TeliaSonera Year-end Report January–December 2015

Further improvements in core markets
   
FOURTH QUARTER SUMMARY   

• Region Eurasia is reported as discontinued operations.
• Net sales in local currencies, excluding acquisitions and disposals, increased 2.9 percent. In reported currency, net sales increased 5.9 percent to SEK 22,655 million (21,399). Service revenues in local currencies, excluding acquisitions and dis-posals, grew 1.1 percent.
• EBITDA, excluding non-recurring items, increased 9.0 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, grew 11.1 percent to SEK 6,556 million (5,902). The EBITDA margin, excluding non-recurring items, improved to 28.9 percent (27.6).
• Operating income, excluding non-recurring items, increased 2.8 percent to SEK 4,938 million (4,804).
• Total net income attributable to the owners of the parent decreased to SEK -3,010 million (2,938) and earnings per share to SEK -0.70 (0.68), mainly impacted by non-cash write-downs of SEK 7,200 million.

FULL YEAR SUMMARY

• Region Eurasia is reported as discontinued operations.
• Net sales in local currencies, excluding acquisitions and disposals, increased 2.4 percent. In reported currency, net sales increased 6.7 percent to SEK 86,569 million (81,131). Service revenues in local currencies, excluding acquisitions and dis-posals, declined 0.4 percent.
• Total net income attributable to the owners of the parent decreased to SEK 8,551 million (14,502) and earnings per share to SEK 1.97 (3.35), mainly impacted by non-cash write-downs of SEK 7,200 million.
• The Board of Directors proposes an ordinary dividend of SEK 3.00 per share (3.00).
• Future dividend policy is changed.

Comments by Johan Dennelind,
President and CEO
  
”Thanks to great efforts from our employees during the year we are well on track to shape TeliaSonera for the future. A solid foundation is now in place and I am pleased that our core markets continued to improve in the fourth quarter at the same time as we started to execute our decision to reduce our presence in Eurasia. Due to the divestment process, region Eurasia is now reported as discontinued operations and results have also been impacted by non-cash write-downs.
   
In Sweden, consumer demand for high speed internet access remains strong. We continue to build out fiber and 4G at a high pace in line with our strategy to offer the best network connectivity. Performance in the fourth quarter shows that we are on the right track, where a 2.5 percent increase in service revenues combined with good cost control translated into double-digit EBITDA growth. The improvement was propelled by a record number of new fiber connections and our network now exceeds 1.3 million homes passed, boosting subscription intake and ARPU growth within both broadband and TV. Our mobile proposition was further strengthened when we recently introduced free roaming for our Swedish mobile customers in the Nordic and Baltic regions.
    
On a further positive note, profitability in Finland improved and mobile service revenue growth turned positive as a result of price adjustments and up sales activities. In Norway, we continued to strengthen our position and 4G population cov-erage passed 95 percent. Further, we are on track reaching the SEK 1 billion synergy target from Tele2 acquisition with full effect in 2016.
   
In December, we announced the divestment of our Nepalese operation to Axiata, three months after the announcement to refocus the group to the Nordic and Baltic region. The process to leave the other Eurasian markets continues. Meanwhile, we are operating these units within the governance structure set up to secure responsible operations and exit process. Operationally, the competitive situation remains demanding in parts of the region and macro challenges have put pressure on currencies.
   
Based on our good cash flow in the year and the solid financial position, the board proposes a maintained dividend of SEK 3.00 per share for the fiscal year 2015, which is in line with our stated ambition.
    
In order to reflect the changing structure of the group, we have changed our future dividend policy and capital structure targets. The ambition is to distribute at least 80 percent of free cash flow based on continuing operations with an ambition to pay out a minimum of SEK 2 per share for the fiscal year 2016. We continue to aim for a solid credit rating of A- to BBB+ and a leverage corresponding to Net debt/EBITDA of 2x plus/minus 0.5x.
    
As previously stated, 2015 and 2016 are two years with heavy investments for TeliaSonera. We foresee continued high activity in 2016, due largely to an accelerated roll-out of fiber in Sweden. Further, we will step up our business transfor-mation activities, mainly targeting our IT and product legacy, which is necessary to reduce costs and strengthen long-term competitiveness.
    
In 2016, the ambition is to maintain EBITDA on a comparable basis at the same level as in 2015 for the continuing operations and CAPEX excluding license and spectrum fees for the continuing operations is expected to be SEK 14-15 billion.”
    
Stockholm, January 29, 2016
   
Johan Dennelind
President and CEO
    
Questions regarding the reports
   
TeliaSonera AB
www.teliasonera.com/investors
Tel. +46 8 504 550 00
    
TeliaSonera AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 07:00 CET on January, 29, 2016.

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