Elisa’s Half-Year Financial Report January–June 2019

ELISA CORPORATION HALF-YEAR FINANCIAL REPORT RELEASE 12 JULY 2019 AT 8:30 AM

Second quarter 2019 financial highlights

  • Revenue decreased by EUR 6m to EUR 452m, mainly due to a decrease in equipment sales, and lower interconnection and roaming revenue.
  • Mobile service revenue increased by 1.9 per cent to EUR 205m.
  • Comparable EBITDA, including IFRS 16 change, grew by EUR 7m to EUR 164m.
  • Comparable EBIT, including IFRS 16 change, decreased by EUR 1m to EUR 97m.
  • Comparable cash flow grew by EUR 15m to EUR 102m, mainly due to lower capital expenditure and taxes paid.
  • Mobile post-paid voice ARPU was at the previous quarter’s level EUR 20.2 (20.4).
  • Mobile post-paid voice churn decreased to 18.0 per cent (19.7 in the previous quarter).
  • Number of post-paid mobile subscriptions increased by 27,200 from the previous quarter.
  • Prepaid subscriptions increased by 4,100 during the quarter.
  • The number of fixed broadband subscriptions decreased by 5,100 during the quarter.
  • Elisa acquired 100 per cent of Swedish Polystar OSIX AB and affiliated companies shares.

Key indicators

EUR million 2Q19 2Q18 Δ % 1H19 1H18 Δ %
Revenue 452 458 -1.3 % 891 907 -1.7 %
EBITDA1) 159 160 -0.4 % 314 313 0.3 %
Comparable EBITDA1)2) 164 157 4.4 % 321 312 2.8 %
EBIT3) 92 101 -8.1 % 182 196 -6.8 %
Comparable EBIT 97 98 -0.7 % 189 195 -2.9 %
Profit before tax 87 95 -8.4 % 170 184 -8.0 %
Comparable PBT 91 92 -0.6 % 177 184 -3.8 %
EPS, EUR 0.45 0.49 -8.3 % 0.87 0.95 -8.1 %
Comparable EPS, EUR 0.47 0.47 0.2 % 0.91 0.94 -3.6 %
Capital expenditure 61 61 -0.4 % 118 114 3.1 %
Net debt 1,319 1,201 9.8 % 1,319 1,201 9.8 %
Net debt / EBITDA4) 2.0 1.9 2.0 1.9
Gearing ratio, % 133.9 % 125.9 % 133.9 % 125.9 %
Equity ratio, % 35.3 % 37.0 % 35.3 % 37.0 %
Cash flow 37 81 -54.2 % 105 133 -21.2 %
Comparable Cash flow5) 102 87 17.1 % 170 140 21.9 %

1) Includes EUR 4m IFRS 16 impact in 2Q19 and EUR 8m in 1H19. 2) 2Q19: EUR 4m restructuring costs and EUR 1m one-off transaction cost relating to Polystar acquisition, 1H19: EUR 6m restructuring costs and EUR 1m one-off transaction cost. 3) IFRS 16 has no material impact on EBIT. 4) (Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA). 5) 2Q19 and 1H19 excluding EUR 65m investments in acquisition and shares.

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

CEO Veli-Matti Mattila: The 5G era has begun and Elisa has improved its competitiveness

Despite the challenging market situation, Elisa continued to strengthen its competitiveness by improving quality and customer experience. In the second quarter, comparable EBITDA increased on the previous year, while revenue decreased slightly, due to a decrease in equipment sales, as well as interconnection and roaming revenue.

The importance of communication services in the daily lives of consumers, corporate customers and organisations continues to increase. Customers are increasingly choosing faster mobile broadband subscriptions. The post-paid mobile subscription base increased by 27,200 subscriptions during the quarter and the prepaid subscription base by 4,100 subscriptions. The fixed-network broadband subscription base decreased by 5,100 subscriptions.

Elisa became the first and only operator in Finland to sell 5G subscriptions. It also became the first Nordic operator to sell a 5G phone to a customer. Pre-purchasing of several 5G phone models began in the second quarter of the year, and more models will become available during the third quarter. The 5G network in Turku became the largest in the Nordic countries, and the world’s first 5G cafés were opened in Turku.  

Elisa introduced an eSIM subscription for consumers and corporate customers. Consumers can use this new type of SIM card in smartwatches, for example, and companies can use it in industrial IoT connections. Finland became the first country in the world to use 5G in television broadcasts when Elisa Viihde Sport broadcast Mestis ice hockey league matches over a 5G network in 4K resolution.

In the realm of corporate responsibility, we sponsored the 2019 World Summit of Students for Climate, providing many forms of support. At the summit, young people aged 14–17 expressed their concerns about climate change and presented practical solutions.

We made the Great Place to Work Finland list again, being the largest company on the list for the third consecutive year. This year, we were also listed among the best places to work in Europe for the first time. Our employees appreciate our development and learning opportunities in particular, as well as our exceptionally flexible working practices.

The continuous improvement of the customer experience and quality are integral parts of our corporate culture, and we will continue to focus on them strongly. Increasing productivity, expanding our digital services internationally and creating value with data, as well as our strong investment capability, will continue to lay a solid foundation for creating value competitively in the future.

Outlook and guidance for 2019   

The positive development of the macroeconomic environment is decelerating in Finland. Competition in the Finnish telecommunications market remains keen.

Full-year revenue is estimated to be at the same level or slightly higher than in 2018. Mobile data and digital services are expected to increase revenue. Full-year comparable EBITDA is anticipated to be at the same level or slightly higher than in 2018. Capital expenditure is expected to be a maximum of 12 per cent of revenue.

Elisa is continuing its productivity improvement development, for example by increasing automation and data analytics in different processes, such as customer interactions, 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 the growth in the mobile data market, 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 Half-Year Financial Report January–June 2019 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 50 520 5555

Distribution:

Nasdaq Helsinki
Principal media
www.elisa.com

About Us

Elisa is a pioneer in telecommunications and digital services. We serve approximately 2.8 million consumer, corporate and public administration organisation customers, and have over 6.3 million subscriptions in our extensive network. Cooperation with Vodafone and Tele2, among others, enables globally competitive services. Our core markets are Finland and Estonia, and we also provide digital services for international markets. Elisa’s shares are listed on the Nasdaq Helsinki. In 2019, our revenue was EUR 1.84 billion euros, and we employed 4,900 people. As a responsible Finnish market leader, our operations are guided by continuous improvement. We will be a carbon neutral company from 2020 onwards. Further information on www.elisa.com , Facebook (@elisasuomi) and Twitter (@ElisaOyj)