Elisa’s Interim Report Q3 2019
ELISA CORPORATION INTERIM REPORT RELEASE 17 OCTOBER 2019 AT 8:30 AM
Third quarter 2019 financial highlights
- Revenue increased by EUR 11m to EUR 465m, mainly due to the Polystar acquisition and growth in mobile services.
- Mobile service revenue increased by 2.3 per cent to EUR 208m. Competition has remained intense.
- EBITDA, including the IFRS 16 change, grew by EUR 10m to EUR 179m.
- EBIT, including the IFRS 16 change, increased by EUR 3m to EUR 113m.
- Comparable cash flow grew by EUR 13m to EUR 98m mainly due to higher EBITDA and change in net working capital.
- Mobile post-paid voice ARPU was at the previous quarter’s level of EUR 20.30 (20.20).
- Mobile post-paid voice churn increased slightly to 18.2 per cent (18.0 in previous quarter).
- The number of post-paid mobile subscriptions increased by 18,500 from the previous quarter.
- Due to seasonality, prepaid subscriptions increased by 19,800 during the quarter.
- The number of fixed broadband subscriptions increased by 8,100 during the quarter.
- The EBITDA guidance for 2019 has been upgraded to “slightly higher” (previously “same level or slightly higher”).
Key indicators
| EUR million | 3Q19 | 3Q18 | Δ % | 1Q-3Q19 | 1Q-3Q18 | Δ % | |
| Revenue | 465 | 454 | 2,4 % | 1 356 | 1 361 | -0,3 % | |
| EBITDA1) | 179 | 169 | 5,8 % | 493 | 482 | 2,2 % | |
| Comparable EBITDA1) | 179 | 169 | 5,8 % | 500 | 481 | 3,9 % | |
| EBIT2) | 113 | 110 | 2,5 % | 295 | 305 | -3,4 % | |
| Comparable EBIT2) | 113 | 110 | 2,5 % | 302 | 305 | -0,9 % | |
| Profit before tax | 107 | 104 | 2,5 % | 276 | 288 | -4,2 % | |
| Comparable PBT | 107 | 104 | 2,5 % | 283 | 288 | -1,5 % | |
| EPS, EUR3) | 0,53 | 0,53 | -0,6 % | 1,40 | 1,48 | -5,4 % | |
| Comparable EPS, EUR | 0,53 | 0,53 | -0,6 % | 1,44 | 1,48 | -2,6 % | |
| Capital expenditure | 56 | 49 | 14,7 % | 173 | 162 | 6,8 % | |
| Net debt | 1 235 | 1 118 | 10,5 % | 1 235 | 1 118 | 10,5 % | |
| Net debt / EBITDA4) | 1,9 | 1,8 | 1,9 | 1,8 | |||
| Gearing ratio, % | 115,3 % | 107,2 % | 115,3 % | 107,2 % | |||
| Equity ratio, % | 37,6 % | 40,4 % | 37,6 % | 40,4 % | |||
| Cash flow | 97 | 87 | 11,9 % | 202 | 220 | -8,1 % | |
| Comparable cash flow5) | 98 | 85 | 15,2 % | 268 | 224 | 19,6 % | |
1) Includes EUR 5m IFRS 16 impact in 3Q19 and EUR 13m in 1Q-3Q19. 2) IFRS 16 has no material impact on EBIT 3) EPS EUR 0.55 excluding adjustment of deferred tax asset. 4) (Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA). 5) Excluding investments in shares.
Additional key performance Indicators are available at elisa.com/investors (Elisa Operational Data.xlsx).
CEO’s review: Thousands of 5G users, Elisa’s result improved
Improvements in quality and customer experience, as well as investments in pioneering technologies, strengthened Elisa’s competitiveness, even though the market situation remained challenging. Revenue and EBITDA in the third quarter grew from the previous year. The growth in revenue was mostly due to mobile services and acquisition.
The shift among customers to increasingly fast mobile broadband subscriptions is continuing. Consumers, corporate customers and organisations appreciate fast connections which make everyday life smoother. The mobile subscription base increased by 38,300 subscriptions during the quarter, and growth in the prepaid subscription base accounted for 19,800 of those subscriptions. The fixed-network broadband subscription base grew by 8,100 subscriptions.
Finns are pioneers of 5G services, and there are already thousands of 5G users, who are especially eager to learn and utilise the possibilities of this new technology. The Port of Helsinki is at the vanguard of Finnish companies – and indeed companies the world over – in adopting a 5G network for ship passengers in Helsinki’s West Harbour. Millions of passengers pass through the West Harbour every year. The City of Turku also serves as a pioneering entity on this front. Among other things, the city has piloted taking senior citizens on virtual reality walks along the banks of the Aura River.
Together with the City of Turku, Elisa organised a hackathon which aimed to find ideas relying on 5G technology to prevent social problems such as marginalisation. The winner, the Know Your Hoods service, helps people to get to know the services in their neighbourhood beforehand through virtual means. Nine partners were selected to develop 5G services in the Elisa Co-creation Challenge. Applications were received from a total of 12 countries.
The rights to the Elisa Viihde original series Arctic Circle were sold to more than 20 countries, including Germany, Spain and the Netherlands. We released yet another new original series, Perfect Commando. In addition, the hit series Downshifters will continue with a third season. In September, top gamers faced off in the major e-sports event the Arctic Invitational, which is also the world’s first arena event for 5G gaming.
Elisa aims to actively develop the responsibility of the ICT industry’s supply chain and therefore joined the Joint Audit Cooperation (JAC) association, which carries out responsibility audits for industry manufacturers and suppliers. The association provides individual operators a better chance to address operational shortcomings.
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.
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 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 Q3 2019 and the complete report is attached as a pdf-file to this release and is also available on our website at 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