Sweden's Telia releases three-year targets as new CEO lays out plan
Sees free cash flow of 10 bln crowns in 2027
Plans to grow service revenue by 2% annually
Could look at more job cuts beyond 2024 -CEO
Adds analyst, CEO comments; paragraphs 5,7, 8, 10
By Supantha Mukherjee and Elviira Luoma
Sept 26 (Reuters) -Telia's TELIA.ST new chief executive laid out his three-year plan on Thursday, calling for the Swedish telecoms company to boost service revenue, lower capital spending, and hit a free cash flow target of at least 10 billion crowns ($984 million).
Patrik Hofbauer, who took over the CEO job in February, plans to decentralise the company's structure, increase efficiency and grow profitability.
By 2027, Telia plans to grow service revenue by 2% a year, raise adjusted EBITDA to 4% and cut capital spending to below 14 billion crowns a year.
Free cash flow, which was not a guidance metric before, will be about 8 billion crowns next year.
"Fairly ambitious targets, but we argue that they should also be seen in light of the recently announced cost cutting exercise, which should make it possible to achieve or even exceed the goals," said Danske Bank Credit Research analyst Mads Lindegaard Rosendal.
Earlier this month, Telia presented a restructuring plan to achieve 3,000 job cuts or about 15% of its workforce in 2024, so as to save costs by 2.6 billion Swedish crowns ($253 million).
"This is a one-time impact before year end, but then we will continue to take out efficiencies, because it's just the nature of the business," Hofbauer told Reuters in an interview.
"We will also do small divestments of assets ... but we will not exit any market."
The company is also doing several tests and pilots with artificial intelligence around customer support, sales and running its networks.
Companies from telecom operator Verizon to fintech Klarna have been using AI for customer support. Klarna has cut hundreds of jobs and sees more to go as it adopts AI to handle customer queries.
"We want to better understand how much impact this will have," Hofbauer said, adding that the the size of the impact was still unclear.
($1=10.1622 Swedish crowns)
Reporting by Elviira Luoma and Supantha Mukherjee; Editing by Mark Potter and Clarence Fernandez
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