Europolitan Holdings AB reports nine months results with pre-tax income of SEK 1 439 million
1/25/2002 1:21 AM EST
Europolitan Holdings AB reports nine months results* with pre-tax income
of SEK 1 439 million
Net income of SEK 1 034 million
96 000 net customer additions
Net sales of SEK 4 409 million
EBITDA of SEK 1 899 million
Pre-tax income for third quarter of SEK 471 million
Launch of GPRS e-mail service
First licence condition met - 3G network operational
* Accounting year to 31 March
Nine months results 2001/2002
Customer Growth
Europolitan Vodafone's customer base increased to 1 109 000 as of 31
December 2001, including 294 000 (209 000) Europolitan Vodafone prepaid
customers. A total of 96 000 new customers were added in the nine months
(109 000), of which 39 000 were contract customers (52 000) and 57 000
(57 000) were prepaid customers. During the third quarter 37 000 (31
000) customers were added, including 31 000 prepaid customers (19 000).
Net Sales
Europolitan Vodafone's consolidated nine months net sales increased 11%
to SEK 4 409 million compared with the same period last year (SEK 3 971
million).
Average monthly revenue per customer, excluding prepaid customers, was
SEK 565 (SEK 551).
The 3% increase compared to the same period last year reflects
continuing stability in market conditions, in terms of both price and
steady growth in minutes of use per customer.
Average monthly revenue per customer, including prepaid customers was
SEK 448 (SEK 449).
Cost of Sales, Operating Expenses and Income
Cost of sales and operating expenses in the nine months ended 31
December 2001 increased 14% to SEK 3 028 million (SEK 2 649 million)
compared to the same period last year. The increase was due to:
· Increases in costs which are directly related to the increased
number of customers and their usage.
· Depreciation on increased capital investments.
· Continuing investment in new business areas and the 3G rollout.
After net financial income of SEK 30 million (SEK 4 million), income
before taxes was SEK 1 439 million (SEK 1 345 million). After tax
expense of SEK 412 million (SEK 378 million) and minority interest of
SEK 7 million (nil), net income was SEK 1 034 million (SEK 967 million).
Capital Expenditures
Capital expenditures in the nine months amounted to SEK 925 million (SEK
687 million). This included the company's increasing investment in its
3G rollout, as well as ongoing investment in its GSM / GPRS network and
in service development.
Liquidity and Financing
EBITDA amounted to SEK 1 899 million (SEK 1 738 million) during the nine
months ended 31 December 2001, an increase of 9%. Cash flow after
investments (free cash flow) decreased by 9%, due to increased
investment in capital expenditures and higher working capital at the
calendar year end. Europolitan AB has made a short-term loan to Vodafone
Group Plc of SEK 1 255 million (SEK 500 million) on market terms.
Option Programs
In 1997, Europolitan Holdings AB issued three debentures (issue Nos. 1,
2 and 3) each with detachable warrants with a right to subscribe to new
shares. Warrants were detached and transferred to senior management of
the Europolitan Group. The exercise period according to the warrants
connected to issue No. 2 was 1 June to 1 December 2001. Subscriptions
for new shares with exercise of the warrants connected to issue No. 2
have been made.
During December 2001, the company undertook a program to repurchase 1.3m
of its own shares, in accordance with the decision taken at the
shareholders' meeting on 26 June 2001, in order to give the company
increased possibilities to handle the share option program approved at
the same meeting. This repurchase program, previously announced was
finalised during December 2001. As a result of the above events the
share capital at 31 December 2001 was SEK 102 426 103 and the number of
shares was 408 384 410.
Market Overview
3G
Europolitan Vodafone announced on 15 January 2002 that Orange Sverige AB
(Orange) had joined 3G Infrastructure Services AB (3GIS), the
established 3G-infrastructure joint venture between Europolitan Vodafone
and Hi3G. 3GIS's objective is to build and operate 3G-infrastructure
covering up to 70 per cent of the total population in Sweden. 3GIS is a
co-operation between three equal partners, which is fully in line with
the regulations and licence conditions set out by The Swedish National
Post and Telecom Agency. The cooperation is subject to approval from the
Competition Authority.
The participation of Orange in the joint venture will decrease
Europolitan Vodafone's network rollout investment costs for the 3G
initiative outside the three major cities of Stockholm, Malmö and
Göteborg by one third. It will also reduce the total number of masts
required, in turn minimising the impact on the environment.
On 20 December 2001, Europolitan Vodafone opened its 3G network in
Karlskrona, thereby meeting the deadline set by PTS as regards public
access to 3G networks from 1 January 2002.
Brand name
During the nine-month period, campaigns were successfully launched to
increase awareness of the dual brand, Europolitan Vodafone. In April
2002, the brand name will change to Vodafone. This step is intended to
underline the fact that the company is part of the world's largest
mobile telecoms group. New Year's Day 2002 saw the start of a
comprehensive brand campaign. The aim of the campaign is to increase
awareness of the Vodafone brand and demonstrate how Vodafone can bring
together people from all over the world - from football fans to business
people.
Customers
Growth in the customer base in the third quarter of the financial period
was higher than the growth experienced in the same period last year. The
number of prepaid connections was higher than contract additions
principally due to seasonal factors and the market trend towards prepay
connections during the final quarter of 2001. Subscriber acquisition
costs have been stable at the same level as the previous quarter.
Of Europolitan Vodafone's total customer base at 31 December 2001, 89%
were active. The proportion of active contract customers amounted to 91%
and the proportion of active prepaid customers amounted to 84%. Active
customers are defined as those who have made a chargeable outgoing call
in the last three months.
Customer satisfaction
In January 2002, Svenskt Kvalitetsindex published the results of its
annual survey which sought to measure customer satisfaction and quality
improvement in, among others, the fixed and mobile telephony sectors. As
with previous surveys, Europolitan Vodafone stood out as the leader in
terms of customer satisfaction in both the private and business customer
segments of the mobile telecommunications sector.
Services
In November 2001 Europolitan Vodafone launched an e-mail service for
GPRS customers enabling them to download new e-mail messages
automatically at intervals set by the customer. In addition to this e-
mail functionality, Europolitan Vodafone also adapted its GPRS price
structure to suit all its customers.
Europolitan Vodafone launched InfoManager in November 2001 as part of
the Wireless Office concept that enables the staff of Europolitan
Vodafone's corporate customers to get quick access to important internal
information while they are out of the office. InfoManager can also help
businesses to improve relationships with their customers by enabling
them to offer services such as booking, balance information or product
offers. This information is accessed via text messages or WAP directly
from a mobile phone.
Vodafone Group Plc announced in January 2002 that it had signed a global
agreement with Ericsson to supply multimedia-messaging software (MMS).
MMS is an evolution of today's successful SMS service, which will allow
customers to compose, send and receive messages using all forms of media
including text, pictures, audio and video clips. Europolitan Vodafone
will adopt Ericsson's platform and is planning to launch MMS services
during 2002.
Service Provider Agreements
Service provider agreements were signed with Campuz Mobile and Universal
Telecom (Unitelco) during the third quarter. Campuz Mobile is a virtual
mobile operator selling mobile phone services and subscriptions to
students at Swedish universities and Unitelco will offer mobile services
principally to its existing fixed line customers across a number of
specific market segments.
Third Quarter Highlights
In October Europolitan Vodafone announced that the construction company
Peab had signed an agreement for the provision of mobile services. The
agreement covers around 3 500 employees. (Press Release 2001-10-23).
Europolitan Vodafone announced a new pricing structure for GPRS and an e-
mail service whereby e-mails are automatically sent to the customer's
GPRS-enabled mobile phone. (Press Release 2001-10-24).
On 6 November Europolitan Vodafone launched InfoManager, a service part
of the Wireless Office concept that enables the staff of its corporate
customers to get quick access to important internal information while
they are out of the office. (Press Release 2001-11-06).
Europolitan Vodafone and TietoEnator announced that they will develop a
virtual payment card together. (Press Release 2001-11-28).
Europolitan Holdings AB announced that it had undertaken a program to
repurchase its own shares. (Press Release 2001-11-29).
Europolitan Vodafone will change its brand name to Vodafone in April
2002. (Press Release 2001-12-19).
Europolitan Vodafone offered mobile services in connection with the
launch of the film "The Lord of the Rings, the Fellowship of the Ring".
(Press Release 2001-12-10).
On 20 December Europolitan Vodafone met PTS (Swedish Post and Telecom
Agency) first licence condition and opened its 3G network in Karlskrona
ahead of 1 January 2002. (Press Release 2001-12-20).
Significant events after the quarter end
Regulatory
The Swedish National Post and Telecom Agency (PTS) is investigating
whether Europolitan Vodafone and Tele2 have significant market power on
the mobile and/or interconnect markets. Europolitan Vodafone does not
consider itself to have significant market power on either market and
particularly not in the interconnect market. If an operator does have
significant market power on the mobile market, it can be obliged by PTS
to offer interconnect tariffs on equal market terms and conditions to
all operators. If an operator has significant market power on the
interconnect market, it can be obliged to offer cost-based interconnect
tariffs. Significant market power on either the mobile or the
interconnect market will only affect interconnect tariffs, as
highlighted above.
Quarterly Report
Europolitan Vodafone's Final Report will be published on 30 April 2002.
Stockholm, 25 January 2002
The Board of Directors - Europolitan Holdings AB (publ)
For further information, please contact:
Jon Risfelt, President and CEO, +46 708 33 10 01
Mark Carey, CFO, +46 708 33 18 03
Monica Enderstein, Investor Relations Manager, +46 708 33 18 02
Tel: +46 (0)8 678 09 50
Previous financial reports and additional information regarding
Europolitan Vodafone can also be obtained on the Internet at
www.europolitan.se
This report has not been audited. The same accounting principles and
calculation methods have been applied in this report as in the full year
report for the financial year ended 31 March 2001.
Europolitan Holdings AB is the holding company of the mobile operator
Europolitan AB, which trades as Europolitan Vodafone. The group operates
a GSM network in Sweden and has a licence to build a 3G mobile telecoms
network. Europolitan Vodafone employs some 1 500 people. Europolitan
Holdings AB is listed on the O-list of the Stockholm Stock Exchange's
Attract 40. The company's principal owner is Vodafone, with 71 per cent
of Europolitan Holdings AB. The remaining 29 per cent is owned by
approximately 30,000 private shareholders, unit trust funds and
insurance companies. Vodafone Group Plc is represented on 5 continents
and has over 100 million customers (proportionate customers). For more
information, please visit www.europolitan.se and www.vodafone.com.