Europe – Region and country development 2015

Top line growth in region Europe

Share of Group total, continuing operations (%)

Share of Group Europe eng.ai

 

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

43,730

39,667

10.2

Change (%) local organic

2.7

   

of which service revenues (external)

34,501

32,488

6.2

change (%) local organic

-2.0

   

EBITDA excl. non-recurring items

10,584

9,772

8.3

Margin (%)

24.2

24.6

 

Income from associated companies and joint ventures

119

108

9.9

Operating income excl. 
non-recurring items

4,875

4,759

2.4

Operating income

2,375

4,401

-46.0

CAPEX excl. license and 
frequency fees

5,517

4,699

17.4

% of service revenues

16.0

14.5

 

EBITDA excl. non-recurring items less CAPEX

4,761

5,073

-6.2

Subscriptions, 
period-end (thousands)

     

Mobile

13,914

13,166

5.7

Fixed telephony

942

980

-3.9

Broadband

1,283

1,268

1.2

TV

900

854

5.4

Employees, period-end

11,305

10,917

3.6

Additional (unaudited) segment information available at www.teliasonera.com; see also the preamble to this Report for information on restated financial information.

 

Market development during 2015 was, as in the previous year, focused on monetization of the growing data traffic. “Roam like home” was launched as a service in several markets. The number of mobile subscriptions continued to grow, with a continued shift from prepaid to postpaid. Among the fixed services, fiber-based services continued to increase but not enough to compensate for the decline in copper-based services. Price pressure continued primarily within the enterprise segment, most apparent in Finland and Denmark. In the beginning of the year, TeliaSonera acquired Tele2’s Norwegian operations.

Net sales in local currencies, and excluding acquisitions and disposals increased 2.7 percent, as increased hardware sales compensated for the decline in service revenues. Net sales in reported currency increased 10.2 percent to SEK 43,730 million (39,667). The effect from exchange rate fluctuations was positive by 1.4 percent and the positive effect of acquisitions and disposals was 6.1 percent. Service revenues, in local currency and excluding acquisitions and disposals, decreased 2.0 percent, burdened by a decline in interconnect revenues in most markets.

EBITDA, excluding non-recurring items, increased to SEK 10,584 million (9,772) in reported currency, while the margin decreased to 24.2 percent from 24.6 percent, mainly due to unfavorable changes in the sales mix with a higher share of low-margin equipment sales in all countries. In local currencies and excluding acquisitions and disposals, EBITDA, excluding non-recurring items decreased 0.8 percent.

Operating income, excluding non-recurring items, increased 2.4 percent in reported currency. Non-recurring items in 2015 were mainly related to a non-cash goodwill impairment charge in Denmark, acquisition and integration costs in Norway and personnel restructuring. Operating income decreased 46.0 percent in reported currency, primarily due to the goodwill impairment charges related to Denmark.

CAPEX excluding license and frequency fees in local currencies increased 16.2 percent mainly driven by accelerated roll-out of 4G in Norway and 4G coverage roll-out in Finland.

Finland – Billed revenue increase

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

13,279

12,905

2.9

Change (%) local organic

0.0

   

of which service revenues (external)

11,065

11,082

-0.2

change (%) local organic

-2.9

   

EBITDA excl. non-recurring items

3,945

3,925

0.5

Margin (%)

29.7

30.4

 

Subscriptions, period-end (thousands)

     

Mobile

3,306

3,281

0.8

Fixed telephony

80

99

-19.2

Broadband

527

561

-6.1

TV

486

481

1.0

 

Net sales in reported currency increased 2.9 percent to SEK 13,279 million (12,905), while being flat in local currency excluding acquisitions and disposals, as increased equipment sales offset the decline in service revenues. Service revenues declined 2.9 percent in local currency, excluding acquisitions and disposals, driven by lower mobile interconnect revenues and fixed service revenue. The mobile service revenue decline is explained by lower interconnect revenues together with a slight decrease in billed revenues in the enterprise segment. TV services grew 7.0 percent in local currency. Fixed broadband service revenues declined as competition from mobile services affected ARPU and the number of subscriptions.

The EBITDA margin, excluding non-recurring items, decreased slightly to 29.7 percent from 30.4 percent, affected by product-mix changes. In local currency, excluding acquisitions and disposals, EBITDA excluding non-recurring items decreased 2.2 percent.

During the year, the number of mobile and TV subscriptions grew by 25,000 and 5,000, respectively, while fixed voice and broadband decreased by 19,000 and 34,000, respectively, the latter due to competition from mobile offerings.

Norway – Supported by synergies

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

9,165

6,864

33.5

Change (%) local organic

4.9

   

of which service revenues (external)

7,556

5,655

33.6

change (%) local organic

0.4

   

EBITDA excl. non-recurring items

2,761

2,130

29.6

Margin (%)

30.1

31.0

 

Subscriptions, period-end (thousands)

     

Mobile

2,311

1,517

52.4

 

Net sales in reported currency increased 33.5 percent to SEK 9,165 million (6,864), due to the acquisition of Tele2’s operations. Service revenues increased 0.4 percent in local currency, excluding acquisitions and disposals. Mobile blended ARPU declined slightly, due to high price pressure in the enterprise segment. Increased equipment revenues more than compensated for the decline in ARPU which led to an increase in net sales by 4.9 percent compared to last year in local currency, excluding acquisitions and disposals.

The EBITDA margin, excluding non-recurring items, decreased from 31.0 percent to 30.1 percent, explained by increased marketing costs.

The number of mobile subscriptions increased by 794,000 during the year, impacted by the Tele2 acquisition.

Denmark – Continued subscription growth

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

5,890

5,761

2.2

Change (%) local organic

-0.4

   

of which service revenues (external)

4,247

4,272

-0.6

change (%) local organic

-3.2

   

EBITDA excl. non-recurring items

743

771

-3.7

Margin (%)

12.6

13.4

 

Subscriptions, period-end (thousands)

     

Mobile

1,644

1,581

4.0

Fixed telephony

114

122

-6.6

Broadband

135

114

18.4

TV

28

20

40.0

 

Net sales in reported currency increased 2.2 percent to SEK 5,890 million (5,761). Service revenues decreased 3.2 percent in local currency, excluding acquisitions and disposals. Mobile service revenues dropped 4.3 percent despite growth in the subscription base, due to fierce price competition and regulated interconnect price decrease. Fixed broadband and TV revenues showed growth due to increasing subscription numbers.

The EBITDA margin, excluding non-recurring items, declined to 12.6 percent from 13.4 percent, negatively impacted by increased resource costs.

The number of mobile subscriptions increased by 63,000 during the year. Fixed telephony subscriptions decreased by 8,000, while broadband and TV subscriptions grew by 21,000 and 8,000, respectively.

Lithuania – TV subscription growth

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

3,146

2,950

6.6

Change (%) local organic

3.7

   

of which service revenues (external)

2,536

2,474

2.5

change (%) local organic

-0.3

   

EBITDA excl. non-recurring items

1,051

1,012

3.9

Margin (%)

33.4

34.3

 

Subscriptions, period-end (thousands)

     

Mobile

1,327

1,378

-3.7

Fixed telephony

447

468

-4.5

Broadband

390

369

5.7

TV

212

187

13.4

 

Net sales in reported currency increased 6.6 percent to SEK 3,146 million (2,950). Service revenues decreased 0.3 percent in local currency, excluding acquisitions and disposals. Mobile service revenues increased 6.1 percent while fixed service revenues decreased 3.4 percent, the latter mainly driven by decline in fixed telephony. Mobile blended ARPU increased 13.4 percent due to a higher portion of postpaid subscriptions.

The EBITDA margin, excluding non-recurring items, decreased to 33.4 percent from 34.3 percent, partly due to a change in product mix, with an increased portion of low-margin equipment sales.

The number of mobile subscriptions decreased by 51,000 during the year, prepaid subscriptions declined while postpaid increased in line with the overall trend in the market. Fixed telephony subscriptions declined, while broadband subscriptions grew by 21,000 and TV subscriptions by 25,000.

Latvia – Increased service revenues

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

1,660

1,458

13.8

Change (%) local organic

10.7

   

of which service revenues (external)

1,188

1,132

5.0

change (%) local organic

2.1

   

EBITDA excl. non-recurring items

548

454

20.6

Margin (%)

33.0

31.2

 

Subscriptions, period-end (thousands)

     

Mobile

1,119

1,097

2.0

 

Net sales in reported currency increased 13.8 percent to SEK 1,660 million (1,458). Service revenues increased 2.1 percent in local currency, excluding acquisitions and disposals. Billed revenues increased but not enough to fully compensate for the lower interconnect revenues, resulting in a decline of mobile service revenues. Mobile blended ARPU increased 1.9 percent due to a shift from prepaid to postpaid subscriptions with higher ARPU.

The EBITDA margin, excluding non-recurring items, increased to 33.0 percent from 31.2 percent, due to improved margin on equipment sales and higher billed revenues.

The number of mobile subscriptions increased by 22,000, as a decline of 34,000 in prepaid was more than offset by an increase of 55,000 in postpaid subscriptions.

Estonia – Pressure on service revenues and profitability

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

2,692

2,630

2.4

Change (%) local organic

-3.0

   

of which service revenues (external)

2,062

2,075

-0.6

change (%) local organic

-6.0

   

EBITDA excl. non-recurring items

817

855

-4.5

Margin (%)

30.3

32.5

 

Subscriptions, period-end (thousands)

     

Mobile

863

841

2.6

Fixed telephony

301

291

3.4

Broadband

231

224

3.1

TV

174

166

4.8

 

Net sales in reported currency increased 2.4 percent to SEK 2,692 million (2,630). Service revenues declined 6.0 percent in local currency, excluding acquisitions and disposals. Mobile service revenues decreased 11.0 percent. The decline was driven by lower wholesale volumes and an interconnect price decrease, while billed revenues increased. Fixed service revenues declined since growth in broadband and TV services could not compensate for the decline in fixed telephony and other fixed service revenues. Mobile blended ARPU increased slightly following the increase of postpaid subscriptions with higher ARPU.

The EBITDA margin, excluding non-recurring items, decreased to 30.3 percent from 32.5 percent, mainly due to lower wholesale revenues.

The number of mobile subscriptions increased by 22,000 in postpaid. The number of TV subscriptions increased by 8,000 during the year.

Spain – Margin improvement

SEK in millions, except margins, operational data and changes

2015

2014

Change (%)

Net sales

7,992

7,392

8.1

Change (%) local organic

5.2

   

of which service revenues (external)

5,847

5,799

0.8

change (%) local organic

-1.9

   

EBITDA excl. non-recurring items

720

625

15.2

Margin (%)

9.0

8.5

 

Subscriptions, period-end (thousands)

     

Mobile

3,344

3,471

-3.6

 

Net sales in reported currency increased 8.1 percent to SEK 7,992 million (7,392). Service revenues declined 1.9 percent in local currency, excluding acquisitions and disposals. Mobile blended ARPU remained flat despite a very competitive market, where prepaid subscriptions with low ARPU have been partly replaced by postpaid subscriptions with higher ARPU.

The EBITDA margin, excluding non-recurring items, increased to 9.0 percent from 8.5 percent.

The number of mobile subscriptions decreased by 127,000 during the year. Mobile prepaid subscriptions decreased by 219,000 while postpaid subscriptions grew by 92,000, due to the successful introduction of high-data-volume packages.

© TeliaSonera 2015
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