even while ratings may remain cautious.
Recent upgrades and target increases indicate confidence that current execution on costs and capital spending can be sustained, which feeds into more constructive views on earnings quality and cash flow durability.
Supportive commentary on profitability helps underpin higher assumed future P/E levels in some models, aligning with the lift in fair value estimates.

Bearish Takeaways

Bearish analysts describe the shares as fully valued, with visible catalysts already reflected in current prices, which can limit the scope for further P/E expansion in their models.
The shift to Neutral ratings, even alongside higher price targets, signals concern that upside may be more constrained from here relative to perceived execution and growth risks.
Some research keeps the stock at an Underweight rating despite acknowledging cost efficiency and disciplined capital allocation, suggesting ongoing caution about the balance between profitability support and potential growth headwinds.
Where analysts see catalysts as largely priced in, they tend to emphasize the risk that any slip in cost control or capital allocation discipline could have a more direct impact on valuation multiples.

What's in the News

Coor and Telia extend their Integrated Facility Management Agreement for five years starting 1 January 2026, covering workplace services such as cleaning, reception, and restaurant services across about 40 offices in Sweden and Norway (Key Developments).
The renewed contract focuses on cost savings, sustainability, innovation, and development within Coor's facility management delivery for Telia (Key Developments).
The agreement uses a vested outsourcing model in which Telia and Coor design the contract together and work jointly toward shared goals measured through agreed performance indicators (Key Developments).

Valuation Changes

The Fair Value Estimate has risen slightly from SEK 37.71 to about SEK 39.60, reflecting updated model inputs.
The Discount Rate has moved up from 5.42% to about 5.80%, indicating a modestly higher required return in the analysis.
The Revenue Growth assumption has shifted from a 2.11% decline to about a 1.96% decline, pointing to a slightly softer contraction in expected revenues.
The Net Profit Margin assumption has risen from about 10.93% to roughly 11.30%, implying a small uplift in expected profitability levels.
The future P/E multiple has edged higher from about 19.0x to roughly 19.4x, suggesting a slightly higher valuation multiple applied to future earnings in the model.

9 views

Key Takeaways

Strong growth in broadband and bundled services, as well as network upgrades, is enabling Telia to boost revenue, margins, and deepen customer loyalty.
Portfolio focus, digitalization, and cost reductions are improving capital allocation, driving free cash flow and supporting higher shareholder returns.
Digital disruption, stagnant demographics, costly network upgrades, fierce competition, and weak service differentiation threaten Telia's pricing power, revenue growth, and long-term profitability.

Catalysts

About Telia Company

Provides communication services to businesses, individuals, families, and communities in Sweden, Finland, Norway, Denmark, Lithuania, Estonia, and Latvia.What are the underlying business or industry changes driving this perspective?

Sustained growth in high-speed broadband and mobile data demand, fueled by digitalization of society and adoption of unlimited plans, is leading to recurrent price increases and rising ARPU, especially in Swedish households-positively impacting long-term revenue and profit growth.
Advancing convergence across connectivity, TV, media, and cloud services allows Telia to deepen customer relationships and reduce churn, driving up household ARPU and supporting stable, recurring revenue streams and higher EBITDA margins over time.
Ongoing transformation and portfolio restructuring-such as the exit from non-core markets (Latvia) and targeted acquisitions (Bredband2)-enables more focused capital allocation in core Nordic/Baltic operations, improving earnings quality and enhancing ROE and long-term earnings growth.
Deployment of advanced 5G capabilities and targeted fiber investments presents revenue opportunities across both consumer and enterprise segments, enabling Telia to address emerging IoT and advanced connectivity needs for industry and public sector clients, lifting top-line growth and future profitability.
Continued execution of cost optimization programs and digitalization of internal processes are driving significant operating expense reductions, supporting EBITDA margin expansion and increasing free cash flow, which will underpin future dividend growth and shareholder returns.

Telia Company Earnings and Revenue Growth

Telia Company Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Telia Company's revenue will decrease by 2.2% annually over the next 3 years.
Analysts assume that profit margins will increase from 6.0% today to 10.4% in 3 years time.
Analysts expect earnings to reach SEK 8.7 billion (and earnings per share of SEK 2.21) by about September 2028, up from SEK 5.4 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting SEK9.7 billion in earnings, and the most bearish expecting SEK7.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 18.7x on those 2028 earnings, down from 25.7x today. This future PE is lower than the current PE for the GB Telecom industry at 28.6x.
Analysts expect the number of shares outstanding to remain consistent over the next 3 years.
To value all of this in today's terms, we will use a discount rate of 4.92%, as per the Simply Wall St company report.

Telia Company Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Proliferation of over-the-top (OTT) services and ongoing digital disruption continues to reduce the relevance of traditional telco offerings, putting pressure on Telia's ability to maintain pricing power and threatening long-term revenue growth as consumers shift away from bundled or legacy services.
Stagnant or negative demographic trends-like aging populations and limited population growth in core Nordic/Baltic markets-constrain Telia's organic subscriber growth, particularly in mature segments such as Sweden and Finland, potentially capping revenue expansion opportunities.
Substantial ongoing and future CapEx requirements for network upgrades (e.g., 5G/6G, fiber rollouts), coupled with rising environmental and decarbonization regulation costs, risk compressing EBITDA margins and free cash flow as infrastructure investment outpaces immediate monetization opportunities.
Intensifying competition from low-cost MVNO entrants and new digital-native providers creates persistent downward price pressure in mobile and broadband markets, leading to ARPU stagnation and increased churn, especially as technology enables easier unbundling of telecom services.
Telia's lack of substantial differentiation in value-added or digital services versus global tech giants limits its ability to lift ARPU or offset declining legacy revenues, which may continue to strain net margins and challenge long-term earnings growth despite recent cost optimization and portfolio simplification.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of SEK35.822 for Telia Company based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of SEK47.0, and the most bearish reporting a price target of just SEK27.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be SEK83.7 billion, earnings will come to SEK8.7 billion, and it would be trading on a PE ratio of 18.7x, assuming you use a discount rate of 4.9%.
Given the current share price of SEK35.12, the analyst price target of SEK35.82 is 2.0% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

Have other thoughts on Telia Company?

Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.

Create Narrative

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

TELIA: Disciplined Capital Allocation And Cost Efficiency Will Drive Steady Performance