Telia Company Interim Report January-March 2016

20 Apr 2016 07:00

First quarter summary

Former segment region Eurasia is reported as discontinued operations. Net sales in local currencies, excluding acquisitions and disposals, declined 1.1 percent. In reported currency, net sales declined 0.9 percent to SEK 20,394 million (20,589). Service revenues in local currencies, excluding acquisitions and disposals, declined 0.9 percent. EBITDA, excluding non-recurring items, increased 10.4 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 10.4 per-cent to SEK 6,217 million (5,632). The EBITDA margin, excluding non-recurring items, rose to 30.5 per-cent (27.4). Operating income, excluding non-recurring items, increased 19.0 percent to SEK 4,198 million (3,526). Total net income attributable to the owners of the parent increased to SEK 3,766 million (3,714) and earnings per share to SEK 0.87 (0.86). Total net income decreased to SEK 3,911 million (4,110). Full year outlook is changed.

COMMENTS BY JOHAN DENNELIND, PRESIDENT AND CEO

”We continue to shape our company for the future with a clear focus on our core operations in the Nordic and Baltic countries. Four out of seven markets now carry the Telia brand and with new roam-like-home offerings in place we can further leverage our position and boost customer loyalty. To emphasize our common purpose, culture and values, we have also adopted a new name for our group - Telia Company.

In the first quarter, the earnings development was encouraging and our continuing operations reported double digit EBITDA growth compared to the corresponding period last year.

Our Swedish operation was a key contributor to the higher profitability, supported by better sales mix and lower costs. Service revenue growth in the consumer segment stayed positive, backed by solid demand for fiber solutions, good traction within TV and mobile customers migrating to larger data buckets. We continue to offer more to our customers as highlighted by our recent social media proposition. The enterprise area remains highly competitive, putting pressure on service revenues despite bright spots in the SME/SoHo segments.

In Finland, we continue to see positive effects from up-sale activities and price adjustments, leading to 4 per-cent increase in mobile billed revenues, supporting profitability. We experienced network disturbances in the quarter, additional measures have therefore been implemented together with our main vendors to ensure a solid customer experience going forward.

We took a further step on the Norwegian market when we successfully rebranded the Netcom brand to Telia. Positive effects from last year’s acquisition of Tele2 Norway continued to support margin and we have now reached our synergy target of SEK 1 billion. Our greater scale and extensive 4G coverage have improved our customer proposition and make us well positioned for the future.

There was further progress in the Baltic region and all three countries delivered positive service revenue growth backed by strong demand for mobile data services. In Lithuania, the integration of Teo and Omnitel continued with further positive effects on profitability.

In mid-April, we completed the divestment of our Nepalese operation Ncell to Axiata. It is comforting that we have been able to hand over the operation to an established player in our industry. The process to exit the other Eurasian markets continues and we will give further updates as we progress. The operating environment remains demanding in several parts of the region, with intense competition and pressure on currencies due to macroeconomic challenges.

There was no decision on dividend at Turkcell’s Ordinary General Assembly in March. We voted in favor of the proposed dividend through our direct ownership, but the main owners were unfortunately not able to agree on this topic. We continue to work hard to solve the governance issues.

We have an ambitious investment agenda in 2016, with initiatives to drive both growth and strengthen long-term competitiveness. This involves an acceleration of the Swedish fiber roll-out as well as further build out of 4G capacity and coverage across our core markets. In addition, we work with our business transformation agenda which will reduce complexity and costs over time.

2016 has started well from an earnings perspective, but we expect growth to slow as we face tougher year-over-year comparisons in the quarters to come. However, we raise our expectations somewhat for the full year and anticipate EBITDA on a comparable basis to be in line or slightly above the level in 2015 for the continuing operations. CAPEX excluding license and spectrum fees for the continuing operations is expected to be SEK 14-15 billion.”

Johan DennelindPresident and CEO

Questions Regarding the ReportsTelia Company ABwww.teliacompany.comTel. +46 8 504 550 00

Telia Company AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 07:00 CET on April 20, 2016.

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