REVENUE AND CASH FLOW GROWTH
- As earlier announced former segment region Eurasia is reported as held for sale and discontinued operations. Sergel is reported as held for sale.
- Net sales in local currencies, excluding acquisitions and disposals, increased 3.0 percent. In reported currency, net sales fell 5.6 percent to SEK 19,252 million (20,394). Service revenues in local currencies, excluding acquisitions and disposals, increased 1.4 percent.
- EBITDA, excluding non-recurring items, declined 0.9 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, declined 1.1 percent to SEK 6,149 million (6,217). The EBITDA margin, excluding non-recurring items, rose to 31.9 percent (30.5).
- Operating income, excluding non-recurring items, declined 9.4 percent to SEK 3,805 million (4,198) mainly due to lower contribution from associated companies.
- Total net income attributable to the owners of the parent increased to SEK 6,984 million (3,766) and earnings per share to SEK 1.61 (0.87). Total net income increased to SEK 7,143 million (3,911). The provision for settlement amount proposed by the US and Dutch authorities has been adjusted to USD 1.0 billion (SEK 8.9 billion) from USD 1.45 billion (SEK 13.2 billion) per December 31, 2016. The total net income effect in the first quarter 2017 of the change in the provision, foreign exchange differences and the hedge was SEK 4.1 billion.
- Free cash flow, in continuing and discontinued operations, increased to SEK 4,087 million (2,293) mainly due to lower CAPEX and repayment of taxes.
- Outlook for 2017 is reiterated.
COMMENTS BY JOHAN DENNELIND,
PRESIDENT & CEO
“Overall, we performed as expected in the first quarter with solid development on service revenues, proven by the accelerating growth of 1.4 percent. This was mainly driven by mobile revenue growth in all our markets. The pressure from the legacy decline was slightly higher compared to previous quarters. Costs in Sweden and Finland were elevated in the quarter, due to short term efforts within customer support, IT and rebranding. We do see cost levels to normalize ahead, especially in the second half of 2017. Operational free cash flow for the quarter was very strong at SEK 3.9 billion, driven by lower taxes, financial expenses and capex as well as contribution from working capital. Part of the positive effects will not recur coming quarters. The development goes hand in hand with the key priorities during 2017, namely operational cash flow, future revenue growth and capital allocation. It is furthermore a proof point that our strategy of focusing on core services and on products and services close to the core, is yielding revenue growth, compensating for the legacy pressure.
We took an important step in the first quarter of 2017 as Finland and Lithuania rebranded which means that all our six wholly owned subsidiaries now operate under one common brand – Telia. We will now fully leverage the Telia brand across our footprint.
Internally we launched Younite, were we encourage our employees to engage in activities and societal contributions connected to digitalization in our communities. The ambition is clear – we must take our role in society even more seriously to create positive impact and to help UN Sustainability Development Goals by 2030 through our own products and services. Our industry and our company can do much more, and we will.
In Sweden we see the main pressure from the legacy decline, but in the first quarter we also saw less burden from the B2B segment, which is comforting although it is too early to call it a turnaround. In Finland, the mobile pricing environment was more stable in the quarter. Our Norwegian business continues to show impressive performance despite intense competition. Denmark continues to be tough, especially on fixed legacy products. The Baltic region continues to be encouraging with service revenue growth in all three countries.
We were pleased to receive the final approval from the Norwegian Competition Authority regarding our acquisition of Phonero. The transaction strengthens our position in the Norwegian market, especially on the enterprise segment and we are convinced that we will deliver on the NOK 400 million synergies. When it comes to Tcell we have sold our shares to AKFED. Importantly we have no risks, such as claims or any obligations, left in Tajikistan. On Sergel, we have still not received the needed approval for the deal but we notice progress in the process.
The dialogue we have with the US, Dutch and Swedish authorities regarding their investigations into Telia Company’s entry into Uzbekistan is progressing. We now see a likely settlement to be USD 1.0 billion rather than the previous assumption of USD 1.45 billion.
We successfully issued hybrid bonds with a total amount of SEK 15 billion. The issuance is a strong commitment to our credit rating noting that S&P a few days after the issuance confirmed our A-rating and removed us from its creditwatch negative. In addition, we maintain a flexibility in our balance sheet to execute on our strategy as well as it strengthens our ambition of an attractive shareholder remuneration.
We reiterate and are comfortable in reaching the outlook set for 2017.”
President and CEO
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