Elisa’s Interim Report Q1 2019

ELISA CORPORATION INTERIM REPORT RELEASE 17 APRIL 2019 AT 8:30 AM

First quarter 2019 financial highlights

  • Revenue decreased by EUR 10m to EUR 440m, mainly due to a decrease in equipment sales, lower interconnection revenue and divestments.
  • Mobile service revenue increased by 2.1 per cent to EUR 204m. Keen competition impacted growth.
  • Comparable EBITDA, including the change to IFRS 16, grew by EUR 2m to EUR 158m.
  • Comparable EBIT, including the IFRS 16 change, decreased by EUR 5m to EUR 92m.
  • Cash flow grew by EUR 16m to EUR 68m, mainly due to a positive change in net working capital.
  • Mobile post-paid voice ARPU was at the previous quarter’s level EUR 20.4 (20.5).
  • Mobile post-paid voice churn increased to 19.7 per cent (18.7 in previous quarter).
  • Number of post-paid mobile subscriptions decreased by 1,500 from the previous quarter.
  • Due to seasonality prepaid subscriptions decreased by 17,300 during the quarter.
  • The number of fixed broadband subscriptions decreased by 700 during the quarter.

Key indicators

EUR million1Q191Q18Δ %2018
Revenue440450-2,2 %1 832
EBITDA1)1551531,1 %640
Comparable EBITDA1)1581561,2 %639
EBIT2)9095-5,4 %404
Comparable EBIT2)9297-5,0 %403
Profit before tax8389-7,5 %381
Comparable profit before tax8592-7,0 %380
EPS, EUR0,430,47-7,8 %1,98
Comparable EPS, EUR0,440,48-7,4 %1,95
Capital expenditure3)57537,6 %254
Net debt1 0751 018 1 068
Net debt / EBITDA4)1,71,6 1,7
Gearing ratio, %90,2 %89,6 % 94,8 %
Equity ratio, %41,9 %42,9 % 42,4 %
Cash flow 685230,3 %272
Comparable cash flow5)685230,3 %282

1) Includes EUR 4m IFRS 16 impact (see Note, page 15). 2) IFRS 16 has no material impact on EBIT 3) 2018 CAPEX includes EUR 26m licence investment. 4) (Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA). 5) 2018 cash flow includes EUR 9m in investments in shares and sale of businesses.

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

CEO’s review: Elisa’s competitiveness continued to grow

Despite the challenging market situation, Elisa’s competitiveness strengthened through the continuous improvement of the customer experience and quality. EBITDA was at last year’s level and revenue declined slightly. The decline in revenue was due to a decrease in the sales of terminal devices and interconnection revenue, as well as divestments of business operations.

Consumers, corporate customers and organisations value effortlessness use of communication services. Customers are continuing to cancel passive subscriptions and switch to mobile broadband subscriptions with higher speeds. The post-paid mobile subscription base fell by 1,500 subscriptions and the prepaid subscription base by 17,300 subscriptions during the quarter. The fixed-network broadband subscription base decreased by 700 subscriptions. Elisa continued to expand the 5G network, and 5G networks were set up in Turku and Jyväskylä. We organised Finland’s first mobile tour played in the 5G network in four cities. The tour was organised in cooperation with Hatch Entertainment and Elisa Viihde Sport.

Elisa announced that it would start selling 5G phones from several manufacturers during the spring. We will be among the first in Europe to start selling 5G phones from OnePlus and ZTE during the second quarter of the year. Cooperation with the Korean carrier LGU+ will intensify. The goal of this collaboration is to ensure first-rate quality in the network as well as to develop automation in the 4G and 5G networks.  

Elisa has launched 14 original series since 2014. For 2019, we are continuing to publish original series. We launched one drama series, which received an international screenwriting award, and one spy thriller. The very latest announcements concerned two comedy series. There will also be new series of popular Elisa Viihde shows.

Elisa’s systematic work to improve quality was recognised with Excellence Finland’s quality award. The award is national recognition for excellence and a capacity for continuous improvement in areas valued by customers. Elisa’s employees again rated Elisa among Finland’s best workplaces in the Great Place to Work survey. For the third time, Elisa was the largest company to win the recognition. Elisa’s personnel particularly appreciate the flexible ways of working that the company provides.

The continuous improvement of customer experience and quality are integral parts of our corporate culture, and we will continue to keep a strong focus on them. Increasing productivity, internationalising our digital services, creating value with data, and our strong investment capability will continue to create a solid foundation for the creation of competitive value in the future.

Veli-Matti Mattila
CEO

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 Interim Report Q1 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 10 262 3036

Distribution:

Nasdaq Helsinki
Principal media
www.elisa.com

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