Berenberg has lowered its rating on Telia Company AB to "sell" from "hold," while simultaneously increasing its one-year price target to SEK40 from SEK31. Telia's shares finished at SEK51.68 on the Stockholm exchange, which Berenberg says implies roughly 23% downside relative to the new target. The stock fell more than 3% on Monday following the note.
The brokerage singled out valuation as the main concern. Telia's share price has climbed 97% since new management took the helm in late 2023 and early 2024, outperforming the broader European telecom sector by 23% and the Stoxx 600 by 49%, a performance Berenberg says leaves the company trading at a premium.
"We believe that other telecoms companies now offer greater potential savings and clearer benefits from consolidation,"the broker said, citing relative value and consolidation opportunity as factors in its view.
Berenberg quantified Telia's current market metrics, noting an equity free cash yield of 4.6% and a dividend yield of 4.1% from 2026. The broker said those yields represent a 15%-40% premium to Nordic telecom peers. Even applying consensus estimates, Berenberg calculated the free cash yield would rise to about 6%, which it judged still below the sector average.
On an EV/EBITDA basis, Berenberg places Telia at 8.7 times for 2026 and 8.5 times for 2028. By contrast, the Nordic peer median sits at 9.5 times for 2026 and 9 times for 2028, according to the note.
Despite the downgrade, Berenberg lifted its near-term forecasts for the company. The brokerage increased its 2026 earnings per share forecast by 17.7% to SEK2.22 and raised its free cash flow estimates for 2026-2028 by up to 20%, attributing the revisions to higher assumed EBITDA and reductions to capital expenditure and depreciation assumptions.
Under Berenberg's updated model, Telia is expected to generate free cash flow of SEK10 billion in 2027 and exceed SEK10.50 billion from 2028, calculated on Telia's own definition.
The note includes a set of group-level forecasts. Berenberg projects group revenue at SEK83.46 billion in 2026, rising modestly to SEK82.19 billion by 2028, with adjusted EBITDA expanding to SEK33.46 billion in 2026 and SEK33.93 billion in 2028. The broker anticipates margin expansion from 40.1% to 41.3% over the same period.
Berenberg's segmentation of enterprise value shows Sweden as the largest division at SEK139.77 billion, representing 56% of the group's total. The firm forecasts Sweden's 2026 service revenue to increase 6.8% to SEK33.82 billion.
Finland is valued at SEK49.79 billion and is expected to be pressured, with service revenue projected to decline 1.4% to SEK12.66 billion in 2026. Norway, valued at SEK49.82 billion, is forecast to recover with service revenue up 4.3% to SEK12.18 billion in 2026. Berenberg notes that Norway's improvement would be aided by capital expenditure savings from a radio access network-sharing agreement with Ice, and it said further deal details are expected at Telia's second-quarter results.
On balance sheet metrics, Berenberg forecasts net debt including leases to decline to SEK59.54 billion by the end of 2026 from SEK61.75 billion at end-2025. The brokerage attributes this reduction in part to the inclusion of proceeds from the disposal of Telia's Latvian business. Under the updated forecasts, net debt to EBITDA is projected at 1.9 times.
Market reaction and context
The downgrade came despite Berenberg's upward revisions to profitability and cash-flow forecasts, underscoring a tension between improving fundamentals and what the broker sees as an already richly valued share price. The call reflects a view that, even with stronger earnings and freer cash flows expected, the current share price limits upside compared with peers and potential consolidation plays elsewhere in the telecom sector.
What to watch next
Investors will likely look for additional detail on the Norway radio access network-sharing deal with Ice when Telia reports second-quarter results, as Berenberg highlighted expected capital expenditure savings tied to that agreement. The evolution of net debt after the Latvian business disposal and the trajectory of margins and free cash flow through 2026-2028 will also be central to assessing whether the premium valuation can be justified.