Elisa’s Interim Report January–March 2017

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ELISA CORPORATION INTERIM REPORT RELEASE 20 APRIL 2017 AT 8:30 AM

First quarter 2017

  • Revenue amounted to EUR 416 million (390)
  • EBITDA was EUR 144 million (137), and EBIT was EUR 89 million (84)
  • Profit before taxes amounted to EUR 84 million (77)
  • Earnings per share were EUR 0.43 (0.39)
  • Cash flow after investments was EUR 63 million (64)
  • Mobile ARPU was EUR 17.2 (17.0 in previous quarter)
  • Mobile churn was 18.5 per cent (18.2 in previous quarter)
  • Mobile service revenue increased by 5.5 per cent to EUR 196 million (186)
  • The number of Elisa’s mobile subscriptions decreased by 23,900 during the quarter due to decrease in prepaid subscriptions
  • The number of fixed broadband subscriptions decreased by 1,500 on the previous quarter
  • Net debt / EBITDA was 1.9 (2.0 end 2016) and gearing 101 per cent (116 end 2016)

Key indicators

EUR million 1-3/2017 1-3/2016 Δ % FY 20161)
Revenue 416 390 6.6 1,636
EBITDA 144 137 5.2 563
EBIT 89 84 5.4 339
Profit before tax 84 77 8.8 320
Earnings per share, EUR 0.43 0.39 8.8 1.61
Capital expenditure 53 44 19.8 226

1) Comparable EBITDA EUR 564m, EBIT EUR 349m, profit before tax EUR 327m and EPS EUR 1.66. Capital expenditure includes 700 MHz license fee of EUR 22m. Change is calculated using exact figures prior to rounding.

Financial position and cash flow

EUR million 31 Mar 2017 31 Mar 2016   End 2016
Net debt 1,062 899   1,124
Net debt / EBITDA1) 1.9 1.7   2.0
Gearing ratio, % 101.1 118.1   115.7
Equity ratio, % 39.4 33.8   38.5

 

EUR million 1-3/2017 1-3/2016 Δ % FY 20162)
Cash flow
after investments
 
63
 
64
-1.6  
65

1) (Interest-bearing debt – financial assets) / (4 previous quarters’ EBITDA exclusive of non-recurring items)
2)
Excluding investments in shares EUR 281m. Change is calculated using exact figures prior to rounding.

Additional key performance indicators are available at elisa.com/investors (Elisa Operational Data.xlsx)


CEO Veli-Matti Mattila: Another excellent result with the continuous improvement of operations

Elisa's competitiveness continued to gain strength. The revenue and earnings grew from the previous year. The revenue growth was due to an increase in mobile revenue, the continuous improvement of Elisa's operations and the development of productivity, as well as the Anvia acquisition. Customer satisfaction forms an important part of productivity. The Net Promoter Score of Elisa's consumer customer service has risen by 30 percentage points over the past three years.

The active use of smart phones and the clear product range of subscriptions steer consumers and corporate customers as well as organisations towards a shift to faster mobile broadband subscriptions. Mobile subscription base declined by 23,900 during the quarter due to decrease in prepaid subscriptions. The postpaid base remained unchanged. The fixed network broadband subscription base decreased by 1,500 subscriptions. Customers value the unlimited data pricing model and the quality of Elisa's network.

The download figures of eBooks began to approach the sales figures of paperbacks. More than 650,000 eBooks were downloaded from Elisa Kirja over the past year. Elisa Kirja is Finland's biggest reseller of eBooks. The offering of Elisa Viihde was popular. The new original series Konttori (The Office) had a record start in the Aitio programme library. The second season of the Downshifters series tripled its viewers compared to the first season. In sports, Elisa announced its cooperation with the Finnish Basketball Association and football league Miesten Ykkönen.

We develop and digitalise the operations of business enterprises and organisations. This makes us a strong part of Finnish society. In cooperation with Technopolis, we introduced a new solution that facilitates the mobility of work, providing access to a secure and scalable wireless corporate network outside the office as well. In addition, we introduced the smart car service S-Drive to the market in cooperation with S Group. The new service connects a car and the related corporate ecosystem of other operators supporting motoring to the network. The service collects all data related to driving to an easy-to-use smart phone application.

Elisa made the Nordic countries' first commercial video call in the 700 MHz 4G-network. The new frequency improves mobile broadband coverage particularly indoors. We were the first in Finland to test a cloud-based technology which allows for the flexible transportation of base station capacity. This enables us to provide customers with increasingly fast and reliable connections.

Elisa's employees elected Elisa among Finland's greatest places to work. Elisa is the largest listed company ever in the category of Great Place to Work Finland's large companies, in which it achieved third place. We invest actively in the employment of young people. Together with its subsidiaries and agencies offering temporary workforce, Elisa will hire 250 young people for summer jobs. We are also taking part in the Responsible Summer Job campaign. We also initiated a project called WORD, which aims to draw attention to the passable level of Finnish boys' reading skills. The project aims to discover new and interesting contents and ways to read them.

We focus on the systematic improvement of the customer experience and our operations. Improving our productivity, developing digital services for our customers and maintaining our strong investment ability create a solid foundation for competitive operations in the future.

Outlook and guidance for 2017

The macroeconomic environment in Finland is still expected to be weak in 2017, regardless of some positive developments. Competition in the Finnish telecommunications market also remains challenging.

Revenue is estimated to be higher than in 2016. Mobile data and digital services are expected to increase revenue. Comparable EBITDA is anticipated to be higher than in 2016. Capital expenditure is expected to be a maximum of 13 per cent of revenue while the mid-term target of a maximum of 12 per cent is still valid. Elisa’s financial position and liquidity are good.

Elisa is continuing its productivity improvement development, for example by increasing automation in different processes, like network operations and delivery. Additionally, Elisa’s continuous quality improvement measures will increase customer satisfaction and efficiency, and reduce costs.

Elisa's transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term growth and profitability improvement will derive from mobile data market growth, as well as digital online and ICT services.

Disclosure procedure

Elisa is adopting the disclosure procedure enabled by the Standard 5.2b published by the Finnish Financial Supervision Authority. This is a summary of Elisa’s Q1 2017 Interim Report and the complete report is attached as a pdf-file to this release and is also available on our website at www.elisa.com/investors.


ELISA CORPORATION

Additional information:

Mr. Veli-Matti Mattila, CEO, tel. +358 10 262 2635
Mr. Jari Kinnunen, CFO, tel.
+358 10 262 9510
Mr. Vesa Sahivirta, IR Director, tel. +358 10 262 3036

Distribution:

Nasdaq Helsinki
Principal media
www.elisa.com