17 Jul 2014 07:00
Comments by Johan Dennelind,President and CEO
”I am pleased to present the first interim report reflecting our new country based operating model implemented in April.
In the second quarter, group profitability remained steady with an underlying EBITDA margin of 35.3 percent. Net sales continued to be affected by lower equipment sales, while group service revenues were stable.
Our strategic framework was further outlined during the spring, with a clear aim to enhance our core operations and also explore opportunities in closely related areas.
In early July, we took an important step in our targeted direction by announcing the acquisition of Tele2’s Norwegian operations. The transaction is a great strategic fit and will reinforce our number-two position in the country, enhance our customer offerings and generate significant cost synergies.
In order to have the most satisfied and loyal customers, there is a need to further simplify our operations and transform legacy to create agility and cost efficiency across our company.
Demand for mobile data services remains strong and it is important for us to monetize on this opportunity. We continue to develop our data-centric price models and see further positive effects from customers migrating to new price plans. In this context it is encouraging to note that the number of subscriptions increased and churn decreased in all of our Nordic mobile operations in the second quarter.
In Sweden, net sales remained stable compared to last year and underlying EBITDA margin improved slightly to 39.8 percent, supported by solid consumer operations and cost saving activities. We continue to expand 4G and fiber coverage by investing SEK 5 billion annually over a three year period to ensure our customers a superior internet experience.
In region Europe, a key priority for us is to improve competitive positions in our Nordic and Baltic markets. In Spain, margin recovered in the second quarter, but the business remains sub-scale with a market share around 7 percent. Competition is fierce, forced by a strong convergence trend that puts pressure on our mobile-only business. Consequently, we are reviewing our future presence in the Spanish market.
In Eurasia our new management team has increased focus on governance, control and new business initiatives. The region continues to deliver strong profitability, with an EBITDA margin improving to 54.4 percent, supported by solid development in Kazakhstan and Nepal. Organic revenue growth was 7 percent, propelled by 35 percent growth in data revenues which now accounts for 14 percent of sales in the region.
Creating a long term sustainable business is a central part of our daily agenda. We have continued to roll out our anti-corruption awareness and training across the company during the quarter. Further, we have engaged in dialogue with key stakeholders on Freedom of Expression in several of our Eurasian countries.
As a result of lower revenues in Spain, mainly equipment related, we revise our full-year organic net sales outlook from previously flat to slightly below the level in 2013. We reiterate our forecast of EBITDA margin at around last year’s level and CAPEX-to-sales of around 15 percent.”
TeliaSonera 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 July 17, 2014.
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