Strong margin improvement
Net sales in local currencies and excluding acquisitions increased 2.5 percent. In reported currency, net sales decreased 5.6 percent to SEK 24,725 million (26,190).
The addressable cost base in local currencies and excluding acquisitions increased 4.1 percent. In reported currency, the addressable cost base decreased 3.9 percent to SEK 7,716 million (8,031).
EBITDA, excluding non-recurring items, increased 5.3 percent in local currencies and excluding acquisitions. In reported currency, EBITDA, excluding non-recurring items, decreased 1.5 percent to SEK 8,812 million (8,945). The EBITDA margin, excluding non-recurring items increased to 35.6 percent (34.2).
Operating income, excluding non-recurring items, decreased 2.6 percent to SEK 7,247 million (7,444).
Net income attributable to owners of the parent company decreased 1.6 percent to SEK 4,646 million (4,722) and earnings per share decreased to SEK 1.04 (1.05).
Free cash flow decreased to SEK 2,587 million (3,372), impacted by higher paid taxes of SEK 0.9 billion.
During the quarter the number of subscriptions grew by 2.1 million in the consolidated operations while subscriptions in the associated companies decreased by 1.2 million. The total number of subscriptions was 158.0 million.
Comments by Lars Nyberg, President and CEO
“We successfully improved our margin during the first quarter although growth in net sales fell somewhat short of our own expectations. Even excluding the improved profitability inSpain, the EBITDA margin, excluding non-recurring items, increased by almost one percentage point compared to the corresponding quarter last year.
Some of the Nordic mobile markets showed lower growth compared to previous quarters as a result of regulatory effects, less handset sales and somewhat lower service revenues. In the Baltic countries, we are still awaiting a recovery. InSpain, Yoigo continues to gain market share and showed positive result for every month in the quarter. Nevertheless, we had lower revenues from equipment sales than previously and we also experienced lower growth in usage as a result of the weak Spanish macroeconomic environment.
Eurasia continues to be our growth engine and in the first quarter we surpassed 30 million subscriptions in our consolidated operations due to a continued strong intake inKazakhstan,UzbekistanandNepal. In Broadband Services, we reached a milestone in April and we now have more than one million TV subscriptions throughout our Nordic and Baltic markets. The appetite for higher bandwidth to support HD-TV, online gaming and on-demand services is virtually unlimited and we recently announced that we will upgrade 800,000 broadband connections inSwedenwith VDSL2, allowing significantly higher speeds for our customers.
InTurkey, we have decided to take a more explicit standpoint to protect our rights as a shareholder and to safeguard good corporate governance in Turkcell. Therefore, we decided to take legal action against the Chairman of the Board, as he has denied us our legal rights as a minority shareholder. Further, I am also quite convinced that we will come to some solution with regards to the complicated ownership situation in Turkcell during this year.
TeliaSonera’s financial position remains strong and we were pleased that we could return an additional SEK 10 billion to our shareholders in April through a public offering. We continue to look for new business opportunities within or neighboring our existing footprint and have publicly expressed our interest for Polkomtel inPoland. However, any transactions are being carefully evaluated to meet our strategic and financial criteria.
We have lowered our expectations on growth in net sales but our outlook for improved EBITDA margin for 2011 remains, as the cost reduction initiatives that the organization has identified will have effect during the second half of this year.”
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