TeliaSonera Interim Report January – March 2015
Progress and challenges
FIRST QUARTER SUMMARY
- Net sales in local currencies, excluding acquisitions and disposals, increased 1.5 percent. In reported currency, net sales increased 8.8 percent to SEK 26,041 million (23,926). Service revenues in local currencies, excluding acquisitions and disposals, decreased 1.1 percent.
- EBITDA, excluding non-recurring items decreased 4.3 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 2.3 percent to SEK 8,540 million (8,345). The EBITDA margin, excluding non-recurring items, decreased to 32.8 percent (34.9).
- Operating income, excluding non-recurring items, decreased 12.6 percent to SEK 5,496 million (6,286).
- Net income attributable to owners of the parent company decreased 5.9 percent to SEK 3,714 million (3,945) and earnings per share to SEK 0.86 (0.91).
- Free cash flow increased to SEK 2,853 million (2,556) despite higher cash CAPEX, supported by lower taxes and working capital changes.
- Group outlook for 2015 is unchanged.
Comments by Johan Dennelind,
President and CEO
”The first quarter was eventful and I am particularly satisfied that we reached two milestones by closing the Tele2 Norway acquisition and in achieving an agreement on dividend distribution in Turkcell.
Our strategic agenda remains firm and we have started to execute on our investment plans to improve the internet experience for our customers and structurally reduce the cost base. We are taking further steps into areas close to the core and recently launched new cloud based services for small and mid-sized enterprises.
In Sweden, mobile service revenue growth remained healthy at 2 percent, fuelled by solid demand for data in the consumer segment. Competitor activity intensified at the beginning of the year when more generous data bundles were introduced in the market. We continue to expand our 4G and fiber networks and will further utilize this strength in our customer offerings going forward. Demand for our fiber services remains strong and we are on track to reach our target for 2015 to increase the number of new connections to single-homes by 25 percent. Profitability slowed in the quarter, mainly due to market investments and changed product mix, but we expect performance to improve during the course of the year.
Our Finnish business holds up well in the market, but costs increased related to our focus on enhancing customer experience. In February, we finalized the acquisition of Tele2 Norway and the business combination will both strengthen our position in the market and enhance our proposition to the Norwegian customers. The nearly one million acquired subscriptions have now been migrated to our network and we remain confident reaching our synergy target in 2016. In Denmark, the regulatory approval process of our joint venture with Telenor continues as expected and we anticipate closing in the second half of 2015.
The macroeconomic and competitive picture in parts of Eurasia remained demanding and we have put a lot of effort into re-positioning our offerings in order to make us more attractive for the customers. Our operation in Nepal showed once again strong performance, while we need to further strengthen our competitiveness in Kazakhstan. Overall, organic service revenue growth turned slightly positive and profitability remained high, but the challenging environment is expected to remain near term.
After nearly five years with a deadlock between the main owners of Turkcell, we reached an agreement in March on a dividend distribution proposal for the years 2010-2014. This was recently approved by Turkcell’s General Assembly Meeting and TeliaSonera’s share amounts to approximately SEK 4.5 billion after tax. The resolution was an important step in achieving ordinary corporate governance of Turkcell and we will continue the dialogue with all relevant stakeholders.
As expected, the start of the year has been somewhat slow, but we foresee a gradual improvement in the earnings trend and reiterate our full year outlook. We anticipate EBITDA, on a local organic basis, to remain around last year’s level and foresee CAPEX at around SEK 17 billion, excluding license and spectrum fees.”
Stockholm, April 21, 2015
President and CEO
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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 April 21, 2015.