“TeliaSonera Q1 sales boosted by currency swings; profits hit by Russia, Turkey” reported MobileWorld Live, the official publication of GSMA the Assosiation of GSMA on 2015-04-21 00:00:00.
TeliaSonera’s Q1 revenue climbed 8.8 per cent, year-on-year, to a shade over SEK26 billion ($3 billion), but strip out favourable currency swings and sales were up by a more subdued 1.5 per cent.
Reported service revenue was up 6.5 per cent, to SEK22.8 billion, but when expressed in local currencies service revenue actually dipped, by 1.1 per cent.
There were, however, some encouraging signs. After a bruising previous quarter for TeliaSonera’s Eurasia segment, which includes operations in Kazakhstan, Azerbaijan and Uzbekistan, the Scandinavian operator managed to boost service revenues there, in local currencies, by 1.4 per cent (after a 2.4 per cent decline in Q4 2014).
Eurasia accounts for over a quarter of group sales, at SEK5.6 billion during Q1, and up 21.1 per cent compared Q1 2014.
“The macroeconomic and competitive picture in parts of Eurasia remained demanding and we have put a lot of effort into re-positioning our offerings in order to make us more attractive for the customers,” said CEO Johan Dennelind (pictured). “Our operation in Nepal showed once again strong performance, while we need to further strengthen our competitiveness in Kazakhstan. Overall, organic service revenue growth turned slightly positive and profitability remained high, but the challenging environment is expected to remain near term.”
The CEO also drew attention to “two milestones” reached during the quarter, which he said he was “particularly satisfied” about. The first was the closing of the Tele2 Norway acquisition, and the second was an eventual agreement with fellow shareholders in Turkcell to distribute a dividend, TRY3.9 billion (SEK12.6 billion), covering the years 2010-2014. TeliaSonera’s share of the dividend is around SEK4.5 billion after tax.
Operating income tumbled by 12.6 per cent in the first three months of 2015, to SEK5.5 billion, compared with Q1 2014. TeliaSonera pinned much of the blame on associated companies in Russia (MegaFon) and Turkey (Turkcell).
Income from MegaFon, excluding non-recurring items, slumped 72 per cent, to SEK150 million. Income from Turkcell fell by 39 per cent to SEK324 million.
The poor performances affected TeliaSonera’s group net income, which dropped by 5.9 per cent, to SEK3.7 billion.
EBITDA, excluding non-recurring items, decreased 4.3 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 2.3 percent, to SEK8.5 billion.
Positives and negatives
Pointing to what he saw as a positive during the quarter, Dennelind flagged mobile service revenue growth of 2 per cent in Sweden, “fuelled by solid demand for data in the consumer segment”, although he noted that “profitability slowed in the quarter, mainly due to market investments and changed product mix, but we expect performance to improve during the course of the year”.
Spain continues to be difficult, as TeliaSonera’s Yoigo recorded a 7.3 per cent drop in mobile service revenue when measured in local currencies. Reported service revenues were down 1.9 per cent, to SEK1.4 billion.
“As expected, the start of the year has been somewhat slow, but we foresee a gradual improvement in the earnings trend and reiterate our full year outlook,” said Dennelind. “We anticipate EBITDA, on a local organic basis, to remain around last year’s level and foresee capex at around SEK17 billion, excluding license and spectrum fees.”
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