Sweden's Telia expects larger drop in core profit this quarter

STOCKHOLM, March 26 (Reuters) - Telia Company expects a larger drop in core profit in the first quarter compared to the final quarter of 2018, it said on Tuesday ahead of a capital markets day in Stockholm.

“For the first quarter of 2019, the underlying organic EBITDA decline is expected to be slightly more than the corresponding decline in the fourth quarter of 2018,” Telia said in a statement, noting it had now seen January and February trading performance.

It added that the slowdown was driven by its three main markets of Sweden, Norway and Finland but that it was not having an impact on the operational free cash flow outlook for 2019.

The company reiterated that it expected its EBITDA performance to improve in the second half of 2019.

Telia said in January that profits in Sweden, its biggest market, would remain under pressure this year and that it would cut operating costs in the country by around 3 percent to offset falling fixed-line income.

The operator said on Tuesday it expected to cut group operational expenses by around 2 percent annually in 2019-2021.

The company, which competes with Sweden’s Tele2 and Norway’s Telenor, is seeking new ways to grow in its traditional Nordic markets, with some analysts seeing content buying as a possible source of revenue.

Telia repeated on Tuesday that it expects free cash flow from continuing operations, excluding licenses and spectrum fees and dividends from associated companies, to grow to 12.0-12.5 billion crowns this year from 10.8 billion in 2018.

Sweden accounts for half of Telia’s core earnings and nearly half of its revenue. (Reporting by Helena Soderpalm, editing by Johannes Hellstrom and Kirsten Donovan)