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TeliaSonera 4Q, FY: nice bottom, top line – shame about the EBIT in between

8 Feb 2008

Nordic telecoms giant TeliaSonera reported that its consolidated group revenues increased 7.5% year-on-year in the fourth quarter of 2007 to SEK24.92 billion (USD3.9 billion), up from SEK23.19 billion in 4Q 2006, although quarterly EBITDA, excluding non-recurring items, fell to SEK7.21 billion from SEK7.77 billion a year before, with the EBITDA margin slipping from 33.5% to 28.9%. However, net income in the three months ended 31 December 2007 rose to SEK5.21 billion from SEK4.54 a year earlier. Full year turnover increased by 5.8% year-on-year to SEK96.34 billion (SEK91.06 billion). Annual EBITDA, excluding non-recurring items, was SEK31.02 billion, down from SEK32.27 billion in 2006, and the margin 32.2% (35.4%), but net profits climbed from SEK19.28 billion to SEK20.30 billion. The group’s total number of subscribers increased during the year to 114.9 million, with 5.8 million new subscriptions in majority-owned operations and 12.9 million new customers in associated companies. Yearly mobile CAPEX rose by 28.2% to SEK4.17 billion, driven by investments in network quality, coverage and capacity, including start-up investments in Spain, extended 3G/HSPA rollout and increased functionality in all Nordic and Baltic markets.

Lars Nyberg, President and CEO of TeliaSonera, commented: ‘I am happy with the top-line growth and the bottom-line development in the fourth quarter. During the year we continued investing in future growth by expanding our presence in Eurasia to new growth markets, building our Yoigo brand in Spain and offering IP-based services with the ambition to migrate our fixed voice customer base. These investments, together with price erosion and regulatory intervention, unfavourably impacted our EBITDA during every quarter of 2007. Net sales are expected to show stable growth in the financial year 2008 compared to the previous year. Despite continued aggressive investments in future growth and in the quality of our networks and services, TeliaSonera’s ambition for 2008 is to maintain the EBITDA margin level of 2007, excluding non-recurring items.’ The group forecasts net income for 2008 to be somewhat higher than in 2007, excluding positive one-off items of approximately SEK2 billion in 2007 and potential positive one-off items in 2008. Capital expenditure will be driven by continued investments in broadband and mobile capacity and is expected to total around SEK15 billion in 2008.

In May 2007, the government of Sweden sold 8% of TeliaSonera, lowering its shareholding to 37.3%.

Sweden, Telia Company

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