Earnings Release • Apr 20, 2018
Earnings Release
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| SEK in millions, except key ratios, per share data and changes |
Jan-Mar 2018 |
Jan-Mar 20174 |
Chg % |
Jan-Dec 20174 |
|---|---|---|---|---|
| Net sales | 19,852 | 19,227 | 3.2 | 79,790 |
| Change (%) local organic1 | 0.2 | |||
| of which service revenues (external) | 16,795 | 16,477 | 1.9 | 67,657 |
| change (%) local organic | -0.9 | |||
| Adjusted² EBITDA1 | 6,495 | 6,049 | 7.4 | 25,151 |
| Change (%) local organic | 4.2 | |||
| Margin (%) | 32.7 | 31.5 | 31.5 | |
| Adjusted² operating income1 | 3,588 | 3,706 | -3.2 | 14,781 |
| Operating income | 3,398 | 3,542 | -4.0 | 13,768 |
| Income after financial items | 2,940 | 3,019 | -2.6 | 9,554 |
| Net income from continuing operations | 2,346 | 2,456 | -4.5 | 8,492 |
| Net income from discontinued operations3 | -2,946 | 4,598 | 1,751 | |
| Total net income | -600 | 7,054 | 10,243 | |
| of which attributable to owners of the parent | -710 | 6,894 | 9,705 | |
| EPS total (SEK) | -0.16 | 1.59 | 2.24 | |
| EPS from continuing operations (SEK) | 0.53 | 0.56 | -4.7 | 1.92 |
| Free cash flow1 | 4,383 | 4,087 | 7.2 | 7,164 |
| of which operational free cash flow1 | 4,256 | 3,937 | 8.1 | 9,687 |
| CAPEX1 excluding license and spectrum fees | 2,785 | 2,898 | -3.9 | 14,849 |
1) See Note 16 for information on financial key ratios and/or page 44 for definitions. 2) Adjustment items, see Note 3. 3) Discontinued operations, see Note 4. 4) Restated for comparability, see Note 1.
"Dear shareholders and Telia followers, I am pleased to report that the start of 2018 has been encouraging with strong operational free cash flow generation of SEK 4.3 billion and a 7 percent reported EBITDA growth versus last year. Together with the recent Turkcell dividend decision and Spotify divestment, this is strengthening our balance sheet even further.
The Board of Directors has decided to utilize its repurchase mandate given at the recent annual general meeting with the aim to buy back shares equivalent to SEK 5 billion per annum over the coming three year period i.e. in total SEK 15 billion. The rationale is to return excess cash to shareholders and to optimize the capital structure of the company. Combining this with the ordinary dividend policy we believe that we will be offering an attractive total return to our shareholders. In addition, we will still have room to execute disciplined value creative M&A within our Nordic and Baltic strategy.
The financial performance in the first quarter of 2018 is strong with further cash flow growth, driven by EBITDA, working capital and cash CAPEX reductions. The service revenue development in Sweden improved, mainly from the mobile consumer segment and a slower deterioration in the enterprise segment. In Finland, service revenues saw a continuous positive contribution from mobile, especially the enterprise segment that has turned the corner. During the summer, our Helsinki data center will open adding further services to our customers and we will start to see the effects of the recently acquired ice hockey rights early autumn. In Norway, the Phonero customers have been successfully migrated and we are leveraging on the synergies, in the quarter approximately SEK 100 million, resulting in a doubledigit EBITDA growth. The development in the Baltics continues to be encouraging and a reshaped mobile portfolio in Denmark shows early positive signs. On the 2018 ambition to reduce costs we have completed savings of around SEK 0.2 billion during the first quarter, equivalent to around 20 percent of the total program ambition. This is well in line with our plans and the target of SEK 1.1 billion in net cost reduction for 2018 stands firm.
The reshaping of Telia Company continues with further, responsible I want to add, disposals of our Eurasian assets Azercell and Geocell. We have also divested our holding in Spotify, which generated a return of 2.4 times the original investment. We have together with our coowners in Turkcell Holding agreed on a Turkcell dividend that will bring around SEK 0.9 billion to Telia Company during 2018. In addition, we now also have a seat at the Turkcell board, which is a step forward in restoring ordinary corporate governance.
In our annual and sustainability report, we have published our responsible business goals, the progress of the work we do to address the UN Sustainability Development Goals and describe Younite, our employee engagement program.
Looking at the remainder of 2018 we have a lot to look forward to and deliver upon. We continue to execute the transformation in Sweden and other markets, which is still holding back our full potential of our customer experience and efficiency agenda. We are tracking our plans and not faltering from our dedication to complete the transformation journey. This journey will be completed to deliver a future proof digital leader – a New Generation Telco. We are also reiterating our EBITDA guidance whilst we slightly change our cash flow guidance, where we now see that we will be above last year's level (previously "around")."
Johan Dennelind President & CEO
Free cash flow from continuing operations, excluding licenses and spectrum fees and dividends from associated companies, is expected to be above last year's level (SEK 9.7 billion). This operational free cash flow together with decided dividends from associated companies should cover a dividend around the 2017 level. Previously: "around the same level as in 2017"
Adjusted EBITDA in continuing operations, based on current structure, in local currencies, excluding future acquisitions and disposals, is expected to be in line with or slightly above the 2017 level (SEK 25.2 billion) Unchanged
Telia Company intends to distribute a minimum of 80 percent of free cash flow from continuing operations, excluding licenses and spectrum fees. The dividend should be split and distributed in two equal tranches.
The company targets a leverage corresponding to Net debt/adjusted EBITDA of 2x plus/minus 0.5x.
The company shall continue to target a solid investment grade long-term credit rating (A- to BBB+).
The Board of Directors has decided to initiate a share buyback program. The intention is to buy back shares for an annual amount of SEK 5 billion over the coming three-year period, totaling SEK 15 billion. Based on current share price (SEK 37.6) this would equal 9.2 percent of the number of outstanding shares. The reason is to return excess cash to shareholders and is a continued effort to optimize the capital structure of the company.
The intention of the program is to cancel the shares bought back. The Board of Directors intends to seek such approval at the Annual General Meetings in 2019, 2020 and 2021, respectively.
The buy-back program is being carried out in accordance with the Market Abuse Regulation (EU) No 596/2014 ("MAR") and the Commission Delegated Regulation (EU) No 2016/1052 (the "Safe Harbour Regulation"). The buyback program will be managed by an investment firm or credit institution that makes its trading decisions regarding the timing of the buybacks of Telia Company's shares independently of Telia Company.
Net sales in local currencies, excluding acquisitions and disposals, increased 0.2 percent. In reported currency, net sales rose 3.2 percent to SEK 19,852 million (19,227). Service revenues in local currencies, excluding acquisitions and disposals, decreased 0.9 percent.
The number of subscriptions decreased from 23.3 million from the end of the first quarter of 2017 to 23.0 million. During the quarter, the total number of subscriptions decreased from 23.2 million to 23.0 million.
Adjusted EBITDA rose 4.2 percent in local currencies, excluding acquisitions and disposals. In reported currency, adjusted EBITDA rose 7.4 percent to SEK 6,495 million (6,049) due to organic growth, positive net impact from acquisitions and disposals and foreign exchange rate impact. The adjusted EBITDA margin improved to 32.7 percent (31.5).
Income from associated companies and joint ventures declined to SEK 145 million (561), following lower contribution from Turkcell and the divestment of Mega-Fon in 2017.
Adjusted operating income fell 3.2 percent to SEK 3,588 million (3,706).
Adjustment items affecting operating income amounted to SEK -189 million (-164), see Note 3.
Financial items totaled SEK -459 million (-522) of which SEK -464 million (-499) related to net interest expenses. Income taxes amounted to SEK -594 million (-563). The effective tax rate was 20.2 percent (18.2). The increase is related to lower income from associated companies compared to the corresponding period previous year.
Net income from discontinued operations fell to SEK -2,946 million (4,598), mainly due to the disposals of Azercell and Geocell (resulting in capital losses and lower net income contribution) and an impairment charge related to Ucell. The devaluation in Uzbekistan in the third quarter 2017 had also a negative impact on the first quarter 2018, while the first quarter 2017 included a positive effect from the adjustment of the provision regarding the Uzbekistan investigations. These also affected Total net income attributable to the owners of the parent that fell to SEK -710 million (6,894) See Note 4 for further information.
Total net income fell to SEK -600 million (7,054) of which SEK 2,346 million (2,456) in continuing operations and SEK -2,946 million (4,598) in discontinued operations. Total earnings per share was SEK -0.16 (1.59).
Total net income attributable to non-controlling interests amounted to SEK 110 million (160).
Other comprehensive income increased to SEK 7,688 million (-1,425) mainly affected by reclassified exchange effects from the disposals of Azercell and Geocell, positive exchange effects from continuing operations and revaluation gain related to the disposal of the Spotify holding.
Operational free cash flow in continuing operations rose to SEK 4,256 million (3,937).
Cash flow from investing activities increased to SEK 3,422 million (-3,323) mainly due to maturity of shortterm bonds and deposits as well as the divestments of Telia Company's holding in Spotify, Geocell and Azercell, partly offset by the acquisition of Inmics Oy.
Cash flow from financing activities improved to SEK -1,955 million (-9,754) as 2017 was mainly impacted by repayment of loans related to matured debt.
CAPEX decreased to SEK 2,785 million (2,898). CAPEX excluding license and spectrum fees decreased to SEK 2,785 million (2,898). Cash CAPEX was SEK 2,844 million (2,951).
Net debt, in continuing and discontinued operations, was SEK 28,513 million at the end of the first quarter (33,823 at the end of the fourth quarter of 2017). The net debt/adjusted EBITDA ratio was 1.01x.
Goodwill and other intangible assets increased to SEK 81,171 million (76,652) mainly due to the acquisitions of Inmics and Cloud Solutions CS as well as foreign exchange rate effects.
Investments in associated companies and joint ventures, pension obligation assets and other non-current assets decreased to SEK 16,533 million (17,650) mainly due to of the divestment of the holding in Spotify offset by increase in investments in associates as a result of cross ownership effects from the disposals of Azercell and Geocell.
Short-term interest bearing receivables decreased to SEK 14,184 million (17,335) mainly due to maturity of short-term bonds and deposits.
Cash and cash equivalents increased to SEK 26,036 million (15,616) mainly due to the divestment the holding in Spotify and the disposals of Azercell and Geocell.
Long-term borrowings remained flat but was underlying negatively affected by foreign exchange rate effects offset by reclassification between long and short-term debt also affecting Short-term borrowings, which were further offset by expiration of bonds.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg % |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 8,997 | 9,074 | -0.8 | 36,825 |
| Change (%) local organic | -1.0 | |||
| of which service revenues (external) | 7,622 | 7,733 | -1.4 | 31,317 |
| change (%) local organic | -1.6 | |||
| Adjusted EBITDA | 3,421 | 3,316 | 3.2 | 13,627 |
| Margin (%) | 38.0 | 36.5 | 37.0 | |
| change (%) local organic | 3.0 | |||
| Adjusted operating income | 2,124 | 2,050 | 3.6 | 8,576 |
| Operating income | 2,003 | 2,017 | -0.7 | 8,204 |
| CAPEX excluding license and spectrum fees | 1,213 | 1,356 | -10.5 | 6,264 |
| Adjusted EBITDA - CAPEX | 2,208 | 1,960 | 12.6 | 7,363 |
| Subscriptions, (thousands) | ||||
| Mobile | 6,068 | 6,056 | 0.2 | 6,118 |
| of which machine to machine (postpaid) | 951 | 862 | 10.3 | 944 |
| Fixed telephony | 1,302 | 1,610 | -19.1 | 1,381 |
| Broadband | 1,281 | 1,294 | -1.0 | 1,286 |
| TV | 807 | 782 | 3.2 | 797 |
| Employees | 6,439 | 6,744 | -4.5 | 6,619 |
1) Restated for comparability, see Note 1.
Net sales fell 0.8 percent to SEK 8,997 million (9,074) and excluding acquisitions and disposals net sales fell 1.0 percent as somewhat higher equipment sales was more than offset by lower service revenues. The effect from acquisitions and disposals was positive by 0.2 percent.
Service revenues decreased 1.4 percent and excluding acquisitions and disposals, service revenues decreased 1.6 percent as a 1.2 percent uplift in mobile service revenues driven by a 5.4 percent growth in B2C mobile revenues, was more than offset by a 4.0 percent decline in fixed service revenues. The fixed service revenue pressure continued to be a combination of lower fiber installation revenues and pressure on legacy revenues.
Adjusted EBITDA increased 3.2 percent to SEK 3,421 million (3,316). The adjusted EBITDA margin rose to
38.0 percent (36.5). In local currency, excluding acquisitions and disposals, adjusted EBITDA grew 3.0 percent as pressure from revenues was more than compensated for by lower resource costs as well as a SEK 165 million reduction of pension related expenses from lower special employer contribution tax. The impact from pension compensation is expected to be an annual recurring event, although the amount will vary.
CAPEX fell 10.5 percent to SEK 1,213 million (1,356) and CAPEX, excluding licenses and spectrum fees fell to SEK 1,213 million (1,356).
TV subscriptions grew by 10,000 and fixed broadband subscriptions fell by 5,000 in the quarter. Mobile subscriptions fell by 50,000 in the quarter driven by the loss of 59,000 pre-paid subscriptions.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg % |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 3,657 | 3,272 | 11.8 | 13,742 |
| Change (%) local organic | 0.6 | |||
| of which service revenues (external) | 3,084 | 2,837 | 8.7 | 11,748 |
| change (%) local organic | -0.7 | |||
| Adjusted EBITDA | 1,151 | 964 | 19.3 | 4,218 |
| Margin (%) | 31.5 | 29.5 | 30.7 | |
| change (%) local organic | 8.7 | |||
| Adjusted operating income | 567 | 458 | 23.6 | 2,073 |
| Operating income | 527 | 406 | 29.8 | 1,926 |
| CAPEX excluding license and spectrum fees | 317 | 350 | -9.5 | 3,066 |
| Adjusted EBITDA - CAPEX | 834 | 614 | 35.8 | 1,152 |
| Subscriptions, (thousands) | ||||
| Mobile | 3,257 | 3,288 | -0.9 | 3,278 |
| of which machine to machine (postpaid) | 248 | 223 | 11.2 | 243 |
| Fixed telephony | 47 | 61 | -23.0 | 50 |
| Broadband | 458 | 487 | -6.0 | 464 |
| TV | 509 | 510 | -0.3 | 508 |
| Employees | 3,067 | 3,021 | 1.5 | 3,107 |
1) Restated for comparability, see Note 1.
Net sales grew 11.8 percent in reported currency to SEK 3,657 million (3,272) and in local currency excluding acquisitions and disposals net sales grew 0.6 percent driven by increased equipment sales. The effect of exchange rate fluctuations was positive by 5.2 percent and the impact from acquisitions and disposals was positive by 6.0 percent.
Service revenues in local currency, excluding acquisitions and disposals declined 0.7 percent as a mobile service revenue growth of 2.4 percent could not compensate for lower fixed service revenues largely due to pressure on fixed broadband revenues.
Adjusted EBITDA in reported currency increased 19.3 percent to SEK 1,151 million (964). The adjusted
EBITDA margin rose to 31.5 percent (29.5). In local currency, excluding acquisitions and disposals, adjusted EBITDA increased 8.7 percent driven by cost measures taken resulting in lower resource costs, and also to some extent from lower spend on marketing compared to last year, when marketing costs were higher following the rebranding from Sonera to Telia.
CAPEX decreased 9.5 percent to SEK 317 million (350) and CAPEX excluding licenses and spectrum fees decreased to SEK 317 million (350).
The number of mobile subscriptions fell by 21,000 and fixed broadband subscriptions fell by 6,000, in the quarter. TV subscriptions grew by 1,000 in the quarter.
• In Norway the last batches of Phonero customers were migrated and when summarizing the huge migration work performed there are three key items to highlight. The churn level during the migration was in line with the business case assumptions, customer satisfaction has not been materially impacted and the yearly synergy run-rate target of NOK 400 million is now realized.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg (%) |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 2,595 | 2,272 | 14.2 | 10,087 |
| Change (%) local organic | 7.2 | |||
| of which service revenues (external) | 2,129 | 1,943 | 9.6 | 8,415 |
| change (%) local organic | 1.1 | |||
| Adjusted EBITDA | 1,008 | 862 | 16.8 | 3,531 |
| Margin (%) | 38.8 | 38.0 | 35.0 | |
| change (%) local organic | 5.0 | |||
| Adjusted operating income | 598 | 489 | 22.2 | 2,003 |
| Operating income | 588 | 472 | 24.5 | 1,851 |
| CAPEX excluding license and spectrum fees | 288 | 236 | 22.2 | 1,041 |
| Adjusted EBITDA - CAPEX | 720 | 627 | 14.8 | 2,083 |
| Subscriptions, (thousands) | ||||
| Mobile | 2,342 | 2,178 | 7.5 | 2,345 |
| of which machine to machine (postpaid) | 63 | 49 | 29.8 | 65 |
| Employees | 1,208 | 1,033 | 16.9 | 1,201 |
1) Restated for comparability, see Note 1.
Net sales increased 14.2 percent in reported currency to SEK 2,595 million (2,272). In local currency excluding acquisitions and disposals net sales increased 7.2 percent mainly driven by higher equipment sales. The effect of exchange rate fluctuations was negative by 2.6 percent and the impact from acquisitions and disposals was positive by 9.6 percent.
Service revenues in local currency, excluding acquisitions and disposals increased 1.1 percent as growth in wholesale revenues more than compensated for lower mobile subscription revenues and interconnect revenues.
Adjusted EBITDA in reported currency grew by 16.8 percent to SEK 1,008 million (862). The adjusted EBITDA margin rose to 38.8 percent (38.0). In local currency, excluding acquisitions and disposals, adjusted
EBITDA increased 5.0 percent driven by a combination of higher service revenues, lower marketing costs as well as lower other operational expenses.
CAPEX increased by 22.2 percent to SEK 288 million (236) and CAPEX excluding licenses and spectrum fees, increased to SEK 288 million (236).
The number of mobile subscriptions decreased by 4,000 in the quarter as the acquisition of a B2C customer base from NextGenTel of approximately 30,000 was not enough to fully compensate for the loss of post-paid as well as pre-paid subscriptions.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg (%) |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 1,415 | 1,479 | -4.4 | 5,945 |
| Change (%) local organic | -8.7 | |||
| of which service revenues (external) | 1,065 | 1,062 | 0.3 | 4,335 |
| change (%) local organic | -4.2 | |||
| Adjusted EBITDA | 141 | 145 | -2.5 | 704 |
| Margin (%) | 10.0 | 9.8 | 11.8 | |
| change (%) local organic | -6.9 | |||
| Adjusted operating income | -62 | -40 | -52 | |
| Operating income | -47 | -42 | -145 | |
| CAPEX excluding license and spectrum fees | 90 | 110 | -18.1 | 412 |
| Adjusted EBITDA - CAPEX | 51 | 35 | 46.9 | 292 |
| Subscriptions, (thousands) | ||||
| Mobile | 1,455 | 1,578 | -7.8 | 1,479 |
| of which machine to machine (postpaid) | 50 | 44 | 14.3 | 49 |
| Fixed telephony | 89 | 98 | -9.2 | 90 |
| Broadband | 105 | 126 | -16.7 | 114 |
| TV | 30 | 28 | 7.1 | 31 |
| Employees | 961 | 1,075 | -10.6 | 1,026 |
1) Restated for comparability, see Note 1.
Net sales declined 4.4 percent in reported currency to SEK 1,415 million (1,479). In local currency excluding acquisitions and disposals net sales declined 8.7 percent. The effect from exchange rate fluctuations was positive by 4.3 percent.
Service revenues in local currency, excluding acquisitions and disposals declined 4.2 percent equally driven by lower mobile and fixed service revenues. For mobile the decline was driven by subscription base erosion that was only partly mitigated by higher ARPU. Fixed service revenues declined due to fixed telephony and fixed broadband subscription base erosion.
Adjusted EBITDA in reported currency fell 2.5 percent to SEK 141 million (145). The adjusted EBITDA margin grew slightly to 10.0 percent (9.8). In local currency, excluding acquisitions and disposals, adjusted EBITDA fell 6.9 percent as lower costs were not enough to offset the impact from service revenue erosion.
CAPEX decreased 18.1 percent to SEK 90 million (110) and CAPEX excluding licenses and spectrum fees decreased to SEK 90 million (110).
The number of mobile subscriptions declined by 24,000 in the quarter. The number of fixed broadband subscriptions fell by 9,000 and TV subscriptions fell by 1,000 in the quarter.
• Telia continued to promote the Telia One convergence offering in the quarter with focus on less tech-savvy and more rural customers. Since the launch in the fourth quarter of 2017 approximately 14,000 customers have signed up for the Telia One offering which has supported both the mobile and fixed subscription base.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg (%) |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 901 | 804 | 12.1 | 3,543 |
| Change (%) local organic | 6.9 | |||
| of which service revenues (external) | 727 | 662 | 9.8 | 2,820 |
| change (%) local organic | 4.7 | |||
| Adjusted EBITDA | 318 | 277 | 14.9 | 1,207 |
| Margin (%) | 35.3 | 34.5 | 34.1 | |
| change (%) local organic | 9.5 | |||
| Adjusted operating income | 141 | 121 | 16.8 | 644 |
| Operating income | 140 | 112 | 25.3 | 615 |
| CAPEX excluding license and spectrum fees | 116 | 115 | 0.2 | 552 |
| Adjusted EBITDA - CAPEX | 203 | 162 | 25.3 | 655 |
| Subscriptions, (thousands) | ||||
| Mobile | 1,363 | 1,347 | 1.2 | 1,352 |
| of which machine to machine (postpaid) | 146 | 127 | 15.3 | 141 |
| Fixed telephony | 361 | 406 | -11.1 | 371 |
| Broadband | 413 | 403 | 2.5 | 410 |
| TV | 246 | 231 | 6.5 | 242 |
| Employees | 2,399 | 2,639 | -9.1 | 2,440 |
1) Restated for comparability, see Note 1.
Net sales in reported currency increased 12.1 percent to SEK 901 million (804). In local currency excluding acquisitions and disposals net sales increased 6.9 percent. The effect of exchange rate fluctuations was positive by 5.2 percent.
Service revenues in local currency, excluding acquisitions and disposals grew 4.7 percent mainly as mobile service revenues increased 12.0 percent driven by a combination of ARPU and customer base expansion. Fixed service revenues remained rather flat as pressure on fixed telephony was offset by an increase in low margin transit revenues.
Adjusted EBITDA in reported currency rose 14.9 percent to SEK 318 million (277). The adjusted EBITDA margin rose to 35.3 percent (34.5). In local currency, excluding acquisitions and disposals, adjusted EBITDA grew 9.5 percent supported by both revenue growth and lower operating expenses.
CAPEX increased marginally to SEK 116 million (115) and CAPEX excluding licenses and spectrum fees increased marginally to SEK 116 million (115).
The number of mobile subscriptions and TV subscriptions grew by 11,000 and 4,000, respectively, in the quarter. The number of fixed broadband subscriptions grew by 3,000 in the quarter.
• After having passed almost 50,000 homes in the last three years with fiber, of which approximately 30,000 were connected, the fiber roll-out continued in the quarter and 4,000 additional households were passed.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 2017 |
Chg (%) |
Jan-Dec 2017 |
|---|---|---|---|---|
| Net sales | 712 | 660 | 7.9 | 2,824 |
| Change (%) local organic | 3.2 | |||
| of which service revenues (external) | 571 | 533 | 7.0 | 2,182 |
| change (%) local organic | 2.5 | |||
| Adjusted EBITDA | 234 | 206 | 13.9 | 871 |
| Margin (%) | 32.9 | 31.1 | 30.9 | |
| change (%) local organic | 8.8 | |||
| Adjusted operating income | 92 | 79 | 16.2 | 360 |
| Operating income | 96 | 78 | 22.3 | 326 |
| CAPEX excluding license and spectrum fees | 68 | 98 | -30.7 | 452 |
| Adjusted EBITDA - CAPEX | 166 | 107 | 54.6 | 369 |
| Subscriptions, (thousands) | ||||
| Mobile | 934 | 901 | 3.8 | 925 |
| of which machine to machine (postpaid) | 223 | 202 | 10.0 | 214 |
| Fixed telephony | 275 | 304 | -9.5 | 279 |
| Broadband | 238 | 232 | 2.6 | 238 |
| TV | 202 | 188 | 7.7 | 200 |
| Employees | 1,835 | 1,913 | -4.1 | 1,871 |
Net sales in reported currency increased 7.9 percent to SEK 712 million (660). In local currency excluding acquisitions and disposals net sales grew 3.2 percent. The effect of exchange rate fluctuations was positive by 5.0 percent and the impact from acquisitions and disposals was negative by 0.3 percent.
Service revenues in local currency, excluding acquisitions and disposals increased 2.5 percent mainly as fixed service revenues grew 4.4 percent. Main drivers behind the increase were growth in TV revenues following ARPU uplift and subscription base expansion, and higher business solution revenues. Mobile service revenues increased 0.9 percent as growth in mobile subscription revenues was partly offset by pressure on interconnect revenues.
Adjusted EBITDA in reported currency increased 13.9 percent to SEK 234 million (206). The adjusted EBITDA margin increased to 32.9 percent (31.1). In local currency, excluding acquisitions and disposals, adjusted EBITDA grew 8.8 percent following higher service revenues and lower operational expenses.
CAPEX fell 30.7 percent to SEK 68 million (98) and CAPEX excluding licenses and spectrum fees fell to SEK 68 million (98).
The number of mobile subscription grew by 9,000 and TV subscriptions grew by 2,000 in the quarter. The number of fixed broadband subscriptions remained unchanged in the quarter.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg (%) |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales | 2,141 | 2,230 | -4.0 | 9,025 |
| Change (%) local organic | 2.4 | |||
| of which Telia Carrier | 1,401 | 1,434 | -2.3 | 5,956 |
| of which Latvia | 493 | 443 | 11.2 | 1,931 |
| Adjusted EBITDA | 222 | 279 | -20.6 | 992 |
| of which Telia Carrier | 109 | 130 | -15.7 | 491 |
| of which Latvia | 160 | 139 | 15.1 | 592 |
| Margin (%) | 10.3 | 12.5 | 11.0 | |
| Income from associated companies | 150 | 564 | -73.5 | 769 |
| of which Russia | – | 114 | -100.0 | 2,700 |
| of which Turkey | 114 | 424 | -73.0 | -2,070 |
| of which Latvia | 35 | 27 | 30.2 | 137 |
| Adjusted operating income | 128 | 547 | -76.5 | 1,176 |
| Operating income | 92 | 498 | -81.6 | 990 |
| CAPEX | 692 | 634 | 9.3 | 3,063 |
| Subscriptions, (thousands) | ||||
| Mobile Latvia | 1,251 | 1,200 | 4.3 | 1,237 |
| of which machine to machine (postpaid) | 298 | 253 | 17.9 | 285 |
| Employees | 4,091 | 4,168 | -1.8 | 4,012 |
1) Restated for comparability, see Note 1.
Net sales in reported currency declined 4.0 percent to SEK 2,141 million (2,230) mainly due to the disposal of Sergel in 2017. In local currency, excluding acquisitions and disposals net sales grew 2.4 percent. The effect of exchange rate fluctuations was positive by 1.2 percent and the effect from acquisitions and disposals was negative by 7.6 percent.
Adjusted EBITDA in reported currency fell 20.6 percent to SEK 222 million (279) mainly due to the disposal of Sergel in 2017 and lower adjusted EBITDA in Telia Carrier. The adjusted EBITDA margin fell to 10.3 percent (12.5).
In Telia Carrier, net sales in reported currency fell 2.3 percent to SEK 1,401 million (1,434) and adjusted EBITDA, fell 15.7 percent to SEK 109 million (130) in reported currency, partly driven by negative foreign exchange rate effects.
In Latvia, net sales in reported currency increased 11.2 percent to SEK 493 million (443). Adjusted EBITDA rose 15.1 percent to SEK 160 million (139) in reported currency.
The number of mobile subscriptions in Latvia grew by 14,000 in the quarter.
Income from associated companies fell to SEK 150 million (564) following lower contribution from Turkcell and the divestment of MegaFon in 2017.
| SEK in millions, except margins, operational data and changes |
Jan-Mar 2018 |
Jan-Mar 20171 |
Chg (%) |
Jan-Dec 20171 |
|---|---|---|---|---|
| Net sales (external) | 1,974 | 3,089 | -36.1 | 11,275 |
| Adjusted EBITDA | 687 | 1,187 | -42.2 | 4,262 |
| Margin (%) | 34.8 | 38.4 | 37.8 | |
| CAPEX | 173 | 304 | -43.2 | 1,787 |
| CAPEX excluding license and spectrum fees | 173 | 304 | -43.3 | 1,782 |
1) Restated for comparability, see Note 1.
Former segment region Eurasia is classified as held for sale and discontinued operations since December 31, 2015. Consequently, highlights for region Eurasia are presented in a condensed format. For more information on discontinued operations, see Note 4.
Net sales fell 36.1 percent in reported currency to SEK 1,974 million (3,089) mainly due to devaluation in Uzbekistan in the third quarter of 2017, the disposal of Tcell in Tajikistan in the second quarter of 2017, the disposal of Azercell in Azerbaijan and the disposal of Geocell in Georgia in the first quarter of 2018.
Adjusted EBITDA fell 42.2 percent to SEK 687 million (1,187) mainly due to devaluation in Uzbekistan in the third quarter of 2017 and the disposals of Azercell, Tcell and Geocell, respectively. The adjusted EBITDA margin fell to 34.8 percent (38.4).
CAPEX decreased 43.2 percent to SEK 173 million (304). CAPEX, excluding license and spectrum fees decreased to SEK 173 million (304).
| SEK in millions, except per share data and number of shares | Note | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|---|
| Continuing operations | ||||
| Net sales | 5, 6 | 19,852 | 19,227 | 79,790 |
| Cost of sales | -12,186 | -11,614 | -49,166 | |
| Gross profit | 7,666 | 7,614 | 30,624 | |
| Selling, administration and R&D expenses | -4,266 | -4,550 | -18,334 | |
| Other operating income and expenses, net | -146 | -84 | 700 | |
| Income from associated companies and joint ventures | 145 | 561 | 778 | |
| Operating income | 5 | 3,398 | 3,542 | 13,768 |
| Financial items, net | -459 | -522 | -4,214 | |
| Income after financial items | 2,940 | 3,019 | 9,554 | |
| Income taxes | -594 | -563 | -1,062 | |
| Net income from continuing operations | 2,346 | 2,456 | 8,492 | |
| Discontinued operations | ||||
| Net income from discontinued operations | 4 | -2,946 | 4,598 | 1,751 |
| Total net income | -600 | 7,054 | 10,243 | |
| Items that may be reclassified to net income: | ||||
| Foreign currency translation differences from continuing operations | 3,260 | -821 | 10,831 | |
| Foreign currency translation differences from discontinued operations | 3,114 | -324 | -1,754 | |
| Other comprehensive income from associated companies and joint ventures |
4 | 199 | 138 | |
| Cash flow hedges | -111 | -92 | -147 | |
| Available-for-sale financial instruments | – | -107 | 729 | |
| Income taxes relating to items that may be reclassified | 574 | -78 | 267 | |
| Items that will not be reclassified to net income: | ||||
| Equity instruments at fair value through OCI | 566 | – | – | |
| Remeasurements of defined benefit pension plans | 362 | -226 | -406 | |
| Income taxes relating to items that will not be reclassified | -80 | 52 | 92 | |
| Associates remeasurements of defined benefit pension plans | -1 | -28 | -25 | |
| Other comprehensive income | 7,688 | -1,425 | 9,725 | |
| Total comprehensive income | 7,088 | 5,629 | 19,968 | |
| Total net income attributable to: | ||||
| Owners of the parent | -710 | 6,894 | 9,705 | |
| Non-controlling interests | 110 | 160 | 538 | |
| Total comprehensive income attributable to: | ||||
| Owners of the parent | 7,009 | 5,158 | 19,811 | |
| Non-controlling interests | 78 | 471 | 156 | |
| Earnings per share (SEK), basic and diluted | -0.16 | 1.59 | 2.24 | |
| of which continuing operations, basic and diluted | 0.53 | 0.56 | 1.92 | |
| Number of shares (thousands) | ||||
| Outstanding at period-end | 4,330,085 | 4,330,085 | 4,330,085 | |
| Weighted average, basic and diluted | 4,330,085 | 4,330,085 | 4,330,085 | |
| EBITDA in continuing operations | 6,305 | 5,885 | 25,519 | |
| Adjusted EBITDA in continuing operations | 6,495 | 6,049 | 25,151 | |
| Depreciation, amortization and impairment losses from continuing | -3,053 | -2,905 | -12,528 | |
| operations | ||||
| Adjusted operating income in continuing operations | 3,588 | 3,706 | 14,781 |
1) Restated for comparability, see Note 1.
| SEK in millions | Note | Mar 31, 2018 |
Dec 31, 20171 |
|---|---|---|---|
| Assets | |||
| Goodwill and other intangible assets | 7, 15 | 81,171 | 76,652 |
| Property, plant and equipment | 7 | 61,081 | 60,024 |
| Investments in associated companies and joint ventures, pension obligation assets and other non-current assets |
16,533 | 17,650 | |
| Deferred tax assets | 2,909 | 3,003 | |
| Long-term interest-bearing receivables | 4, 11 | 18,256 | 18,674 |
| Total non-current assets | 179,950 | 176,003 | |
| Inventories | 1,892 | 1,521 | |
| Trade and other receivables and current tax receivables | 16,570 | 16,385 | |
| Short-term interest-bearing receivables | 11 | 14,184 | 17,335 |
| Cash and cash equivalents | 4, 11 | 26,036 | 15,616 |
| Assets classified as held for sale | 4, 11 | 13,547 | 18,508 |
| Total current assets | 72,229 | 69,365 | |
| Total assets | 252,179 | 245,367 | |
| Equity and liabilities | |||
| Equity attributable to owners of the parent | 108,228 | 101,226 | |
| Equity attributable to non-controlling interests | 5,370 | 5,291 | |
| Total equity | 113,598 | 106,517 | |
| Long-term borrowings | 8, 11 | 88,319 | 87,813 |
| Deferred tax liabilities | 8,749 | 8,973 | |
| Provisions for pensions and other long-term provisions | 4 | 8,191 | 8,210 |
| Other long-term liabilities | 1,880 | 1,950 | |
| Total non-current liabilities | 107,139 | 106,946 | |
| Short-term borrowings | 8, 11 | 5,196 | 3,674 |
| Trade payables and other current liabilities, current tax payables and short term provisions |
20,340 | 19,673 | |
| Liabilities directly associated with assets classified as held for sale | 4, 11 | 5,906 | 8,556 |
| Total current liabilities | 31,443 | 31,904 |
1) Restated for comparability, see Note 1.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20172 |
Jan-Dec 20172 |
|---|---|---|---|
| Cash flow before change in working capital | 6,862 | 6,907 | 27,869 |
| Change in working capital1 | 684 | 511 | -4,665 |
| Cash flow from operating activities | 7,546 | 7,418 | 23,204 |
| of which from continuing operations | 7,057 | 6,811 | 25,948 |
| of which from discontinued operations1 | 489 | 607 | -2,744 |
| Cash CAPEX | -3,163 | -3,332 | -16,040 |
| Free cash flow | 4,383 | 4,087 | 7,164 |
| of which from continuing operations | 4,213 | 3,861 | 11,804 |
| of which from discontinued operations | 170 | 226 | -4,640 |
| Cash flow from other investing activities | 6,585 | 9 | 6,290 |
| Total cash flow from investing activities | 3,422 | -3,323 | -9,750 |
| of which from continuing operations | 3,358 | -2,995 | -6,148 |
| of which from discontinued operations | 64 | -328 | -3,602 |
| Cash flow before financing activities | 10,967 | 4,096 | 13,454 |
| Cash flow from financing activities | -1,955 | -9,754 | -13,905 |
| of which from continuing operations | -1,949 | -9,115 | -13,316 |
| of which from discontinued operations | -6 | -639 | -589 |
| Cash flow for the period | 9,012 | -5,659 | -451 |
| of which from continuing operations | 8,465 | -5,299 | 6,484 |
| of which from discontinued operations | 547 | -360 | -6,935 |
| Cash and cash equivalents, opening balance | 20,984 | 22,907 | 22,907 |
| Cash flow for the period | 9,012 | -5,659 | -451 |
| Exchange rate differences in cash and cash equivalents | 884 | -346 | -1,472 |
| Cash and cash equivalents, closing balance | 30,881 | 16,902 | 20,984 |
| of which from continuing operations (including Sergel for comparative figures) |
26,036 | 9,399 | 15,616 |
| of which from discontinued operations (Eurasia) | 4,845 | 7,503 | 5,368 |
1) Full year 2017 is impacted by the cash flow effect from the global settlement with the authorities regarding the Uzbekistan investigations amounting to SEK 6,129 million and is classified as cash flow from discontinued operations.
2) Restated for comparability, see Note 1.
See Note 16 section Operational free cash flow for further cash flow information.
| SEK in millions | Owners of | Non-controlling | |
|---|---|---|---|
| Opening balance, January 1, 2017 | the parent 89,833 |
interests 5,036 |
Total equity 94,869 |
| Change in accounting principles1 | 1,159 | 31 | 1,190 |
| Adjusted opening balance, January 1, 2017 | 90,991 | 5,067 | 96,058 |
| Dividends | – | -642 | -642 |
| Share-based payments | 7 | – | 7 |
| Total transactions with owners | 7 | -642 | -634 |
| Total comprehensive income4 | 5,158 | 471 | 5,629 |
| Effect of equity transactions in associated companies | -40 | – | -40 |
| Closing balance, March 31, 20174 | 96,116 | 4,896 | 101,014 |
| Dividends | -8,660 | -193 | -8,853 |
| Share-based payments | 26 | – | 26 |
| Repurchased treasury shares | -4 | – | -4 |
| Change in non-controlling interests2 | -903 | 903 | – |
| Total transactions with owners | -9,541 | 710 | -8,831 |
| Total comprehensive income4 | 14,653 | -315 | 14,338 |
| Effect of equity transactions in associated companies | -3 | – | -3 |
| Closing balance, December 31, 20174 | 101,226 | 5,291 | 106,517 |
| Change in accounting principles3 | -16 | – | -16 |
| Adjusted opening balance, January 1, 2018 | 101,210 | 5,291 | 106,501 |
| Share-based payments | 9 | – | 9 |
| Total transactions with owners | 9 | – | 9 |
| Total comprehensive income | 7,009 | 78 | 7,088 |
| Closing balance, March 31, 2018 | 108,228 | 5,370 | 113,598 |
1) Transition effect of IFRS 15, see Note 1.
2) Non-controlling interests in Fintur Holdings increased by SEK 766 million due to reduced ownership in Turkcell. Capitalization of Ucell (Coscom) and Uzbek Telecom Holding B.V. resulted in an increase in non-controlling interests of SEK 138 million.
3) Transition effect of IFRS 9, see Note 1.
4) Restated for comparability, see Note 1.
Telia Company's consolidated financial statements as of and for the three-month period ended March 31, 2018, have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The parent company's financial statements have been prepared in accordance with the Swedish Annual Reports Act as well as standard RFR 2 Accounting for Legal Entities and other statements issued by the Swedish Financial Reporting Board. For the group this Interim report has been prepared in accordance with IAS 34 Interim Financial Reporting and for the Parent Company in accordance with the Swedish Annual Reports Act. The accounting policies adopted and computation methods used are consistent with those followed in the Annual and Sustainability Report 2017, except as described below. All amounts in this report are presented in SEK millions, unless otherwise stated. Rounding differences may occur.
New accounting standards effective on or after January 1, 2018
IFRS 15 "Revenue from Contracts with Customers" is effective for the annual reporting period beginning January 1, 2018. Telia Company has implemented the new standard using the full retrospective method (subject to practical expedients in the standard), with adjustments to all periods presented.
IFRS 15 specifies how and when revenue should be recognized as well as requires more detailed revenue disclosures. The standard provides a single, principle based five-step model to be applied to all contracts with customers. Revenue is allocated to performance obligations (equipment and services) in proportion to standalone selling prices items ("fair values" under Telia Company's previous accounting principles) of the individual. Revenue is recognized when (at a point in time) or as (over a period of time) the performance obligations are satisfied, which is determined by the manner in which control passes to the customer. Among others the new revenue standard gives detailed guidance on the accounting for:
Bundled offerings: Telia Company's prior accounting and recognition of revenue for bundled offerings and allocation of the consideration between equipment and service was line with IFRS 15. A detailed analysis of the performance obligations and the revenue recognition for each type of customer contract has been performed and the model previously used has been slightly refined for some types of customer contracts, but the effect was not material.
Incremental costs for obtaining a contract: Sales commissions and equipment subsidies granted to dealers for obtaining a specific contract are capitalized and deferred over the period over which Telia Company expects to provide services to the customer. The amortization of capitalized contract costs over the service period is classified as operating expenses within EBITDA. Under Telia Company's prior accounting principles, cost for obtaining contracts were expensed as incurred. The main effect of implementing IFRS 15 for Telia Company is related to capitalization of costs.
Financing: If the period between payment and transfer of goods and services is beyond one year, adjustments for the time value of money are made at the prevailing interest rates in the relevant market. Under prior accounting principles Telia Company applied discounting, using the group's average borrowing rate and the model has therefore been adjusted, but the effect was not material.
Contract modifications: Guidance is included on when to account for modifications retrospectively or progressively. The new guidance had no material revenue effect for Telia Company.
Disclosures: IFRS 15 adds a number of disclosure requirements in annual reports, e.g. to disaggregate revenues into categories that depict how the nature, amount, timing and uncertainty of revenues and cash flows are affected by economic factors. This disaggregation of revenues is also disclosed in the interim reports, see Note 6.
The restatement tables below present the impact of the initial application of IFRS 15 on the consolidated financial statements for 2017.
IFRS 9 "Financial instruments" is effective as of January 1, 2018, and replaces IAS 39 "Financial instruments: Recognition and Measurement". As permitted by IFRS 9, Telia Company has chosen to implement the new standard without restating comparative figures for 2017. In accordance with RFR 2 "Accounting for Legal Entities", Telia Company AB (parent company) has chosen to apply IFRS 9 in the legal entity as of January 1, 2018.
The standard's three main projects have been classification and measurement, impairment and hedge accounting. During 2017 Telia Company has performed a review and an assessment of the effects on the financial assets and financial liabilities. The impact of IFRS 9 on the financial reporting for Telia Company is presented below for each respective area where IFRS 9 has brought changes compared with the requirements of IAS 39.
Classification and measurement of financial assets and financial liabilities: IFRS 9 requires financial assets that are debt instruments to be classified based on the entity's business model for managing the financial assets as well as the characteristics of the contractual cash
flows of the financial assets. The classification in turn decides how the assets are to be measured. The financial assets are classified and measured at any of the following three categories: Amortized Cost (AC); Fair Value through Other Comprehensive Income (FVOCI); or Fair Value through Profit or Loss (FVPL). For Telia Company, there is no material change to the measurement of financial assets, since the measurement bases were already amortized cost or fair value. Telia Company has chosen to continue to report gains and losses from equity instruments classified as "financial assets available-for sale" under IAS 39 in other comprehensive income also under IFRS 9 as these instruments are held for strategic purposes. For equity instruments that are designated at "fair value through OCI" under IFRS 9 only dividend income is recognized in the income statement, all other gains and losses are recognized in OCI without reclassification on derecognition. This differs from the treatment of "available-for-sale" equity instruments under IAS 39 where gains and losses recognized in OCI were reclassified on derecognition or impairment. The changes in IFRS 9 that relates to classification and measurement of financial liabilities did not impact Telia Company as the Group did not measure financial liabilities at fair value (other than derivatives liabilities).
Impairment: IFRS 9 requires a loss allowance for the expected credit losses to be recognized on receivables and other types of debt instruments. In order be able to recognize the expected credit losses and not merely the "incurred" credit losses as was the requirement under IAS 39, Telia Company has made an assessment of impairment of trade receivables and other receivables resulting in a transition effect of SEK 16 million compared to the previous method for each portfolio of such assets. For investments in interest bearing assets in the bond and deposit portfolios, the general impairment model in IFRS 9, with the low credit risk exception, is applied, meaning that the loss allowance will be measured at an amount equal to the 12-month expected credit losses as long as there is no significant increase in credit risk. If a significant increase in credit risk should arise, the loss allowance will be measured at an amount equal to the lifetime expected credit losses for the asset. In Telia Company AB the transition effect from impairment for intra-group receivables was SEK 150 million. The amount is recognized as per January 1, 2018, as a decrease in Trade and other receivables and current tax receivables and a decrease in Equity.
Hedge accounting: IFRS 9 applies to all hedge relationships, with the exception of "fair value macro hedges". The IASB is working on a project to address macro hedging and in the meantime IFRS 9 provides an accounting policy choice for hedge accounting: either to continue to apply the requirements of IAS 39 until the macro hedging project is finalized, or apply IFRS 9. The hedge accounting requirements in IFRS 9 retain the three hedge accounting mechanisms but introduces greater flexibility in the types of transactions eligible for hedge accounting, the risks that can be hedged, and the instruments that can be used as hedging instruments. The new hedge accounting model enables a better reflection of risk management activities in the financial statements. The previous 80-125 percent threshold effective-test is not carried over to IFRS 9. Instead, there should be an economic relationship between the hedged item and the hedging instrument, with no quantitative threshold. Telia Company will apply the hedge accounting provisions of IFRS 9 from the second quarter of 2018. Telia Company expects no major effects based on current hedging activities. On the contrary, IFRS 9 is assumed to better align hedge accounting with Telia Company risk mitigation strategies. However, the improved hedge accounting possibilities also require increased disclosures regarding the risk management strategy, cash flows from hedging activities and the impact of hedge accounting on the financial statements. In addition, consequential amendments have been made to IFRS 7 "Financial Instruments: Disclosures".
IFRS 16 "Leases" is effective for the annual reporting period beginning January 1, 2019, and Telia Company has not pre-adopted the standard. The project for IFRS 16 continued during the first quarter of 2018 and is proceeding according to plan. Telia Company continues to assess the impact of the new standard on the consolidated financial statements. For more information, see the Annual and Sustainability Report 2017.
As a result of a review in the first quarter of 2018, an additional number of machine-to-machine subscriptions in Finland have started to be included in the reporting. As a consequence, the 2017 subscription base has been restated for comparability. Also, in order to reflect the full TV subscription base, OTT TV customers have started to be included in Sweden, Finland and Estonia, respectively, and as a result of this, the 2017 subscriptions base has been restated for comparability. Furthermore, the number of employees in Lithuania in 2017 has been restated for hourly paid employees.
Former segment region Eurasia is classified as held for sale and discontinued operations since December 31, 2015. For information on assets held for sale and discontinued operations, see Note 4.
Former segment region Eurasia is classified as held for sale and discontinued operations since December 31, 2015, and is therefore not included in the segment information in Note 5.
Compensation from the pension fund has previously been presented as cash flow from investing activities. From 2018, compensation from the pension fund is presented as cash flow from operating activities. The compensation from the pension fund was SEK 675 million in the first quarter 2018. There was no compensation in 2017.
Prior periods have been restated to reflect the discovery of certain classification errors referring to capitalized work by employees recognized as property plant and equipment SEK 231 million and intangible assets SEK 133 million. The correction resulted in a reclassification between personnel expenses and impairment losses and a reclassification between cash flow from operating activities and investing activities for the full year 2017. The reclassifications have no effect on costs by function, operating income, net income, free cash flow or total cash flow for the full year 2017 or carrying values of the related assets per December 31, 2017. The reclassification corrections per quarter 2017 and full year 2017 are presented in the restatement tables below.
| Jan-Mar 2017 | Jan-Dec 2017 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| IFRS | ||||||||||
| SEK in millions | Re ported |
IFRS 15 effects Ref |
Capital ized work |
Restated | Reported | 15 ef fects |
Ref | Capital ized work |
Restated | |
| Continuing operations | ||||||||||
| Net sales | 19,252 | -24 b) | – | 19,227 | 79,867 | -77 | b) | – | 79,790 | |
| Cost of sales | -11,555 | – | -59 | -11,614 | -49,166 | – | – | -49,166 | ||
| Gross profit | 7,697 | -24 | -59 | 7,614 | 30,701 | -77 | – | 30,624 | ||
| Selling, admin. and R&D expenses |
-4,533 | 15 | c) | -31 | -4,550 | -18,489 | 155 | c) | – | -18,334 |
| Other operating income and expenses, net |
-84 | – | – | -84 | 700 | – | – | 700 | ||
| Income from associated companies and joint ven tures |
561 | – | – | 561 | 778 | – | – | 778 | ||
| Operating income | 3,641 | -9 | -90 | 3,542 | 13,690 | 78 | – | 13,768 | ||
| Finance costs and other financial items, net |
-527 | 5 | d) | – | -522 | -4,234 | 20 | d) | – | -4,214 |
| Income after financial items |
3,114 | -5 | -90 | 3,019 | 9,457 | 97 | – | 9,554 | ||
| Income taxes | -568 | 5 | e) | – | -563 | -1,041 | -21 | e) | – | -1,062 |
| Net income from continu ing operations |
2,546 | 0 | -90 | 2,456 | 8,416 | 76 | – | 8,492 | ||
| Discontinued operations | – | |||||||||
| Net income from discontin ued operations |
4,596 | 1 | f) | – | 4,598 | 1,729 | 21 | f) | – | 1,751 |
| Total net income | 7,143 | 2 | a) | -90 | 7,054 | 10,146 | 98 | a) | – | 10,243 |
| Other comprehensive income |
||||||||||
| Total comprehensive income |
5,718 | 2 | -90 | 5,629 | 19,870 | 98 | – | 19,968 | ||
| Total net income attributable to: |
||||||||||
| Owners of the parent | 6,984 | 1 | -90 | 6,894 | 9,608 | 97 | – | 9,705 | ||
| Non-controlling interests | 159 | 1 | 0 | 160 | 537 | 1 | – | 538 | ||
| Total comprehensive income attributable to: |
||||||||||
| Owners of the parent | 5,248 | 1 | -90 | 5,158 | 19,715 | 97 | – | 19,811 | ||
| Non-controlling interests | 470 | 1 | 0 | 471 | 155 | 1 | – | 156 | ||
| Earnings per share (SEK), basic and diluted |
1.61 | 0.00 | -0.02 | 1.59 | 2.22 | 0.02 | 0.00 | 2.24 | ||
| of which from continuing op erations, basic and diluted |
0.58 | 0.00 | -0.02 | 0.56 | 1.90 | 0.02 | 0.00 | 1.92 | ||
| EBITDA from continuing operations |
5,985 | -9 | -90 | 5,885 | 25,806 | 78 | -365 | 25,519 | ||
| Adjusted EBITDA from continuing operations |
6,149 | -9 | -90 | 6,049 | 25,438 | 78 | -365 | 25,151 | ||
| Depreciation, amortization and impairment losses from continuing operations |
-2,905 | – | – | -2,905 | -12,893 | – | 365 | -12,528 | ||
| Adjusted operating income from continuing operations |
3,805 | -9 | -90 | 3,706 | 15,069 | 78 | -365 | 14,781 |
| SEK in millions | Reported Dec 31, 2016 |
IFRS 15 effects |
Ref | Restated Jan 1, 2017 |
Reported Dec 31, 2017 |
IFRS 15 effects |
Ref | Restated Dec 31, 2017 |
|---|---|---|---|---|---|---|---|---|
| Assets | ||||||||
| Investments in associates and joint ventures, pension obligation assets and other non-current assets |
27,934 | 1,265 | a) | 29,199 | 16,151 | 1,499 | a) | 17,650 |
| Other non-current assets | 151,541 | – | 151,541 | 158,353 | – | 158,353 | ||
| Trade and other receivables and current tax receivables |
17,468 | 26 | 17,493 | 16,462 | -77 | 16,385 | ||
| Assets classified as held for sale |
29,042 | 91 | f) | 29,133 | 18,408 | 100 | f) | 18,508 |
| Other current assets | 27,446 | – | 27,446 | 34,472 | – | 34,472 | ||
| Total assets | 253,430 | 1,382 | 254,812 | 243,845 | 1,523 | 245,367 | ||
| Equity and liabilities | ||||||||
| Equity attributable to owners of the parent |
89,833 | 1,159 | 90,991 | 99,970 | 1,255 | 101,226 | ||
| Equity attributable to non controlling interests |
5,036 | 31 | 5,067 | 5,260 | 32 | 5,291 | ||
| Total equity | 94,868 | 1,190 | a) | 96,058 | 105,230 | 1,287 | a) | 106,517 |
| Deferred tax liabilities | 10,567 | 185 | e) | 10,752 | 8,766 | 207 | e) | 8,973 |
| Other non-current liabilities | 91,167 | – | 91,167 | 97,973 | – | 97,973 | ||
| Trade payables and other current liabilities, current tax payables and short-term provisions |
31,892 | -4 | 31,888 | 19,649 | 24 | 19,673 | ||
| Liabilities directly associated with assets classified as held for sale |
13,627 | 10 | f) | 13,637 | 8,552 | 4 | f) | 8,556 |
| Other current liabilities | 11,307 | – | 11,307 | 3,674 | – | 3,674 | ||
| Total equity and liabilities | 253,430 | 1,382 | 254,812 | 243,845 | 1,523 | 245,367 |
a) The implementation of IFRS 15 had a positive equity effect of SEK 1,190 million per the transition date January 1, 2017 and SEK 1,287 million per December 31, 2017. The equity increases were mainly related to capitalization of incremental costs for obtaining new contracts. The net income effect for 2017 was limited.
b) The limited effect on net sales was related to refining of Telia Company's previous revenue model for bundled offerings.
c) Selling and administration expenses was 2017 was reduced by SEK 1,312 million due to capitalization of costs to obtain a contract, the corresponding amount for the first quarter 2017 was SEK 290 million. The 2017 amortization of the capitalized contract costs of SEK -1,157 million was also included in Selling, administration and R&D expenses which lead to a net effect of SEK 155 million. The corresponding amount for the first quarter 2017 was SEK -275 million, which lead to a net effect of SEK 15 million in the first quarter 2017. The amortization is classified as operating expenses within EBITDA.
d) The minor adjustment of the discount rate and calculation model used for the financing component in customer contracts had an immaterial effect on net income 2017.
e) The deferred tax relating to the IFRS 15 adjustments increased deferred tax liabilities by SEK 185 million at the date of transition January 1, 2017, and SEK 207 million as of December 31, 2017. The tax effect on net income 2017 was immaterial.
f) The implementation of IFRS 15 had no material effect on discontinued operations and assets held for sale. The implementation effects mainly related to capitalization of incremental costs for obtaining new contracts.
| Jan-Mar 2017 | Jan-Dec 2017 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK in millions | Reported | Capital ized work |
Restated | Reported | Capital ized work |
Restated | ||
| Cash flow before change in working capital |
6,998 | -90 | 6,907 | 28,234 | -365 | 27,869 | ||
| Change in working capital | 511 | – | 511 | -4,665 | – | -4,665 | ||
| Cash flow from operating ac tivities |
7,509 | -90 | 7,418 | 23,569 | -365 | 23,204 | ||
| of which from continuing operations |
6,902 | -90 | 6,811 | 26,313 | -365 | 25,948 | ||
| Cash CAPEX | -3,422 | 90 | -3,332 | -16,405 | 365 | -16,040 | ||
| Free cash flow | 4,087 | – | 4,087 | 7,164 | – | 7,164 | ||
| Cash flow from other investing activities |
9 | – | 9 | 6,290 | – | 6,290 | ||
| Total cash flow from investing activities |
-3,413 | 90 | -3,323 | -10,115 | 365 | -9,750 | ||
| of which from continuing operations |
-3,085 | 90 | -2,995 | -6,513 | 365 | -6,148 | ||
| Cash flow from financing ac tivities |
-9,754 | – | -9,754 | -13,905 | – | -13,905 | ||
| Cash flow for the period | -5,659 | – | -5,659 | -451 | – | -451 |
For more information regarding:
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 2017 |
Jan-Dec 20176 |
|---|---|---|---|
| Within EBITDA | -189 | -164 | 368 |
| Restructuring charges, synergy implementation costs, costs related to historical legal disputes, regulatory charges and taxes etc.: |
|||
| Sweden | -121 | -33 | -268 |
| Finland | -39 | -52 | -84 |
| Norway | -9 | -17 | -143 |
| Denmark | – | -3 | -72 |
| Lithuania | -5 | -9 | -29 |
| Estonia | -2 | -1 | -23 |
| Other operations | -37 | -49 | -229 |
| Capital gains/losses1 | 24 | 0 | 1,215 |
| Within Depreciation, amortization and impairment losses | – | – | -438 |
| Within Income from associated companies and joint ventures | – | – | -942 |
| Capital gains/losses2 | – | – | -942 |
| Total adjustment items within operating income, continuing opera tions |
-189 | -164 | -1,013 |
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 2017 |
Jan-Dec 2017 |
|---|---|---|---|
| Within EBITDA | -3,354 | 4,090 | 3,971 |
| Restructuring charges, synergy implementation costs, costs related to historical legal disputes, regulatory charges and taxes etc3 |
-38 | 4,090 | 4,163 |
| Impairment loss on remeasurement to fair value less costs to sell4 | -10 | – | – |
| Capital gains/losses5 | -3,306 | – | -190 |
| Total adjustment items within EBITDA, discontinued operations | -3,354 | 4,090 | 3,971 |
1) Full year 2017 includes the second quarter capital gain of the disposal of Sergel.
2) 2017 includes a capital gain from disposal of 6.2 percent holding in MegaFon and the capital losses (including cumulative exchange loss in equity reclassified to net income) from the disposals of 14.0 percent holding in Turkcell.
3) The first quarter of 2017 included the adjustment of the provision for the settlement amount with the US and Dutch authorities, which also affected the full year 2017. Further, full year 2017 also included the positive effect from the global settlement with the authorities regarding the Uzbekistan investigations in the third quarter 2017.
4) Total impairment loss on remeasurement to fair value less cost to sell amounts to SEK 300 million for Ucell, of which SEK 10 million is recognized within EBITDA. See Note 4 for further information.
5) Capital losses in the first quarter 2018 relate to the disposals of Azercell in Azerbaijan and Geocell in Georgia. Capital losses in full year 2017 was mainly related to disposal of Tcell in Tajikistan. See Note 4 for further information.
6) Restated for comparability, see Note 1.
Former segment region Eurasia (including holding companies) is classified as held for sale and discontinued operations since December 31, 2015. The holding companies will be disposed or liquidated in connection with the transactions. Ncell in Nepal was disposed in 2016 and Tcell in Tajikistan was disposed in 2017. Azercell in Azerbaijan and Geocell in Georgia were disposed in March 2018. Telia Company is still committed to the plan to dispose the remaining parts of Eurasia and the delays in the sales processes were primarily caused by events and circumstances beyond Telia Company's control. Telia Company has taken actions necessary to respond the change in circumstances, the units are available for immediate sale and are being actively marketed at reasonable prices given the change in circumstances. The sales processes relating to the remaining Eurasian units are in the final stages, bids have been received and term negotiations are ongoing. Disposals of these units are therefore deemed highly probable within 2018.
Management's best estimate of the risk adjusted debt free value of Ucell remains unchanged at SEK 1.3 billion per March 31, 2018. Changes in any of the estimated risk adjustments made for Ucell would have a material impact on the estimated fair value. The most significant impact on fair value will be the buyer's ability to operate in the country and convert local currency. For more information on valuation of Ucell, see the Annual and Sustainability Report 2017. Due to increased carrying values for Ucell, an impairment charge of SEK 300 million was recognized in the in the first quarter of 2018. Ucell was impaired by SEK 1,600 million in 2017.
For Kcell in Kazakhstan the estimated fair value exceeds the carrying value and Kcell has therefore not been remeasured as of March 31, 2018. The estimated cash and debt free value for Moldcell per December 31, 2017, of SEK 0.5 billion remains unchanged per March 31, 2018, and no impairment charge has been recognized in the first quarter of 2018. Management's best estimates of the fair values are based on bids received and other input from the sales processes. Moldcell was impaired by SEK 450 million in 2017.
Telia Company made a write-down of SEK 330 million in 2017 of its holding in the associated company TOO Rodnik in Kazakhstan which Telia consolidates to 50 percent. Rodnik owns the listed company AO KazTrans-Com. Based on the development in ongoing negotiations, the associated company was no longer deemed having a recoverable value. In the first quarter 2018, Telia Company agreed to transfer its interests in KazTrans-Com to Amun Services. The transaction is subject to
regulatory approvals and is expected to close during the second quarter 2018.
On March 5, 2018, Fintur Holdings B.V. (Fintur), jointly owned by Telia Company (58.55 percent) and Turkcell (41.45 percent) disposed its 51.3 percent holding in Azertel Telekommünikasyon Yatirim Dis Ticaret A.S. (Azertel) to Azerbaijan International Telecom LLC (Azintelecom), wholly-owned company by the Republic of Azerbaijan. Azertel is the sole shareholder of the leading Azeri mobile operator Azercell LLC (Azercell). The price for Fintur's 51.3 percent in Azertel was EUR 222 million (SEK 2.3 billion), which implied an equity value of EUR 432 million for 100 percent of Azercell and an enterprise value of EUR 197 million on a cash and debt free basis. The price corresponded to and EV/EBITDA multiple of 2.1x based on 2017. The total price has been received in cash as of March 31, 2018.
In addition to the impairment of SEK 2,550 million recognized in December 2017, the disposal resulted in a capital loss of SEK 3,065 million for the group in the first quarter of 2018, mainly due to accumulated foreign exchange losses reclassified from equity to net income from discontinued operations of SEK 2,944 million. The reclassification of accumulated exchange losses had no effect on equity.
The transaction had a positive cash flow effect for the group (relating to both parent shareholders and non-controlling interests) in the first quarter of 2018 of SEK 264 million (price received less cash and cash equivalents in entities sold). Telia Company's share of the sales price of SEK 1.3 billion has been classified within continuing operations in cash and cash equivalents as of March 31, 2018. The minority owner Turkcell's share of the sales price of SEK 0.9 billion has been included within discontinued operations and is classified as held for sale.
On March 20, 2018, Fintur's Turkish subsidiary Gürtel Telekomünikasyon Yatirim ve Dis Ticaret A.S. (Gürtel) disposed its 100 percent holding in Geocell LLC (Geocell) to the Georgian telecommunications company JSC Silknet. The price for Geocell of SEK 1.2 billion was based on an enterprise value of USD 153 million for 100 percent of the company and corresponded to an EV/EBITDA multiple of 4.5x based on 2017. Per March 31, 2018, SEK 1.1 billion has been received in cash.
In addition to the impairment of SEK 550 million recognized in December 2017, the disposal resulted in a capital loss of SEK 241 million for the group in the first quarter of 2018, whereof accumulated foreign exchange
losses reclassified from equity to net income from discontinued operations of SEK 101 million. The reclassification of accumulated exchange losses had no effect on equity.
The transaction had a positive cash flow effect for the group (relating to both parent shareholders and non-controlling interests) in the first quarter 2018 of SEK 1,100 million (price received less cash and cash equivalents in entities sold). Telia Company's share of the sales price of SEK 0.7 billion has been classified within continuing operations, whereof SEK 0.6 billion in cash and cash equivalents and SEK 0.1 billion as Long term interestbearing receivables as of March 31, 2018. The minority owner Turkcell's share of the sales price of SEK 0.5 billion has been included within discontinued operations and is classified as held for sale.
In April 2017, Telia Company disposed its holdings in Tcell in Tajikistan, which resulted in a capital loss of SEK 193 million relating to reclassification of accumulated negative foreign exchange differences to net income. Tcell was impaired by SEK 222 million in 2017.
On April 11, 2016, Telia Company completed the disposal of its holdings in Ncell in Nepal. Provisions for transaction warranties are included in the statement of financial position for continuing operations. The final amounts relating to the Ncell disposal are still subject to deviations in transaction warranties and related foreign exchange rates.
Telia Company has, subsequent of the disposal, received requests from the Nepalese tax authorities to submit a tax return on the disposal to Axiata. Telia Company's assessment is that there is no obligation to file a tax return, or pay any capital gain tax, in Nepal since the sales transaction is not taxable in Nepal.
The US and Dutch authorities have investigated historical transactions related to Telia Company's entry into Uzbekistan in 2007. On September 21, 2017, Telia Company reached a global settlement with the US and Dutch authorities regarding the Uzbekistan investigations. As part of the settlement, Telia Company agreed to pay fines and disgorgements in an aggregate amount of USD 965 million, whereof USD 757 million (SEK 6,129 million) were paid during the third quarter of 2017. The remaining part of USD 208 million is related to the SEC disgorgement amount potentially offset against any disgorgement obtained by the Swedish Prosecutor or Dutch authorities. The outstanding discounted provision amounts to SEK 1,694 million per March 31, 2018, and is included in the line item "Provisions for pensions and other long-term provisions" (continuing operations) in the condensed consolidated statements of financial position. There was no material effect on net income in the first quarter of 2018. For more information, see the Annual and Sustainability Report 2017.
| SEK in millions, except per share data | Jan-Mar 2018 |
Jan-Mar 20174 |
Jan-Dec 20174 |
|---|---|---|---|
| Net sales | 1,974 | 3,089 | 11,275 |
| Expenses and other operating income, net1 | -1,315 | 2,189 | -2,841 |
| Operating income | 659 | 5,278 | 8,433 |
| Financial items, net | 10 | -52 | -218 |
| Income after financial items | 669 | 5,226 | 8,216 |
| Income taxes | -8 | -379 | -543 |
| Net income before remeasurement and gain/loss on disposal | 660 | 4,847 | 7,673 |
| Impairment loss/impairment reversal on remeasurement to fair value less costs to sell2 |
-300 | -249 | -5,729 |
| Loss on disposal of Azercell in Azerbaijan (including cumulative Azercell exchange loss in equity reclassified to net income of SEK -2,944 million)3 |
-3,065 | – | – |
| of which loss attributable to parent shareholders | -3,024 | – | – |
| of which loss attributable to non-controlling interests | -41 | – | – |
| Loss on disposal of Geocell in Georgia (including cumulative Geocell ex change loss in equity reclassified to net income of SEK -101 million)3 |
-241 | – | – |
| of which loss attributable to parent shareholders | -190 | – | – |
| of which loss attributable to non-controlling interests | -52 | – | – |
| Loss on disposal of Tcell in Tajikistan (including cumulative Tcell ex change loss in equity reclassified to net income of SEK -193 million)3 |
– | – | -193 |
| Net income from discontinued operations | -2,946 | 4,598 | 1,751 |
| EPS from discontinued operations (SEK) | -0.70 | 1.03 | 0.33 |
| Adjusted EBITDA | 687 | 1,187 | 4,262 |
1) The first quarter of 2017 included the SEK 4.1 billion adjustment of the provision for the settlement amount with the US and Dutch authorities, which also affected the full year 2017. Further, full year 2017 also includes the positive effect from the global settlement with the authorities regarding the Uzbekistan investigations of SEK 0.3 billion in the third quarter 2017. 2) Non-tax deductible. 3) Non-taxable gain/loss. 4) Restated for comparability, see Note 1.
| SEK in millions | Eurasia Mar 31, 2018 |
Eurasia Dec 31, 2017 4 |
Property, plant and equipment Dec 31, 20173 |
Total, Dec 31, 2017 4 |
|---|---|---|---|---|
| Goodwill and other intangible assets | 1,867 | 2,694 | – | 2,694 |
| Property, plant and equipment | 3,819 | 6,329 | 28 | 6,358 |
| Other non-current assets1 | 260 | 189 | – | 189 |
| Short-term interest-bearing receivables | 1,550 | 2,091 | – | 2,091 |
| Other current assets | 1,205 | 1,807 | – | 1,807 |
| Cash and cash equivalents1 | 4,845 | 5,368 | – | 5,368 |
| Assets classified as held for sale | 13,547 | 18,480 | 28 | 18,508 |
| Long-term borrowings | 1,136 | 295 | – | 295 |
| Long-term provisions | 42 | 1,887 | – | 1,887 |
| Other long-term liabilities | 1,222 | 1,197 | – | 1,197 |
| Short-term borrowings | 692 | 1,428 | – | 1,428 |
| Other current liabilities | 2,813 | 3,749 | – | 3,749 |
| Liabilities associated with assets classified as held for sale |
5,906 | 8,556 | – | 8,556 |
| Net assets classified as held for sale2 | 7,641 | 9,924 | 28 | 9,951 |
1) Eurasia March 31, 2018, includes the sales prices for minority owner Turkcell's share of Azercell and Geocell, whereof SEK 1.4 billion is included in cash and cash equivalents. The sales prices for Telia Company's shares in Azercell and Geocell are included in continuing operations. 2) Represents 100 percent of external assets and liabilities, i.e. non-controlling interests' share of net assets are included. 3) Refers to a property in Denmark that was sold during the first quarter of 2018. 4) Restated for comparability, see Note 1.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Net sales | |||
| Sweden | 8,997 | 9,074 | 36,825 |
| of which external | 8,923 | 9,012 | 36,578 |
| Finland | 3,657 | 3,272 | 13,742 |
| of which external | 3,608 | 3,227 | 13,575 |
| Norway | 2,595 | 2,272 | 10,087 |
| of which external | 2,590 | 2,268 | 10,064 |
| Denmark | 1,415 | 1,479 | 5,945 |
| of which external | 1,391 | 1,454 | 5,845 |
| Lithuania | 901 | 804 | 3,543 |
| of which external | 889 | 787 | 3,492 |
| Estonia | 712 | 660 | 2,824 |
| of which external | 689 | 640 | 2,737 |
| Other operations | 2,141 | 2,230 | 9,025 |
| Total segments | 20,419 | 19,792 | 81,991 |
| Eliminations | -567 | -564 | -2,201 |
| Group | 19,852 | 19,227 | 79,790 |
| Adjusted EBITDA | |||
| Sweden | 3,421 | 3,316 | 13,627 |
| Finland | 1,151 | 964 | 4,218 |
| Norway | 1,008 | 862 | 3,531 |
| Denmark | 141 | 145 | 704 |
| Lithuania | 318 | 277 | 1,207 |
| Estonia | 234 | 206 | 871 |
| Other operations | 222 | 279 | 992 |
| Total segments | 6,495 | 6,049 | 25,151 |
| Eliminations | – | 0 | 0 |
| Group | 6,495 | 6,049 | 25,151 |
| Operating income | |||
| Sweden | 2,003 | 2,017 | 8,204 |
| Finland | 527 | 406 | 1,926 |
| Norway | 588 | 472 | 1,851 |
| Denmark | -47 | -42 | -145 |
| Lithuania | 140 | 112 | 615 |
| Estonia | 96 | 78 | 326 |
| Other operations | 92 | 498 | 990 |
| Total segments | 3,398 | 3,542 | 13,768 |
| Eliminations | -0 | 0 | 0 |
| Group | 3,398 | 3,542 | 13,768 |
| Financial items, net | -459 | -522 | -4,214 |
| Income after financial items | 2,940 | 3,019 | 9,554 |
1) Restated for comparability, see Note 1.
| SEK in millions | Mar 31, 2018 | Mar 31, 2018 | Dec 31, 20171,2 | Dec 31, 20171,2 |
|---|---|---|---|---|
| Segment assets |
Segment liabilities |
Segment assets |
Segment liabilities |
|
| Sweden | 45,580 | 11,117 | 46,388 | 11,133 |
| Finland | 52,070 | 4,919 | 49,212 | 4,970 |
| Norway | 30,670 | 2,648 | 28,805 | 2,753 |
| Denmark | 9,020 | 1,605 | 8,775 | 1,578 |
| Lithuania | 7,383 | 619 | 7,174 | 774 |
| Estonia | 5,374 | 500 | 5,168 | 588 |
| Other operations | 27,408 | 8,818 | 26,544 | 8,748 |
| Total segments | 177,505 | 30,227 | 172,067 | 30,544 |
| Unallocated | 61,127 | 102,448 | 54,792 | 99,750 |
| Assets and liabilities held for sale | 13,547 | 5,906 | 18,508 | 8,556 |
| Total assets/liabilities, group | 252,179 | 138,582 | 245,367 | 138,850 |
1) Comparative figures for segments Sweden, Finland and Denmark have been restated to reflect a reallocation of inventories and related liabilities. 2) Restated for comparability, see Note 1.
| Jan-Mar 2018 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK in millions | Sweden | Finland | Norway | Den mark |
Lithua nia |
Estonia | Other opera tions |
Elimi nations |
Total |
| Mobile subscription revenues | 3,262 | 1,524 | 1,734 | 725 | 235 | 207 | 284 | – | 7,970 |
| Interconnect | 160 | 119 | 121 | 55 | 36 | 16 | 39 | – | 545 |
| Other mobile service revenues | 131 | 186 | 238 | 62 | 6 | 3 | 7 | – | 633 |
| Total mobile service revenues |
3,552 | 1,829 | 2,093 | 842 | 277 | 226 | 330 | – | 9,149 |
| Telephony | 703 | 56 | 36 | 45 | 81 | 34 | – | – | 953 |
| Broadband | 1,142 | 178 | 0 | 66 | 139 | 127 | 0 | – | 1,652 |
| TV | 458 | 130 | – | 42 | 63 | 52 | – | – | 745 |
| Business solutions | 644 | 549 | – | 43 | 50 | 47 | 17 | – | 1,350 |
| Other fixed service revenues | 1,044 | 342 | 0 | 20 | 117 | 76 | 1,171 | – | 2,770 |
| Total fixed service revenues |
3,991 | 1,254 | 36 | 216 | 450 | 335 | 1,188 | – | 7,471 |
| Other service revenues | 78 | 1 | 0 | 8 | – | 10 | 79 | – | 176 |
| Total service revenues1 | 7,622 | 3,084 | 2,129 | 1,065 | 727 | 571 | 1,597 | – | 16,795 |
| Total equipment revenues1 | 1,301 | 524 | 461 | 326 | 162 | 119 | 164 | – | 3,056 |
| Total external net sales | 8,923 | 3,608 | 2,590 | 1,391 | 889 | 689 | 1,761 | – | 19,852 |
| Internal net sales | 75 | 49 | 5 | 24 | 12 | 23 | 380 | -567 | – |
| Total net sales | 8,997 | 3,657 | 2,595 | 1,415 | 901 | 712 | 2,141 | -567 | 19,852 |
| Jan-Mar 20172 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK in millions | Sweden | Finland | Norway | Denmark | Lithua nia |
Estonia | Other opera tions |
Elimi nations |
Total | |
| Mobile subscription revenues | 3,188 | 1,411 | 1,634 | 703 | 201 | 194 | 256 | – | 7,587 | |
| Interconnect | 163 | 114 | 135 | 57 | 32 | 17 | 39 | – | 556 | |
| Other mobile service revenues | 159 | 179 | 169 | 68 | 3 | 3 | 21 | – | 601 | |
| Total mobile service | 3,509 | 1,704 | 1,938 | 827 | 236 | 214 | 316 | – | 8,743 | |
| revenues Telephony |
778 | 58 | 5 | 54 | 90 | 36 | – | – | 1,021 | |
| Broadband | 1,142 | 204 | 0 | 73 | 134 | 118 | – | – | 1,672 | |
| TV | 437 | 136 | – | 40 | 56 | 43 | – | – | 712 | |
| Business solutions | 673 | 441 | – | 35 | 47 | 41 | 17 | – | 1,254 | |
| Other fixed service revenues | 1,112 | 292 | 0 | 27 | 100 | 69 | 1,208 | – | 2,808 | |
| Total fixed service revenues |
4,142 | 1,131 | 5 | 230 | 426 | 308 | 1,226 | – | 7,467 | |
| Other service revenues | 83 | 2 | 0 | 6 | – | 12 | 165 | – | 267 | |
| Total service revenues1 | 7,733 | 2,837 | 1,943 | 1,062 | 662 | 533 | 1,706 | – | 16,477 | |
| Total equipment revenues1 | 1,279 | 390 | 325 | 392 | 125 | 106 | 134 | – | 2,750 | |
| Total external net sales | 9,012 | 3,227 | 2,268 | 1,454 | 787 | 640 | 1,840 | – | 19,227 | |
| Internal net sales | 62 | 45 | 4 | 25 | 17 | 21 | 390 | -564 | – | |
| Total net sales | 9,074 | 3,272 | 2,272 | 1,479 | 804 | 660 | 2,230 | -564 | 19,227 |
| Jan-Dec 20172 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| SEK in millions | Sweden | Finland | Norway | Den mark |
Lithua nia |
Estonia | Other opera tions |
Elimi nations |
Total |
| Mobile subscription revenues | 12,968 | 5,806 | 6,909 | 2,850 | 841 | 800 | 1,088 | – | 31,262 |
| Interconnect | 650 | 475 | 541 | 229 | 131 | 71 | 147 | – | 2,245 |
| Other mobile service revenues | 581 | 733 | 826 | 334 | 24 | 15 | 64 | – | 2,577 |
| Total mobile service revenues |
14,200 | 7,014 | 8,276 | 3,413 | 996 | 886 | 1,298 | – | 36,084 |
| Telephony | 3,063 | 238 | 120 | 203 | 344 | 139 | – | – | 4,107 |
| Broadband | 4,581 | 782 | 0 | 286 | 544 | 485 | – | – | 6,678 |
| TV | 1,774 | 524 | – | 162 | 229 | 188 | – | – | 2,877 |
| Business solutions | 2,658 | 1,962 | – | 157 | 181 | 168 | 65 | – | 5,191 |
| Other fixed service revenues | 4,597 | 1,221 | 0 | 93 | 526 | 272 | 4,997 | – | 11,707 |
| Total fixed service revenues |
16,673 | 4,728 | 120 | 900 | 1,824 | 1,252 | 5,062 | – | 30,560 |
| Other service revenues | 444 | 6 | 19 | 22 | – | 44 | 479 | – | 1,013 |
| Total service revenues1 | 31,317 | 11,748 | 8,415 | 4,335 | 2,820 | 2,182 | 6,840 | – | 67,657 |
| Total equipment revenues1 | 5,261 | 1,827 | 1,649 | 1,510 | 672 | 555 | 660 | – | 12,134 |
| Total external net sales | 36,578 | 13,575 | 10,064 | 5,845 | 3,492 | 2,737 | 7,500 | – | 79,790 |
| Internal net sales | 247 | 168 | 24 | 100 | 51 | 87 | 1,525 | -2,201 | – |
| Total net sales | 36,825 | 13,742 | 10,087 | 5,945 | 3,543 | 2,824 | 9,025 | -2,201 | 79,790 |
1) In all material aspects, equipment revenues are recognized at a point in time and service revenue over time.
2) Restated for comparability, see Note 1.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| CAPEX | 2,785 | 2,898 | 15,307 |
| Intangible assets | 622 | 493 | 4,014 |
| Property, plant and equipment | 2,163 | 2,405 | 11,293 |
| Acquisitions and other investments | 854 | 220 | 4,973 |
| Asset retirement obligations | 10 | 26 | 60 |
| Goodwill, intangible and tangible non-current assets acquired in business combinations |
817 | 194 | 4,886 |
| Equity instruments | 28 | 0 | 27 |
| Total continuing operations | 3,639 | 3,118 | 20,280 |
| Total discontinued operations | 173 | 304 | 1,787 |
| of which CAPEX | 173 | 304 | 1,787 |
| Total investments | 3,812 | 3,422 | 22,066 |
| of which CAPEX | 2,958 | 3,202 | 17,094 |
1) Restated for comparability, see Note 1.
| Mar 31, 2018 | Dec 31, 2017 | |||
|---|---|---|---|---|
| Long-term and short-term borrowings1 SEK in millions |
Carrying value |
Fair value | Carrying value |
Fair value |
| Long-term borrowings | ||||
| Open-market financing program borrowings in fair value hedge relationships |
42,459 | 51,870 | 44,918 | 54,965 |
| Interest rate swaps | 249 | 249 | 276 | 276 |
| Cross currency interest rate swaps | 2,323 | 2,323 | 1,990 | 1,990 |
| Subtotal | 45,031 | 54,442 | 47,184 | 57,231 |
| Open-market financing program borrowings | 40,829 | 46,229 | 38,255 | 43,269 |
| Other borrowings at amortized cost | 2,280 | 2,280 | 2,204 | 2,204 |
| Subtotal | 88,140 | 102,951 | 87,642 | 102,704 |
| Finance lease agreements | 179 | 179 | 171 | 171 |
| Total long-term borrowings | 88,319 | 103,130 | 87,813 | 102,875 |
| Short term borrowings | ||||
| Open-market financing program borrowings in fair value hedge relationships |
3,017 | 3,551 | 729 | 735 |
| Interest rate swaps | 27 | 27 | 4 | 4 |
| Cross currency interest rate swaps | 543 | 543 | 199 | 199 |
| Subtotal | 3,588 | 4,122 | 932 | 937 |
| Utilized bank overdraft and short-term credit facilities at amortized cost |
– | – | – | – |
| Open-market financing program borrowings | 880 | 880 | 1,459 | 1,461 |
| Other borrowings at amortized cost | 721 | 759 | 1,276 | 1,336 |
| Subtotal | 5,188 | 5,761 | 3,668 | 3,734 |
| Finance lease agreements | 8 | 8 | 6 | 6 |
| Total short-term borrowings | 5,196 | 5,769 | 3,674 | 3,740 |
1) For financial assets, fair values equal carrying values. For information on fair value estimation, see the Annual and Sustainability Report 2017, Note C3 to the consolidated financial statements.
| Mar 31, 2018 | Dec 31, 2017 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Financial assets and liabilities by | Carry | of which | Carry | of which | |||||
| fair value hierarchy level1 | ing | Level | Level | Level | ing | Level | Level | Level | |
| SEK in millions | value | 1 | 2 | 3 | value | 1 | 2 | 3 | |
| Financial assets at fair value | |||||||||
| Equity instruments at fair value through OCI2 | 211 | – | – | 211 | 1,899 | – | – | 1,899 | |
| Equity instruments at fair value through income statement2 |
19 | – | – | 19 | 19 | – | – | 19 | |
| Long- and short-term bonds at fair value through OCI2 | 22,679 | 17,719 | 4,960 | – | 22,738 | 18,029 | 4,709 | – | |
| Derivatives designated as hedging instruments | 1,633 | – | 1,633 | – | 1,709 | – | 1,709 | – | |
| Derivatives at fair value through income statement2 | 2,711 | – | 2,711 | – | 1,508 | – | 1,508 | – | |
| Total financial assets at fair value by level | 27,254 | 17,719 | 9,303 | 232 | 27,874 | 18,029 | 7,926 | 1,919 | |
| Financial liabilities at fair value | |||||||||
| Derivatives designated as hedging instruments | 2,386 | – | 2,386 | – | 2,180 | – | 2,180 | _ | |
| Derivatives at fair value through income statement2 | 1,007 | – | 1,007 | – | 514 | – | 514 | – | |
| Total financial liabilities at fair value by level | 3,392 | – | 3,392 | – | 2,693 | – | 2,693 | – |
1) For information on fair value hierarchy levels and fair value estimation, see the Annual and Sustainability Report 2017, Note C3 to the consolidated financial statements and the section below.
2) For the comparative figures, financial assets measured at fair value through Other Comprehensive Income (OCI) refer to financial assets classified as "available-for-sale" under IAS 39, whereas financial assets and financial liabilities measured at fair value through profit or loss (income statement) refer to instruments classified as "held for trading" under IAS 39.
Investments classified within Level 3 make use of significant unobservable inputs in deriving fair value, as they trade infrequently. As observable prices are not available for these equity instruments, Telia Company has a market approach to derive the fair value.
Telia Company's primary valuation technique used for estimating the fair value of unlisted equity instruments in level 3 is based on the most recent transaction for the specific company if such transaction has been recently done. If there has been significant changes in circumstances between the transaction date and the balance sheet date that, in the assessment of Telia Company, would have a material impact on the fair value, the carrying value is adjusted to reflect the changes.
In addition, the assessment of the fair value of material unlisted equity instruments is verified by applying other valuation models in the form of valuation multiples from listed comparable companies (peers) on relevant financial and operational metrics, such as revenue, gross profit and other relevant KPIs for the specific company. Comparable listed companies are determined based on industry, size, development stage, geographic area and strategy. The multiple is calculated by dividing the enterprise value of the comparable company by the relevant metric. The multiple is then adjusted for discounts/premiums with regards to differences, advantages and disadvantages between Telia Company's investment and the comparable public companies based on company specific facts and circumstances.
Although Telia Company uses its best judgement, and cross-references results of the primary valuation model against other models in estimating the fair value of unlisted equity instruments, there are inherent limitations in any estimation techniques. The fair value estimates presented herein are not necessarily indicative of an amount that Telia Company could realize in a current transaction. Future confirming events will also affect the estimates of fair value. The effect of such events on the estimates of fair value could be material.
The table below presents the movements in level 3 instruments for the three-month period ended March 31, 2018. The change in fair value and the disposals of equity instruments mainly relates to the disposal of Telia Company's holding in Spotify.
| Jan-Mar 2018 | ||||
|---|---|---|---|---|
| Movements within Level 3, fair value hierarchy SEK in millions |
Equity in struments at fair value through OCI |
Equity instru ments at fair value through in come statement |
Total | |
| Level 3, opening balance | 1,899 | 19 | 1,919 | |
| Changes in fair value | 554 | – | 554 | |
| of which recognized in other comprehen sive income |
554 | – | 554 | |
| Purchases/capital contributions | 27 | – | 28 | |
| Disposals | -2,269 | – | -2,269 | |
| Level 3, closing balance | 211 | 19 | 232 |
| Jan-Dec 2017 | |||
|---|---|---|---|
| Movements within Level 3, fair value hierarchy SEK in millions |
Equity in struments at fair value through OCI1 |
Equity instru ments at fair value through income statement1 |
Total |
| Level 3, opening balance | 1,162 | 26 | 1,188 |
| Changes in fair value | 738 | -7 | 731 |
| of which recognized in net income | – | -7 | -7 |
| of which recognized in other comprehen sive income |
738 | – | 738 |
| Exchange rate differences | – | 0 | 0 |
| Level 3, closing balance | 1,899 | 19 | 1,919 |
1) For the comparative figures, financial assets measured at fair value through Other Comprehensive Income (OCI) refer to financial assets classified as "available-for-sale" under IAS 39, whereas financial assets and financial liabilities measured at fair value through profit or loss (income statement) refer to instruments classified as "held for trading" under IAS 39.
No Telia Company shares were held by the company or by its subsidiaries as of March 31, 2018, or as of December 31, 2017. The total numbers of issued and outstanding shares were 4,330,084,781.
In the three-month period ended March 31, 2018, Telia Company purchased goods and services for SEK 7 million (11), and sold goods and services for SEK 4 million (5). These related party transactions are based on commercial terms.
Net debt presented below is based on the total Telia Company group for both continuing and discontinued operations.
| SEK in millions | Mar 31, 2018 | Dec 31, 2017 |
|---|---|---|
| Long-term borrowings | 89,455 | 88,108 |
| Less 50 percent of hybrid capital1 | -7,875 | -7,670 |
| Short-term borrowings | 5,889 | 5,102 |
| Less derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit support annex (CSA) |
-4,129 | -3,032 |
| Less long-term bonds at fair value through OCI2 | -12,125 | -12,084 |
| Less short-term investments | -11,822 | -15,616 |
| Less cash and cash equivalents | -30,881 | -20,984 |
| Net debt, continuing and discontinued operations | 28,513 | 33,823 |
1) 50 percent of hybrid capital is treated as equity, consistent with market practice for the type of instrument, and reduces net debt. 2) For the comparative figures, long-term bonds at fair value through OCI refers to long-term bonds available for sale under IAS 39.
Derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit support annex (CSA) are part of the balance sheet line items Long-term interest-bearing receivables and Shortterm interest-bearing receivables. Hybrid capital is part of the balance sheet line item Long-term borrowings. Long-term bonds at fair value through OCI are part of the balance sheet line item Long-term interest-bearing receivables. Short-term investments are part of the balance sheet line item Short-term interest-bearing receivables.
The credit rating of Telia Company remained unchanged during the first quarter. Moody's rating for long-term borrowings is Baa1 and P-2 for short-term borrowings, both with a stable outlook. The Standard & Poor long-term rating is A- and the short-term rating is A-2, however with the long-term rating on a negative outlook since April 3, 2017. No new capital market debt has been issued during the first quarter.
As of March 31, 2018, the maximum potential future payments that Telia Company (continuing operations) could be required to make under issued financial guarantees totaled SEK 377 million (368 at the end of 2017), of which SEK 360 million (352 at the end of 2017) referred to guarantees for pension obligations. Collateral pledged (continuing and discontinued operations) totaled SEK 46 million (714 at the end of 2017). The decrease is mainly related to investment bonds pledged under repurchase agreements in 2017. For ongoing legal proceedings see
Note C29 in the Annual and Sustainability Report 2017. For updated information regarding the Uzbekistan investigations, see Note 4.
As of March 31, 2018, contractual obligations (continuing operations) totaled SEK 4,241 million (3,373 at the end of 2017), of which SEK 2,037 million (1,448 at the end of 2017) referred to contracted build-out of Telia Company's fixed networks in Sweden. Total contractual obligations includes a lease agreement relating to future data center in Finland.
On January 31, 2018, Telia Company acquired all shares in the Finnish ICT company Inmics Oy. The acquisition will strengthen Telia Company's offer of IT equipment and services targeting the Finnish SME segment.
On March 9, 2018, Telia Company acquired all shares in the Finnish IT service provider Cloud Solutions CS Oy. The acquisition will strengthen Telia Company's offer of cloud services and data security targeting the Finnish large B2B customers.
The preliminary costs of the combinations, preliminary fair values of net assets acquired and preliminary goodwill for the combinations are presented in the table below.
| SEK in millions | Inmics | Cloud Solutions |
Total |
|---|---|---|---|
| Cost of combination | 914 | 82 | 996 |
| of which cash consideration | 914 | 82 | 996 |
| Fair value of net assets acquired | |||
| Intangible assets | 0 | 0 | 1 |
| Property, plant and equipment and other non-current assets | 5 | 1 | 5 |
| Current assets | 239 | 41 | 280 |
| Total assets acquired | 244 | 42 | 285 |
| Current liabilities | -62 | -24 | -86 |
| Total liabilities assumed | -62 | -24 | -86 |
| Total fair value of net assets acquired | 182 | 18 | 200 |
| Goodwill | 732 | 64 | 795 |
The net cash flow effect of the business combination was SEK 743 million (cash consideration SEK 914 million less cash and cash equivalents SEK 171 million). No part of goodwill is expected to be deductible for tax purposes. Acquisition-related costs of SEK 17 million have been recognized as other operating expenses. The total cost of combination and fair values has been determined provisionally, as they are based on preliminary appraisals and subject to confirmation of certain facts. Thus, the purchase price accounting is subject to adjustment. Compared to the preliminary fair values presented in the annual report of 2017, the changes are mainly due to adjustment of the cost of the combination and current liabilities. From the acquisition date, revenues of SEK 94 million and net income of SEK -8 million are included in the condensed consolidated statements of comprehensive income. If Inmics had been acquired at the beginning of 2018, there had been no material effect on revenues and total net income for Telia Company for the first quarter 2018.
The net cash flow effect of the business combination was SEK 59 million (cash consideration SEK 82 million
less cash and cash equivalents SEK 22 million). Goodwill consist of the knowledge of transferred personnel and expected synergies. No part of goodwill is expected to be deductible for tax purposes. Acquisition-related costs of SEK 2 million have been recognized as other operating expenses. The total cost of combination and fair values has been determined provisionally, as they are based on preliminary appraisals and subject to confirmation of certain facts. Thus, the purchase price accounting is subject to adjustment. From the acquisition date, revenues of SEK 7 million and net income of SEK -1 million are included in the condensed consolidated statements of comprehensive income. If Cloud Solutions CS had been acquired at the beginning of 2018, there had been no material effect on revenues and total net income for Telia Company for the first quarter 2018.
On January 2, 2018, Telia Company acquired all shares in Axelerate Solutions AB. The cost of the acquisition was approximately SEK 17 million.
The key ratios presented in the table below are based on the total Telia Company group including both continuing and discontinued operations.
| Mar 31, 2018 | Dec 31, 20174 | |
|---|---|---|
| Return on equity (%, rolling 12 months)1, 2, 3 | 2.3 | 11.2 |
| Return on capital employed (%, rolling 12 months)1, 2, 3 | 5.1 | 9.2 |
| Equity/assets ratio (%)2, 3 | 40.1 | 39.4 |
| Net debt/adjusted EBITDA rate (multiple, rolling 12 months)1 | 1.01 | 1.15 |
| Owners' equity per share (SEK) 2, 3 | 24.99 | 23.38 |
1) Includes continuing and discontinued operations.
2) Key ratios effected by provision for the settlement proposed by and agreed with the US and Dutch authorities. See Note 4 for further information.
3) Equity is adjusted with proposed ordinary dividend, see the Annual and Sustainability Report 2017 section Definitions for key ratio definitions. 4) Restated for comparability, see Note 1.
In addition to financial performance measures prepared in accordance with IFRS, Telia Company presents non-IFRS financial performance measures, for example EBITDA, Adjusted EBITDA, Adjusted operating income, continuing operations, CAPEX, CAPEX excluding license and spectrum fees, Cash CAPEX, Free cash flow, Operational free cash flow, Net debt, Net debt/Adjusted EBITDA ratio and Adjusted EBITDA margin. (Adjustment items were previously named non-recurring items.) These alternative measures are considered to be important performance indicators for investors and other users of the Interim report. The alternative performance measures should be considered as a complement to, but not a substitute for, the information prepared in accordance with IFRS. Telia Company's definitions of these
non-IFRS measures are described in this note and in the Annual and Sustainability Report 2017. These terms may be defined differently by other companies and are therefore not always comparable to similar measures used by other companies.
Telia Company considers EBITDA as a relevant measure to be able to understand profit generation before investments in fixed assets. To assist the understanding of Telia Company's underlying financial performance we believe it is also useful to analyze adjusted EBITDA. Adjustment items within EBITDA are specified in Note 3.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Operating income | 3,398 | 3,542 | 13,768 |
| Income from associated companies and joint ventures | -145 | -561 | -778 |
| Total depreciation/amortization/write-down | 3,053 | 2,905 | 12,528 |
| EBITDA | 6,305 | 5,885 | 25,519 |
| Adjustment items within EBITDA (Note 3) | 189 | 164 | -368 |
| Adjusted EBITDA | 6,495 | 6,049 | 25,151 |
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Operating income | 659 | 5,278 | 8,433 |
| Income from associated companies and joint ventures | -10 | -1 | -8 |
| Total depreciation/amortization/write-down | -10 | – | – |
| Gain/loss on disposals | -3,306 | – | -193 |
| EBITDA | -2,667 | 5,277 | 8,233 |
| Adjustment items within EBITDA (Note 3) | 3,354 | -4,090 | -3,971 |
| Adjusted EBITDA | 687 | 1,187 | 4,262 |
1) Restated for comparability, see Note 1.
Telia Company considers Adjusted operating income, continuing operations, as a relevant to be able to understand the underlying financial performance of Telia Company. Adjustment items within operating income, continuing operations are specified in Note 3.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Operating income | 3,398 | 3,542 | 13,768 |
| Adjustment items within Operating income (Note 3) | 189 | 164 | 1,013 |
| Adjusted operating income, continuing operations | 3,588 | 3,706 | 14,781 |
1) Restated for comparability, see Note 1.
Telia Company considers CAPEX, CAPEX excluding license and spectrum fees and Cash CAPEX as relevant measures to understand the group's investments in intangible and tangible non-current assets
(excluding goodwill, assets acquired in business combinations and asset retirement obligations).
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Continuing operations | |||
| Investments in intangible assets | 622 | 493 | 4,014 |
| Investments in property, plant and equipment | 2,163 | 2,405 | 11,293 |
| CAPEX | 2,785 | 2,898 | 15,307 |
| Net of not paid investments and additional payments from previ ous periods2 |
59 | 52 | -1,162 |
| Cash CAPEX | 2,844 | 2,951 | 14,144 |
| CAPEX | 2,785 | 2,898 | 15,307 |
| Deduct: investments in license and spectrum fees | 0 | – | -457 |
| CAPEX excluding license and spectrum fees | 2,785 | 2,898 | 14,849 |
| SEK in millions | Jan-Mar | Jan-Mar | Jan-Dec |
|---|---|---|---|
| 2018 | 2017 | 2017 | |
| Discontinued operations | |||
| Investments in intangible assets | 27 | 18 | 178 |
| Investments in property, plant and equipment | 146 | 287 | 1,609 |
| CAPEX | 173 | 304 | 1,787 |
| Net of not paid investments and additional payments from previous periods |
146 | 77 | 109 |
| Cash CAPEX | 319 | 382 | 1,896 |
1) Restated for comparability, see Note 1.
2) For 2017 mainly attributable to acquired rights for the ice hockey rights in Finland.
Telia Company considers Free cash flow as a relevant measure to be able to understand the group's cash flow from operating activities and after CAPEX.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Cash flow from operating activities | 7,546 | 7,418 | 23,204 |
| Cash CAPEX (paid Intangible and tangible assets) | -3,163 | -3,332 | -16,040 |
| Free cash flow, continuing and discontinued operations | 4,383 | 4,087 | 7,164 |
1) Restated for comparability, see Note 1.
Telia Company considers Operational free cash flow as a relevant measure to be able to understand the cash flows that Telia Company is in control of. From the reported free cash flow from continuing operations dividends from associated companies are deducted as these are dependent on the approval of boards and the annual general meetings of the associated companies.
Licenses and spectrum payments are excluded as they generally refer to a longer period than just one year. Telia Company intends to distribute a minimum of 80 percent of free cash flow from continuing operations, excluding licenses and spectrum fees.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20172 |
Jan-Dec 20172 |
|---|---|---|---|
| Cash flow from operating activities from continuing operations | 7,057 | 6,811 | 25,948 |
| Deduct: Cash CAPEX from continuing operations | -2,844 | -2,951 | -14,144 |
| Free cash flow, continuing operations | 4,213 | 3,861 | 11,804 |
| Add back: Cash CAPEX for licenses and spectrum fees from con tinuing operations |
45 | 80 | 561 |
| Free cash flow that forms the basis for dividend1 | 4,257 | 3,941 | 12,365 |
| Deduct: Dividends from associates from continuing operations | -1 | -4 | -2,851 |
| Add back: Taxes paid on dividends from associates from continu ing operations |
0 | 0 | 173 |
| Operational free cash flow | 4,256 | 3,937 | 9,687 |
1) Dividend amount to be proposed by the Board of Directors and decided on by the Annual General Meeting.
2) Restated for comparability, see Note 1.
Telia Company considers Net debt to be a relevant measure to be able to understand the group's indebtedness. Net debt is specified in Note 11.
Telia Company considers net debt in relation to adjusted EBITDA as a relevant measure to be able to understand the group's financial position.
| SEK in millions, except for multiple | Mar 31, 2018 |
Mar 31, 20171 |
Dec 31, 20171 |
|---|---|---|---|
| Net debt | 28,513 | 47,890 | 33,823 |
| Adjusted EBITDA continuing operations | 6,495 | 6,049 | 25,151 |
| Adjusted EBITDA continuing operations previous year | 19,102 | 19,619 | |
| Adjusted EBITDA discontinued operations | 687 | 1,187 | 4,262 |
| Adjusted EBITDA discontinuing operations previous year | 3,062 | 4,105 | |
| Deduct disposed operations | -1,200 | -758 | -109 |
| Adjusted EBITDA rolling 12 months excluding disposed operations | 28,145 | 30,202 | 29,304 |
| Net debt/adjusted EBITDA ratio (multiple) | 1.01x | 1.59x | 1.15x |
1) Restated for comparability, see Note 1.
Telia Company considers Adjusted EBITDA in relation to net sales as a relevant measure to be able to understand the group's profit generation and to be used as a comparative benchmark.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 20171 |
Jan-Dec 20171 |
|---|---|---|---|
| Net sales | 19,852 | 19,227 | 79,790 |
| Adjusted EBITDA | 6,495 | 6,049 | 25,151 |
| Adjusted EBITDA margin (%), continuing operations | 32.7 | 31.5 | 31.5 |
1) Restated for comparability, see Note 1.
| SEK in millions | Jan-Mar 2018 |
Jan-Mar 2017 |
Jan-Dec 2017 |
|---|---|---|---|
| Net sales | 118 | 93 | 413 |
| Gross income | 118 | 93 | 413 |
| Operating expenses and other operating income, net | -286 | 3,876 | 5,184 |
| Operating income | -168 | 3,968 | 5,597 |
| Financial income and expenses | -3,254 | -1,530 | 2,093 |
| Income after financial items | -3,422 | 2,438 | 7,689 |
| Appropriations | 3,237 | 1,385 | 7,000 |
| Income before taxes | -184 | 3,822 | 14,689 |
| Income taxes | -44 | -305 | -536 |
| Net income | -228 | 3,517 | 14,153 |
Operating expenses and other operating income, net, for the first quarter of 2017 included the SEK 4.1 billion adjustment of the provision for the settlement with the US and Dutch authorities regarding the Uzbekistan investigations, which also affected the full year 2017. For the full year 2017 the line item also includes the net effect derived from the transfer of parts of the original provision to other group companies amounting to SEK 2.2 billion and the net income effect of SEK 0.3 billion related to the adjustment of the provision for the final settlement. See the Annual and Sustainability Report 2017 for further information.
Financial income and expenses in the first quarter 2018 were negatively impacted by foreign exchange losses mainly related to EUR loans. The first quarter of 2018 and of 2017 were also impacted by write-downs of shares in subsidiaries amounting to SEK 298 million and SEK 1,556 million respectively whilst full year 2017 was also positively impacted by dividends from subsidiaries offset by impairments of subsidiaries. See the Annual and Sustainability Report 2017 for further information.
Appropriations in the first quarter of 2018 increased due to a higher amount of net reversal of the equalization fund and increased group contributions from the Swedish subsidiaries.
| SEK in millions | Mar 31, 2018 |
Dec 31, 2017 |
|---|---|---|
| Assets | ||
| Non-current assets | 157,916 | 156,592 |
| Current assets | 69,407 | 67,556 |
| Total assets | 227,323 | 224,148 |
| Equity and liabilities | ||
| Restricted shareholders' equity | 15,713 | 15,713 |
| Non-restricted shareholders' equity | 70,791 | 70,687 |
| Total shareholders' equity | 86,503 | 86,400 |
| Untaxed reserves | 7,004 | 8,029 |
| Provisions | 2,205 | 2,153 |
| Long-term liabilities | 85,874 | 85,450 |
| Short-term liabilities and short-term provisions | 45,737 | 42,116 |
| Total equity and liabilities | 227,323 | 224,148 |
Non-current assets increased mainly due to increased intra-group receivables and investments in subsidiaries, partly offset by the disposal of the holding in Spotify also affecting Current assets (Cash and bank).
Long-term liabilities remained flat but was underlying negatively affected by foreign exchange rate, offset by reclassification between long and short-term debt also affecting short-term liabilities, which were further impacted by increased intra-group liabilities.
Financial investments 2018 were SEK 1,062 million (308) mainly affected by the acquisition of Inmics Oy.
Telia Company operates in a broad range of geographical product and service markets in the highly competitive and regulated telecommunications industry. Telia Company has defined risk as anything that could have a material adverse effect on the achievement of Telia Company's goals. Risks can be threats, uncertainties or lost opportunities relating to Telia Company's current or future operations or activities. Risk management is an integrated part of Telia Company's business planning process and monitoring of business performance. Telia Company has an established risk management
framework in place to regularly identify, analyze, assess and report business, financial as well as ethics and sustainability risks and uncertainties, and to mitigate such risks when appropriate. A Risk Universe consisting of four categories and over thirty risk areas are used to aggregate and categorize risks identified across the organization within the risk management framework, see below. For further information regarding details on risk exposure and risk management, see the Annual and Sustainability Report 2017, Directors Report, section Risk and uncertainties.
42
Stockholm, April 20, 2018
Johan Dennelind President and CEO
This report has not been subject to review by Telia Company's auditors.
This report contains statements concerning, among other things, Telia Company's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent Telia Company's future expectations. Telia Company believes that the expectations reflected in these forward-looking statements are based on reasonable assumptions; however, forward-looking statements involve inherent risks and uncertainties, and a number of important factors could cause actual results or outcomes to differ materially from those expressed in any forwardlooking statement. Such important factors include, but
may not be limited to: Telia Company's market position; growth in the telecommunications industry; and the effects of competition and other economic, business, competitive and/or regulatory factors affecting the business of Telia Company, its associated companies and joint ventures, and the telecommunications industry in general. Forward-looking statements speak only as of the date they were made, and, other than as required by applicable law, Telia Company undertakes no obligation to update any of them in light of new information or future events.
Adjustment items comprise capital gains and losses, impairment losses, restructuring programs (costs for phasing out operations and personnel redundancy costs) or other costs with the character of not being part of normal daily operations.
Broadband revenues: External net sales related to fixed broadband services.
Business solutions: External net sales related to fixed business networking and communication solutions.
CAPEX: An abbreviation of "Capital Expenditure". Investments in intangible and tangible non-current assets but excluding goodwill, intangible and tangible non-current assets acquired in business combinations and asset retirement obligations.
Change local organic (%): The change in Net sales/External service revenues/Adjusted EBITDA, excluding effects from changes in currency rates compared to the group's reporting currency (SEK) and acquisitions/disposals, compared to the same period previous year.
EBITDA: An abbreviation of "Earnings before Interest, Tax, Depreciation and Amortization." Equals operating income before depreciation, amortization and impairment losses and before income from associated companies and joint ventures.
Free cash flow: The total of cash flow from operating activities and cash CAPEX.
Interconnect revenues: External net sales related to mobile termination.
Internal net sales: Group internal net sales.
Mobile subscription revenues: External net sales related to voice, messaging, data and content (including machine-to-machine).
Net debt: Interest-bearing liabilities less derivatives recognized as financial assets (and hedging long-term and short-term borrowings) and related credit support annex (CSA), less 50 percent of hybrid capital (which, consistent with market practice for the type of instrument, is treated as equity), less short-term investments, longterm bonds at fair value through OCI and cash/cash equivalents.
Net debt/adjusted EBITDA ratio (multiple): Net debt divided by adjusted EBITDA rolling 12 months and excluding disposed operations.
Operational free cash flow: Free cash flow from continuing operations excluding cash CAPEX for licenses and dividends from associated companies net of taxes.
Other fixed service revenues: External net sales of fixed services including fiber installation, wholesale and other infrastructure services
Other mobile service revenues: External net sales related to visitors' roaming, wholesale and other.
Return on capital employed: Operating income, including impairments and gains/losses on disposals, plus financial revenues excluding forex exchange gains expressed as a percentage of average capital employed.
Telephony revenues: External net sales related to fixed telephony services.
Total equipment revenues: External equipment net sales.
Total service revenues: External net sales excluding equipment sales.
TV revenues: External net sales related to TV services.
For definitions of other alternative performance measures, see the Annual and Sustainability Report 2017.
In this report, comparative figures are provided in parentheses following the operational and financial results and refer to the same item in the corresponding period last year, unless otherwise stated.
Interim Report January-June 2018 July 20, 2018
Interim Report January-September 2018 October 19, 2018
Interim Report January-December 2018 January 25, 2019
Telia Company AB www.teliacompany.com Tel. +46 8 504 550 00
This information is information that Telia Company AB is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact person set out above, at 07:00 CET on April 20, 2018.
Telia Company AB (publ) Corporate Reg. No. 556103-4249, Registered office: Stockholm Tel. +46 8 504 550 00. www.teliacompany.com
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