Europolitan Vodafone AB reports nine months results with pre-tax income of SEK 1 528

Europolitan Vodafone AB reports nine months* results with pre-tax income of SEK 1 528 million · Net income of SEK 1 095 million · 148 000 net customer additions · Net sales of SEK 4 707 million · EBITDA of SEK 2 014 million · Pre-tax income for third quarter of SEK 456 million · Successful launch of Vodafone live! * Accounting year 1 April - 31 March 2002/2003 Nine months results 2002/2003 Customer Growth Vodafone's customer base increased to 1 311 000 (1 109 000) as of 31 December 2002, including 395 000 (294 000) prepaid customers. A total of 148 000 new customers were added in the nine months (96 000), of which 74 000 were contract customers (39 000). During the third quarter 42 000 (37 000) customers were added, including 28 000 contract customers (6 000). Of the closing base, 122 000 (37 000) customers were connected through Service Providers, of which 67 000 (25 000) were contract customers. Net Sales Vodafone's consolidated nine months net sales increased 7% to SEK 4 707 million compared with the same period last year (SEK 4 409 million). Average monthly revenue per customer in the first nine months for all contract customers was SEK 533 (SEK 565). Average monthly revenue per customer including prepaid customers was SEK 400 (SEK 448). As a result of the increased focus on the consumer and prepaid segments in the first nine months, the customer mix has changed compared to last year and has led to a decline in blended average monthly revenue per customer. Also impacting the negative variance is the corporate economic climate in Sweden. Note: In this report, unless otherwise stated "Vodafone" refers to the activities of Europolitan Vodafone AB and its subsidiaries in Sweden. Numbers put in brackets show comparative period last year. Cost of Sales, Operating Expenses and Income Cost of sales and operating expenses in the nine months ended 31 December 2002 increased by 8% to SEK 3 285 million (SEK 3 028 million) compared with the same period last year. The increase arose mainly as a result of the costs related to the higher number of new customers during the period, higher depreciation costs and costs associated with the 3G rollout. During the last quarter the company also increased it's publicity spending launching the unique consumer product Vodafone live! which will be a major focus moving forward. After net financial income of SEK 64 million (SEK 30 million), income before taxes was SEK 1 528 million (SEK 1 439 million). After tax expense of SEK 434 million (SEK 412 million) and minority interest of SEK 1 million (SEK 7 million), net income was SEK 1 095 million (SEK 1 034 million). Capital Expenditures Capital expenditures in the nine months amounted to SEK 1 663 million (SEK 925 million), including Vodafone's one third share of the 3G infrastructure investments made by its joint venture 3GIS AB, which is accounted for using the proportionate consolidation method. Almost 70% of capital expenditures are related to 3G investments with the balance being invested in enhancing Vodafone's existing 2G/2,5G infrastructure and services. Rollout of Vodafone's own 3G network in the major cities of Stockholm, Gothenburg, Malmö and Karlskrona continued and the implementation of the joint venture network has been progressing. However issues with planning permits and Defence approvals cause major problems in fulfilling the licence conditions. Liquidity and Financing EBITDA amounted to SEK 2 014 million (SEK 1 899 million) during the nine months ended 31 December 2002, an increase of 6%. EBITDA margin was 43% for the nine months. Free cash flow (cash flow after investments) was SEK 558 million (SEK 671 million). Related Party Transactions As previously announced, Vodafone has a number of agreements with other companies within the Vodafone Group. Approximately SEK 74 million has been charged by Vodafone Group companies during the first nine months. The agreement covers cooperation within service development, technology development, global purchasing, brand and multinational accounts. In addition, Vodafone Sverige AB invested its cash funds in Vodafone Group Plc's Commercial Paper program during the third quarter. At the end of December 2002, 3 tranches totalling SEK 2 186 million were held with up to 6 months tenor. The Commercial Paper program is traded in the market, at arm's length rates. Parent Company Results The Group's parent company, Europolitan Vodafone AB, had revenue in the first nine months of SEK 25 million (SEK 26 million) and income after financial items of SEK 6 million (SEK 3 million). The increase in the parent company's cash was SEK 11 thousand (nil). Net financing decreased by SEK 2 million (SEK 1 million). In 1997, Europolitan Vodafone AB issued three debentures (issue Nos. 1, 2 and 3) each with detachable warrants with a right to subscribe to new shares. Warrants were detached and transferred to senior management of the Europolitan Group. The exercise period according to the warrants connected to issue No. 3 as 1 June to 1 December 2002. The remaining subscriptions for new shares with exercise of the warrants connected to issue No. 3 have been made. As a result of the above events the share capital at 31 December 2002 was SEK 102 556 665 and the number of shares was 408 906 660. Market Overview Customers The number of customers added during the first nine months increased by 54% compared with the same period in the previous year. Contract customer growth was strong, with an increased contribution from the consumer segment. Growth in customers connected through Service Providers was weaker than in the previous quarter. The proportion of prepaid customers in the customer base was unchanged at 30% compared to the previous quarter. At 31st December 2002 95 percent of both contract and prepaid customers were active. Active customers are defined as those who have made or received a chargeable outgoing call in the last three months. 3G During the third quarter, Orange Sverige AB announced its intention to withdraw from the Swedish 3G market. If so, Orange would withdraw from the 3G-infrastructure joint venture 3GIS AB. The shareholders' agreement for 3GIS AB covers for this situation. As previously announced by Orange there is a 1 billion SEK parent company guarantee in place in the Orange contract. Services Vodafone live! During the third quarter Vodafone live! was launched, a unique consumer product that was met with great success both in Europe and in Sweden. The product is based on integrated camera telephones and a great variety of data services. The services are easy to access via Vodafone live!'s own user interface directly from the mobile phone. Content such as information and game services will mainly be provided by external content partners using their own brands such as Aftonbladet, Dagens Nyheter, EuroFlorist, Gourmet and Göteborgsposten. The first Vodafone live! enabled handset to be sold in Sweden was the Panasonic GD87. Supported by a successful media campaign the GD87 accounted for a substantial proportion of sales during December 2002. During January 2003 the second Vodafone live! handset, the Nokia 7650 was launched. Vodafone is planning to offer even more Vodafone live! handsets made by a variety of mobile phone manufacturers during 2003. Vodafone Mobile Office Vodafone Mobile Office is Vodafone's new product range aimed at business customers. In time it will include a number of voice and data services tailored to the needs of the global mobile work environment. Vodafone Mobile Office supplements Vodafone's The wireless office product extremely well. The first service in Vodafone Mobile Office is Vodafone Remote Access. This service enables companies to connect to their local networks simply and securely via current mobile networks from laptops. It will enable the companies' employees to access e-mail, the Internet, intranet and other business-critical information at the company at any time and in any place. Collaboration with leading computer suppliers for mobile services offering Vodafone Sweden has signed a partnership agreements, with computer suppliers Dell and IBM for its mobile solution "Connected by Vodafone". This service allows companies and organisations to buy IBM or Dell palmtops and portable computers with pre-installed mobile connections for Vodafone Sweden's GPRS network. Third Quarter Highlights · Vodafone Sweden launches Eurocall Platinum for customers who make frequent calls inside Europe. (Press Release 2002-10-03). · Vodafone Sweden signed collaboration agreement concerning sales and marketing activities with Danish mobile operator TDC Mobil A/S. (Press Release 2002-10-08). · Vodafone Sweden launched MMS in October. This will enable Vodafone Sweden's customers to send messages that contain colour pictures, sound and text between mobile phones. (Press Releases 2002-10-15). · Vodafone Sweden to distribute services and products at SIBA stores. · (Press Release 2002-10-17). · Aftonbladet and Vodafone Sweden to collaborate on new mobile services. (Press Release 2002-10-23). · Vodafone Sweden launched two new concepts that are part of its largest initiative ever focusing on mobile services - Vodafone live! for private customers and Vodafone Mobile Office for corporate customers. (Press Release 2002-10-24). · Gourmet points Vodafone Sweden's customers to the best wines and restaurants. (Press Release 2002-11-15). · Vodafone Sweden customers get SMHI weather charts directly to their mobile phones. (Press Release 2002-11-12. · Vodafone Sweden and Dagens Nyheter in collaboration to give customers mobile phone access to Sweden's biggest morning paper. (Press Release 2002-11-14). · Vodafone Sweden has signed a two-year sponsorship agreement that gives exclusive rights to all mobile content connected with Bond films. (Press Release 2002-11-15). · Top up Vodafone PRE-PAID abroad. (Press Release 2002-11-18). · Vodafone Sweden launches mobile access to e-mail, the Internet and intranets in Europe. (Press Release 2002-11-20). · Vodafone Sweden in collaboration with travel magazine Vagabond and travel agency Resfeber.se. (Press Release 2002-11-20). · Vodafone Sweden launched Vodafone live! (Press Release 2002-12-02). · Vodafone Sweden did not appeal against PTS's decision not to change UMTS licence terms. (Press Release 2002-12-13). · Vodafone Sweden in collaboration with leading computer suppliers for mobile services offering. (Press Releases 2002-12-18). Significant events after the quarter end Vodafone Group Plc announced 13 January that the company has the intention to issue a possible public offer. Vodafone's current shareholding in Europolitan Vodafone AB is almost 74.7 percent of the total shares outstanding. Vodafone Group Plc is working to finalise the terms and conditions of the possible offer and intends to make a further announcement as soon as practicable. Quarterly Report Europolitan Vodafone AB's Final Report will be published on 30 April 2003. Stockholm, 30 January 2003 The Board of Directors - Europolitan Vodafone AB (publ) For further information, please contact: Jon Risfelt, President and CEO, +46 708 33 10 01 Thomas Cronzell, CFO, +46 709 61 42 41 Monica Enderstein, Investor Relations Manager, +46 708 33 18 02 Tel: +46 (0)8 410 160 00 Previous financial reports and additional information regarding Vodafone can also be obtained on the Internet at www.vodafone.se This report has not been audited. The same accounting principles and calculation methods have been applied in this report as in the full year report for the financial year ended 31 March 2002. These are in accordance with the Annual Accounts Act, Swedish Generally Accepted Accounting Principles and Recommendations issued by the Swedish Financial Accounting Standards Council. Europolitan Vodafone AB is listed on Attract 40 on the Stockholm Stock Exchange's O list. The operations are carried out by Europolitan Vodafone AB and its subsidiaries, Vodafone Sverige AB and Vodafone Stores AB. The majority shareholder is Vodafone Group Plc, which owns 74.7 per cent of the shares, while private shareholders, investment companies and pension funds own the remaining 25.3 per cent. The Vodafone Group is one of the world's largest mobile network and is represented in 28 countries on 5 continents. It has more than 270 million mobile telecom users. Our services enhance the efficiency of companies' operations and make it simpler and more fun for people to communicate. Read more at www.vodafone.se and www.vodafone.com. ------------------------------------------------------------ This information was brought to you by Waymaker http://www.waymaker.net The following files are available for download: http://www.waymaker.net/bitonline/2003/01/30/20030130BIT00040/wkr0001.doc The full report http://www.waymaker.net/bitonline/2003/01/30/20030130BIT00040/wkr0002.pdf The full report