Elisa’s Interim Report January–September 2016

ELISA INTERIM REPORT RELEASE 19 OCTOBER 2016 AT 8:30 AM

Third quarter 2016

• Revenue amounted to EUR 419 million (394)
• EBITDA was EUR 154 million (145) and comparable EBITDA EUR 155 million
• EBIT was EUR 98 million (90)
• Profit before tax amounted to EUR 93 million (83)
• Earnings per share were EUR 0.47 (0.43)
• Cash flow after investments was EUR 47 million (85)

• Mobile ARPU was EUR 16.7 (16.6 in previous quarter)
• Mobile churn was 18.0 per cent (17.0 in previous quarter)
• The number of Elisa’s mobile subscriptions were at the previous quarter’s level
• The number of fixed broadband subscriptions increased by 58,500 on the previous quarter
• Net debt / EBITDA was 1.8 (1.8 end 2015) and gearing 110 per cent (104 end 2015)

January–September 2016

• Revenue was EUR 1,202 million (1,165)
• EBITDA was EUR 424 million (405) and EBIT was EUR 263 million (244)
• Earnings per share was 1.24 (1.17)
• Cash flow after investments was EUR 180 million (223)

Key indicators

¹⁾ Comparable EBITDA excludes net of transfer tax of EUR 1.7m relating to the Anvia acquisition and a capital gain of EUR 0.6m from the sale of Tansec shares
²⁾ Q3/2016 comparable EBIT EUR 100m, profit before tax EUR 94m and EPS EUR 0.48. 1–9/2016 comparable EBIT EUR 265m, profit before tax EUR 247m and EPS EUR 1.25

Financial position and cash flow

¹⁾ (interest-bearing debt – financial assets) / (four previous quarters’ EBITDA exclusive of non-recurring items)
²⁾ Excluding investments in shares and business combinations Q3/2016 EUR 72m, 1–9/2016 EUR 228m, Q3/15 EUR 88m and 1–9/2015 EUR 236m

Elisa uses Alternative Performance Measures (APM), i.e. measures not based on IFRS. Definitions for these measures are available at elisa.com/investors/financial-information. Additional key performance indicators are also at the same address (Operational Data.xls).

CEO Veli-Matti Mattila: Elisa's strong development continues

We succeeded in strengthening our competitiveness although the economic situation continued to be challenging during the third quarter. Our revenue and earnings grew again year-on-year. Our earnings improved similarly to the previous quarter with growth in mobile service revenue and through Elisa's efficiency improvements. Furthermore, the acquisition of Anvia's telecom, IT and entertainment services had a positive effect on revenue.

Consumers, corporate customers and public organisations appreciate the ease and speed provided by increasingly fast mobile broadband subscriptions. The volume of mobile data in Elisa's network reached an all-time high. The average volume of mobile data per user exceeded 13 gigabytes in August. The mobile subscription base remained on a par with the previous quarter, while the fixed-network broadband subscription base increased by over 58,000 subscriptions.

The Elisa Viihde IPTV service will feature extensive new Finnish and international entertainment and sports content in the near future. Elisa Viihde's most popular series ever, Downshiftaajat, will continue in December, and a new original series, Suomen Konttori, will begin in March next year. Elisa Viihde is also showing the European FIFA World Cup qualifiers, UEFA Champions League and Mestis ice hockey league games.

Integration of Anvia’s operations with Elisa has proceeded well. Anvia’s capabilities combined with Elisa’s investment and development resources ensure excellent services to customers in the Ostrobothnia region, as well as a basis for further developing shareholder value.

Elisa is the biggest fixed-network operator in Finland. We have brought fibre closer to our customers, and we are expanding our coverage by over 75,000 households in 2016, allowing speeds of up to 100 Mbit/s in low-rise residential areas and up to 1,000 Mbit/s in blocks of flats and terraced houses. Customers will benefit the most in remote working and home entertainment, such as online gaming.

Offering an increasingly better customer experience is important to us, and to guarantee it, we are testing new technologies in both mobile and fixed networks. In August, we broke a world speed record in the 4G network by achieving a speed of 1.9 Gbit/s. We were the first operator to test 5G in Finland. 5G will support, for example, virtual reality games, smart traffic, remote surgery and other future services.

The Elisa Innovation Challenge, part of Elisa's open development and service platform Elisa IoT, expanded internationally. This competition has two categories – the IoT and smart homes. Almost a hundred ideas were submitted, and three finalists were selected in both categories from three countries.

We will continue our determined work to improve both customer satisfaction and our operational productivity. 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 2016

The macroeconomic environment in Finland is still expected to be weak in 2016. Competition in the Finnish telecommunications market also remains challenging.

Full-year guidance includes the companies acquired from Anvia for six months. Full-year revenue is estimated to be slightly higher than in 2015. Mobile data, ICT and digital online services are expected to increase revenue. Comparable full-year EBITDA is anticipated to be slightly higher than in 2015. Full-year capital expenditure is expected to be a maximum of 12 per cent of revenue. Elisa’s financial position and liquidity are good.

Elisa is continuing its productivity improvement measures, for example by streamlining the product portfolio and IT systems and operations. Additionally, Elisa is continuing to increase customer service and sales efficiency, as well as to reduce general administrative 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 Q3 2016 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