Earnings Release • Jan 29, 2015
Earnings Release
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TeliaSonera Year-end Report January–December 2014
| SEK in millions, except key ratios, per share data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 26,606 | 26,560 | 0.2 | 101,060 | 101,870 | -0.8 |
| Change (%) local organic | -2.2 | -1.8 | ||||
| of which service revenues (external) | 23,264 | 23,215 | 0.2 | 90,951 | 91,046 | -0.1 |
| EBITDA1) excl. non-recurring items²) | 8,604 | 8,728 | -1.4 | 35,223 | 35,584 | -1.0 |
| Margin (%) | 32.3 | 32.9 | 34.9 | 34.9 | ||
| Operating income | 4,525 | 4,560 | -0.8 | 22,679 | 24,462 | -7.3 |
| Operating income excl. non-recurring | ||||||
| items | 6,757 | 7,100 | -4.8 | 26,656 | 28,534 | -6.6 |
| Income after financial items | 4,027 | 3,821 | 5.4 | 20,107 | 21,368 | -5.9 |
| Net income | 2,870 | 2,695 | 6.5 | 15,599 | 16,767 | -7.0 |
| of which attributable to owners of the | ||||||
| parent | 2,938 | 2,190 | 34.2 | 14,502 | 14,970 | -3.1 |
| Earnings per share (SEK) | 0.68 | 0.51 | 34.2 | 3.35 | 3.46 | -3.1 |
| RoCE (%, rolling 12 months) | 12.2 | 13.5 | 12.2 | 13.5 | ||
| CAPEX-to-sales (%) | 21.2 | 22.8 | 16.5 | 16.0 | ||
| Net debt | 59,320 | 55,774 | 59,320 | 55,774 | ||
| Free cash flow | 1,635 | 2,126 | -23.1 | 13,046 | 16,310 | -20.0 |
Additional information available at www.teliasonera.com. 1) Please refer to page 34 for definitions. 2) Non-recurring items; see table on page 25.
In this report, comparative figures are provided in parentheses following the operational and financial results and refer to the same item in the fourth quarter of 2013, unless otherwise stated. New segment and reporting structure due to new organization as of April 1, 2014, for more information please see page 24.
" In 2014, growth in our industry remained modest, but despite some revenue headwind, TeliaSonera maintained an EBITDA margin, excluding non-recurring items, of 34.9 percent, on par with last year and in line with our projections.
In the fourth quarter, organic service revenues declined by 2.2 percent, impacted by a more challenging macroeconomic environment in Eurasia. Due to the somewhat slower overall revenue development, group EBITDA declined by 3.5 percent on a comparable basis.
In Sweden, we continued to upgrade our networks in order to meet the increasing customer demand for high speed internet access. In December we celebrated the five year anniversary of our mobile 4G launch and our network now covers more than 99 percent of the population. Mobile service revenue growth improved to nearly 2 percent, supported by further increase in data usage. The share of 4G enabled handsets in our networks continued to rise and total 4G traffic surpassed 3G. Our fiber network was further expanded in the quarter, now reaching more than 1.1 million Swedish households.
We continue to seek structural opportunities within our footprint with the aim to strengthen our core operations. In early December, we entered into an agreement with Telenor to merge our respective Danish operations into a new joint venture. This market has been in obvious need for consolidation and by this transaction we establish a strong challenger with major synergy potential.
In Eurasia, profitability declined slightly compared to the corresponding period last year, as increased uncertainty regarding overall economic growth impacted our operations in key markets like Kazakhstan and Azerbaijan. We continue to monitor the situation closely and follow the development market by market.
Following a period of change, we have now started our journey towards the new TeliaSonera. We have high ambitions for the future and in 2015 we will execute on our investment plans to drive growth and strengthen long term competitiveness. This involves a further push for fiber in Sweden, new B2B solutions and upgrade of networks across our footprint. We will step up the pace in our business transformation, which is necessary in order to reduce complexity and bring down cost.
We remain determined to create a long term sustainable business as this is important to us and all our stakeholders. In the past year, we have made significant progress in this field by strengthening our governance and processes, areas that we will continuously develop also in the future. Our commitment was supported and visible in our latest employee survey.
In line with our dividend policy and based on the performance in 2014, also reflecting our solid financial position, the board proposes a maintained dividend of SEK 3.00 per share, corresponding to 90 percent payout of earnings per share.
In 2015, we target EBITDA around the same level as in 2014, excluding non-recurring items, in local currencies, excluding acquisitions and disposals, and foresee CAPEX of around SEK 17 billion, excluding license and spectrum fees."
Stockholm, January 29, 2015
Johan Dennelind President and CEO
This report has not been subject to review by TeliaSonera's auditors.
EBITDA, excluding non-recurring items, in local currencies, excluding acquisitions and disposals, is expected to be around the same level as in 2014.
CAPEX, excluding license and spectrum fees, is expected to be around SEK 17 billion. Currency fluctuations may impact the reported number in Swedish krona.
In line with the dividend policy, TeliaSonera targets to distribute at least SEK 3.00 for fiscal year 2015.
Net sales in local currencies, excluding acquisitions and disposals, decreased 2.2 percent. In reported currency, net sales increased 0.2 percent to SEK 26,606 million (26,560). The positive effect of exchange rate fluctuations was 2.0 percent and the positive effect of acquisitions and disposals was 0.4 percent. Service revenues in local currencies, excluding acquisitions and disposals, decreased 2.2 percent.
In region Sweden, net sales excluding acquisitions and disposals increased 1.9 percent. Net sales including acquisitions and disposals increased 2.9 percent to SEK 9,661 million (9,386).
In region Europe, net sales in local currencies, excluding acquisitions and disposals, decreased 8.0 percent. In reported currency, net sales decreased 4.2 percent to SEK 10,382 million (10,834).
In region Eurasia, net sales in local currencies, excluding acquisitions and disposals, declined 0.1 percent. Net sales in reported currency increased 1.7 percent to SEK 5,328 million (5,241).
The number of subscriptions in the subsidiaries increased by 1.0 million from the end of the fourth quarter of 2013 to 72.8 million. During the quarter, the total number of subscriptions increased by 0.4 million.
EBITDA, excluding non-recurring items, decreased 3.5 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 1.4 percent to SEK 8,604 million (8,728). The EBITDA margin, excluding non-recurring items, decreased to 32.3 percent (32.9).
Income from associated companies and joint ventures, decreased to SEK 1,546 million (1,724).
Operating income, excluding non-recurring items, decreased 4.8 percent to SEK 6,757 million (7,100).
Non-recurring items affecting operating income totaled SEK -2,232 million (-2,540), mainly related to non-cash impairment charge related to goodwill and other fixed assets in Tajikistan, Georgia and Moldova. Financial items totaled SEK -498 million (-739) of which SEK -574 million (-721) related to net interest expenses.
Income taxes increased to SEK -1,157 million (-1,126). The effective tax rate was 28.7 percent (29.5). The fourth quarter 2014 was impacted by a revaluation effect of the net deferred tax assets in Spain related to the enacted tax rate reduction. In the fourth quarter of 2013 the effective tax rate was heavily impacted by the enacted tax rate reduction in Finland. The effective tax rate for 2014 increased due to reduced earnings from associated companies.
Non-controlling interests in subsidiaries decreased to SEK -68 million (505).
Net income attributable to owners of the parent company increased 34.2 percent to SEK 2,938 million (2,190) and earnings per share to SEK 0.68 (0.51).
CAPEX decreased to SEK 5,652 million (6,047) and the CAPEX-to-sales ratio decreased to 21.2 percent (22.8). CAPEX excluding license and spectrum fees increased to SEK 5,463 million (5,015) and the CAPEXto-sales ratio, excluding license and spectrum fees, increased to 20.5 percent (18.9).
Free cash flow decreased to SEK 1,635 million (2,126) due to changes in working capital.
Net debt increased to SEK 59,320 million at the end of the fourth quarter (59,301 at the end of the third quarter of 2014). The net debt/EBITDA ratio was 1.68 (1.68 at the end of the third quarter of 2014).
The equity/assets ratio was 38.0 percent (40.1 percent at the end of the third quarter of 2014).
Net sales in local currencies, excluding acquisitions and disposals, decreased 1.8 percent. In reported currency, net sales decreased 0.8 percent to SEK 101,060 million (101,870). The positive effect of exchange rate fluctuations was 0.8 percent and the positive effect of acquisitions and disposals was 0.2 percent. Service revenues in local currencies, excluding acquisitions and disposals, decreased 1.0 percent.
EBITDA, excluding non-recurring items, decreased 1.0 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 1.0 percent to SEK 35,223 million (35,584). The EBITDA margin, excluding non-recurring items, was flat at 34.9 percent (34.9).
Income from associated companies and joint ventures, decreased to SEK 4,593 million (6,021).
Operating income, excluding non-recurring items, decreased 6.6 percent to SEK 26,656 million (28,534).
Non-recurring items affecting operating income totaled SEK -3,976 million (-4,072).
Financial items totaled SEK -2,573 million (-3,094) of which SEK -2,538 million (-2,918) related to net interest expenses.
Income taxes decreased to SEK -4,508 million (-4,601). The effective tax rate was 22.4 percent (21.5), impacted by reduced earnings from associated companies, non-tax deductible impairment losses and write-downs in Eurasia and a revaluation effect of the net deferred tax assets in Spain related to the enacted tax rate reduction. In the fourth quarter of 2013, the effective tax rate was heavily impacted by the enacted tax rate reduction in Finland. The effective tax rate going forward is expected to be around 21 percent.
Non-controlling interests in subsidiaries decreased to SEK 1,097 million (1,797).
Net income attributable to owners of the parent company decreased 3.1 percent to SEK 14,502 million (14,970) and earnings per share to SEK 3.35 (3.46).
CAPEX increased to SEK 16,679 million (16,332) and the CAPEX-to-sales ratio increased to 16.5 percent (16.0). CAPEX excluding license and spectrum fees increased to SEK 15,325 million (14,565) and the CAPEX-to-sales ratio, excluding license and spectrum fees, increased to 15.2 percent (14.3).
Free cash flow decreased to SEK 13,046 million (16,310) due to higher cash CAPEX and changes in working capital.
• On February 11, 2014, TeliaSonera announced that it had issued a 5 year Eurobond of EUR 500 million maturing in February 2019, under its existing EUR 11 billion EMTN (Euro Medium Term Note) program. The Re-offer yield was set at 1.483 percent per annum equivalent to Euro Mid-swaps +45 basis points.
price of SEK 46.0244 to cover commitments under the "Long Term Incentive Program 2011/2014."
up to SEK 6–7 billion in 2015–2016 in two main areas: To increase competitiveness and reduce cost, and acceleration of the fiber roll-out in Sweden, new B2B offerings, as well as to upgrade data networks in Eurasia.
• On January 16, 2015, TeliaSonera announced that in the fourth quarter of 2014, operating income would be impacted by non-recurring items of SEK -2,232 million, of which net SEK -1,973 million relate to non-cash items.
The TeliaSonera share is listed on Nasdaq Stockholm and Nasdaq Helsinki. The share's settlement price in Stockholm decreased 5.9 percent in 2014, from SEK 53.55 to SEK 50.40. The highest share price was SEK 53.20 (54.90) and the lowest SEK 44.32 (41.80). The number of shareholders decreased from 529,394 to 510,566. Ownership by the Swedish state was 37.3 percent and the Finnish state's holding was 7.8 percent. Holdings outside Sweden and Finland increased to 28.8 percent from 25.6 percent.
TeliaSonera shall target to distribute an annual dividend of at least SEK 3 per share for the fiscal years 2014 and 2015. The company shall continue to target a solid investment grade long-term credit rating (A- to BBB+).
For 2014, the Board of Directors proposes to the Annual General Meeting (AGM) an ordinary dividend of SEK 3.00 (3.00), totaling SEK 13.0 billion (13.0), or 90 percent (87) of net income attributable to owners of the parent company.
The Board of Directors proposes that the final day for trading in shares entitling shareholders to dividend be set for April 8, 2015, and that the first day of trading in shares excluding rights to dividend be set for April 9, 2015. The recommended record date at Euroclear Sweden for the right to receive dividend will be April 10, 2015. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on April 15, 2015.
The Annual General Meeting (AGM) will be held on April 8, 2015, at 14:00 CET at Waterfront Congress Centre, Stockholm. Notice of the meeting will be posted on www.teliasonera.com, and advertised in the newspapers at the beginning of March 2015. The record date entitling shareholders to attend the meeting will be March 31, 2015. Shareholders may file notice of intent to attend the AGM from the beginning of March 2015. TeliaSonera must receive notice of attendance no later than March 31, 2015.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 9,661 | 9,386 | 2.9 | 36,456 | 36,199 | 0.7 |
| Change (%) local organic | 1.9 | 0.2 | ||||
| of which service revenues (external) | 8,427 | 8,381 | 0.6 | 32,897 | 33,123 | -0.7 |
| EBITDA excl. non-recurring items | 3,460 | 3,445 | 0.4 | 14,311 | 14,514 | -1.4 |
| Margin (%) | 35.8 | 36.7 | 39.3 | 40.1 | ||
| Income from associated companies | 1 | -3 | -5 | -14 | ||
| Operating income | 2,147 | 2,072 | 3.6 | 9,746 | 9,580 | 1.7 |
| Operating income excl. non-recurring | ||||||
| items | 2,356 | 2,413 | -2.4 | 10,130 | 10,348 | -2.1 |
| CAPEX | 1,573 | 1,097 | 43.4 | 4,936 | 4,414 | 11.8 |
| CAPEX-to-sales ratio | 16.3 | 11.7 | 13.5 | 12.2 | ||
| EBITDA-CAPEX | 1,888 | 2,349 | -19.6 | 9,375 | 10,100 | -7.2 |
| Subscriptions, (thousands) | ||||||
| Mobile | 6,578 | 6,546 | 0.5 | 6,578 | 6,546 | 0.5 |
| Fixed telephony | 2,054 | 2,209 | -7.0 | 2,054 | 2,209 | -7.0 |
| Broadband | 1,275 | 1,208 | 5.5 | 1,275 | 1,208 | 5.5 |
| TV | 697 | 641 | 8.7 | 697 | 641 | 8.7 |
| Employees | 6,740 | 6,756 | -0.2 | 6,740 | 6,756 | -0.2 |
Net sales, excluding acquisitions and disposals, increased 1.9 percent. Net sales including acquisitions and disposals increased 2.9 percent to SEK 9,661 million (9,386). The positive effect of acquisitions and disposals was 1.0 percent. Service revenues, excluding acquisitions and disposals, declined 0.6 percent.
EBITDA, excluding non-recurring items, acquisitions and disposals, was unchanged. EBITDA, excluding non-recurring items, but including acquisitions and disposals, increased 0.4 percent to SEK 3,460 million (3,445). The EBITDA margin decreased to 35.8 percent (36.7).
CAPEX increased to SEK 1,573 million (1,097) and CAPEX, excluding licenses and spectrum fees, increased to SEK 1,573 million (1,097).
Mobile service revenues increased 1.5 percent, of which billed revenues grew 2.3 percent, supported by strong B2C sales and temporarily less pressure on B2B sales in the quarter.
The number of mobile subscriptions grew by 18,000 in the quarter, while churn levels were reduced compared to the corresponding quarter last year. Blended ARPU grew 3 percent to SEK 190, driven by continued migration to the new price model and increased data usage.
Fixed service revenues decreased 3.0 percent, as broadband and TV revenues could not fully compensate for the decline in traditional telephony revenues.
In the quarter the number of fixed broadband and TV subscriptions grew by 15,000 and 16,000, respectively.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 10,382 | 10,834 | -4.2 | 39,836 | 41,360 | -3.7 |
| Change (%) local organic | -8.0 | -7.3 | ||||
| of which service revenues (external) | 8,388 | 8,291 | 1.2 | 33,017 | 32,840 | 0.5 |
| EBITDA excl. non-recurring items | 2,467 | 2,448 | 0.8 | 9,772 | 9,740 | 0.3 |
| Margin (%) | 23.8 | 22.6 | 24.5 | 23.5 | ||
| Income from associated companies | 25 | 34 | -25.0 | 108 | 110 | -1.2 |
| Operating income | 879 | -114 | 4,401 | 3,498 | 25.8 | |
| Operating income excl. non-recurring | ||||||
| items | 1,054 | 1,208 | -12.7 | 4,759 | 5,126 | -7.2 |
| CAPEX | 1,727 | 2,586 | -33.2 | 4,699 | 5,368 | -12.5 |
| CAPEX-to-sales ratio | 16.6 | 23.9 | 11.8 | 13.0 | ||
| EBITDA-CAPEX | 740 | -137 | 5,073 | 4,372 | 16.0 | |
| Subscriptions, (thousands) | ||||||
| Mobile | 14,113 | 13,950 | 1.2 | 14,113 | 13,950 | 1.2 |
| Fixed telephony | 980 | 1,038 | -5.6 | 980 | 1,038 | -5.6 |
| Broadband | 1,415 | 1,283 | 10.3 | 1,415 | 1,283 | 10.3 |
| TV | 854 | 789 | 8.3 | 854 | 789 | 8.3 |
| Employees | 10,917 | 11,120 | -1.8 | 10,917 | 11,120 | -1.8 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 8.0 percent. In reported currency, net sales decreased 4.2 percent to SEK 10,382 million (10,834). The positive effect of exchange rate fluctuations was 3.7 percent and the positive effect of acquisitions and disposals was 0.1 percent. Service revenues in local currencies, excluding acquisitions and disposals, decreased 2.8 percent.
EBITDA, excluding non-recurring items, decreased 3.3 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 0.8 percent to SEK 2,467 million (2,448). The EBITDA margin rose to 23.8 percent (22.6).
CAPEX decreased to SEK 1,727 million (2,586) and CAPEX, excluding licenses and spectrum fees, increased to SEK 1,727 million (1,623).
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 3,360 | 3,278 | 2.5 | 12,905 | 12,596 | 2.5 |
| Change (%) local organic | -2.0 | -2.6 | ||||
| of which service revenues (external) | 2,969 | 2,889 | 2.8 | 11,610 | 11,232 | 3.4 |
| EBITDA excl. non-recurring items | 876 | 932 | -5.9 | 3,925 | 3,850 | 2.0 |
| Margin (%) | 26.1 | 28.4 | 30.4 | 30.6 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 3,365 | 3,345 | 0.6 | 3,365 | 3,345 | 0.6 |
| Fixed telephony | 99 | 108 | -8.3 | 99 | 108 | -8.3 |
| Broadband | 561 | 532 | 5.5 | 561 | 532 | 5.5 |
| TV | 481 | 436 | 10.3 | 481 | 436 | 10.3 |
Service revenues declined 1.8 percent in local currency, excluding acquisitions and disposals. Higher mobile billed revenues was offset by lower interconnect revenues, while fixed service revenues were burdened by lower traditional telephony revenues.
Blended mobile ARPU fell 6.1 percent, compared to the corresponding quarter last year.
The EBITDA margin, excluding non-recurring items, decreased to 26.1 percent (28.4), partly related to higher costs in customer operations.
The number of subscriptions in fixed broadband and TV grew by 8,000 and 4,000, respectively, in the quarter. The number of mobile subscriptions grew by 3,000 in the quarter and by 20,000 during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 1,799 | 1,742 | 3.3 | 6,864 | 7,056 | -2.7 |
| Change (%) local organic | 3.0 | 0.3 | ||||
| of which service revenues (external) | 1,417 | 1,408 | 0.6 | 5,655 | 5,904 | -4.2 |
| EBITDA excl. non-recurring items | 543 | 511 | 6.3 | 2,130 | 2,144 | -0.7 |
| Margin (%) | 30.2 | 29.3 | 31.0 | 30.4 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 1,600 | 1,612 | -0.7 | 1,600 | 1,612 | -0.7 |
Service revenues grew 0.3 percent in local currency, excluding acquisitions and disposals, supported by continued migration to data centric price plans. Over 80 percent of the consumer postpaid base is now migrated over to the new price plans.
The EBITDA margin, excluding non-recurring items, increased to 30.2 percent (29.3), mainly due to lower subscriber acquisition costs and more sales in own channels.
The number of mobile subscriptions was reduced by 11,000 in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 1,574 | 1,431 | 10.0 | 5,761 | 5,325 | 8.2 |
| Change (%) local organic | 3.5 | 1.3 | ||||
| of which service revenues (external) | 1,093 | 1,032 | 5.9 | 4,272 | 4,098 | 4.3 |
| EBITDA excl. non-recurring items | 214 | 199 | 7.6 | 771 | 731 | 5.4 |
| Margin (%) | 13.6 | 13.9 | 13.4 | 13.7 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 1,581 | 1,522 | 3.9 | 1,581 | 1,522 | 3.9 |
| Fixed telephony | 122 | 121 | 0.8 | 122 | 121 | 0.8 |
| Broadband | 114 | 99 | 15.6 | 114 | 99 | 15.6 |
| TV | 20 | 18 | 12.7 | 20 | 18 | 12.7 |
Service revenues declined 0.1 percent in local currency, excluding acquisitions and disposals. Mobile service revenues were impacted by lower interconnect revenues, while fixed service revenues increased.
The EBITDA margin, excluding non-recurring items, remained more or less flat at 13.6 percent (13.9).
The number of mobile subscriptions grew by 15,000 in the quarter and by 59,000 during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 798 | 744 | 7.1 | 2,950 | 2,911 | 1.3 |
| Change (%) local organic | 2.5 | -3.7 | ||||
| of which service revenues (external) | 635 | 630 | 0.7 | 2,474 | 2,514 | -1.6 |
| EBITDA excl. non-recurring items | 265 | 229 | 15.4 | 1,012 | 1,027 | -1.5 |
| Margin (%) | 33.2 | 30.8 | 34.3 | 35.3 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 1,537 | 1,634 | -5.9 | 1,537 | 1,634 | -5.9 |
| Fixed telephony | 468 | 504 | -7.1 | 468 | 504 | -7.1 |
| Broadband | 516 | 430 | 20.0 | 516 | 430 | 20.0 |
| TV | 187 | 172 | 8.7 | 187 | 172 | 8.7 |
Service revenues declined 3.7 percent in local currency, excluding acquisitions and disposals. Mobile service revenues were negatively impacted by price erosion in both the B2B and B2C segment. Fixed service revenues were burdened by lower traditional fixed telephony revenues.
The EBITDA margin, excluding non-recurring items, rose to 33.2 percent (30.8), mainly due to reduced headcount and cost saving activities.
The number of mobile subscriptions fell by 18,000 in the quarter, despite growth in the number of postpaid subscriptions.
The number of fixed broadband subscriptions grew by 27,000 in the quarter and by 86,000 during the year. 7,000 TV subscriptions were added in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 350 | 374 | -6.5 | 1,458 | 1,492 | -2.2 |
| Change (%) local organic | -10.8 | -6.9 | ||||
| of which service revenues (external) | 282 | 268 | 5.4 | 1,132 | 1,088 | 4.0 |
| EBITDA excl. non-recurring items | 111 | 128 | -13.1 | 454 | 449 | 1.1 |
| Margin (%) | 31.7 | 34.1 | 31.2 | 30.1 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 1,113 | 1,083 | 2.8 | 1,113 | 1,083 | 2.8 |
Service revenues grew 0.8 percent in local currency, excluding acquisitions and disposals, as higher billed revenues counteracted lower interconnect revenues.
Blended mobile ARPU decreased 4.3 percent compared to the corresponding quarter last year.
The EBITDA margin, excluding non-recurring items, decreased to 31.7 percent (34.1), partly explained by increased marketing activities.
The number of subscriptions fell by 9,000 in the quarter, while the number of subscriptions grew by 30,000 during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 695 | 683 | 1.7 | 2,630 | 2,599 | 1.2 |
| Change (%) local organic | -3.6 | -4.0 | ||||
| of which service revenues (external) | 524 | 515 | 1.8 | 2,075 | 2,042 | 1.6 |
| EBITDA excl. non-recurring items | 191 | 199 | -4.0 | 855 | 849 | 0.7 |
| Margin (%) | 27.5 | 29.1 | 32.5 | 32.7 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 873 | 865 | 0.9 | 873 | 865 | 0.9 |
| Fixed telephony | 291 | 305 | -4.6 | 291 | 305 | -4.6 |
| Broadband | 224 | 222 | 0.9 | 224 | 222 | 0.9 |
| TV | 166 | 163 | 1.8 | 166 | 163 | 1.8 |
Service revenues declined 2.8 percent in local currency, excluding acquisitions and disposals. Mobile billed revenues increased slightly, fuelled by higher mobile data usage. Fixed service revenue declined, burdened by lower traditional fixed telephony revenues.
The EBITDA margin, excluding non-recurring items, decreased to 27.5 percent (29.1), due to higher marketing and personnel expenses.
The number of fixed broadband and TV subscriptions grew marginally in the quarter while the number of mobile subscriptions increased by 16,000 in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 2,032 | 2,601 | -21.9 | 7,562 | 9,467 | -20.1 |
| Change (%) local organic | -25.5 | -24.1 | ||||
| of which service revenues (external) | 1,469 | 1,549 | -5.2 | 5,799 | 5,961 | -2.7 |
| EBITDA excl. non-recurring items | 267 | 251 | 6.3 | 625 | 690 | -9.4 |
| Margin (%) | 13.1 | 9.7 | 8.3 | 7.3 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 4,044 | 3,889 | 4.0 | 4,044 | 3,889 | 4.0 |
Mobile service revenues fell 9.5 percent in local currency, excluding acquisitions and disposals, due to continued ARPU erosion.
Equipment sales nearly halved in the quarter to SEK 559 million, explained by lower gross intake of subscriptions, changed handset financing scheme and a handset portfolio focused on the low to mid segment, reducing the average price per sold device.
The EBITDA margin, excluding non-recurring items, rose to 13.1 percent (9.7), helped by less low margin equipment sales and lower subscriber acquisition and retention costs. EBITDA in the corresponding quarter last year included positive one-time item of SEK 179 million related to tower sales.
The number of subscriptions grew by 13,000 in the quarter, supported by lower churn levels, and 155,000 subscriptions were added during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 5,328 | 5,241 | 1.7 | 20,458 | 20,414 | 0.2 |
| Change (%) local organic | -0.1 | 4.4 | ||||
| of which service revenues (external) | 5,047 | 5,085 | -0.7 | 19,473 | 19,797 | -1.6 |
| EBITDA excl. non-recurring items | 2,702 | 2,778 | -2.7 | 10,859 | 10,804 | 0.5 |
| Margin (%) | 50.7 | 53.0 | 53.1 | 52.9 | ||
| Income from associated companies | 0 | 6 | -92.2 | 26 | 19 | 40.3 |
| Operating income | 131 | 1,541 | -91.5 | 4,936 | 6,640 | -25.7 |
| Operating income excl. non-recurring | ||||||
| items | 1,953 | 2,138 | -8.7 | 7,819 | 7,849 | -0.4 |
| CAPEX | 1,577 | 1,267 | 24.4 | 4,724 | 4,712 | 0.3 |
| CAPEX-to-sales ratio | 29.6 | 24.2 | 23.1 | 23.1 | ||
| EBITDA -CAPEX | 1,125 | 1,510 | -25.5 | 6,135 | 6,092 | 0.7 |
| Subscriptions, (thousands) | ||||||
| Mobile | 44,866 | 44,177 | 1.6 | 44,866 | 44,177 | 1.6 |
| Employees | 5,273 | 4,904 | 7.5 | 5,273 | 4,904 | 7.5 |
Net sales in local currencies, excluding acquisitions and disposals, declined 0.1 percent. In reported currency, net sales increased 1.7 percent to SEK 5,328 million (5,241). The positive effect of exchange rate fluctuations was 1.8 percent. Service revenues in local currencies, excluding acquisitions and disposals, decreased 2.4 percent.
EBITDA, excluding non-recurring items, decreased 4.7 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 2.7 percent to SEK 2,702 million (2,778). The EBITDA margin fell to 50.7 percent (53.0).
CAPEX increased to SEK 1,577 million (1,267) and CAPEX, excluding licenses and spectrum fees, increased to SEK 1,388 million (1,198).
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 1,852 | 2,111 | -12.3 | 7,248 | 8,111 | -10.6 |
| Change (%) local organic | -7.1 | -0.5 | ||||
| of which service revenues (external) | 1,770 | 2,108 | -16.1 | 7,043 | 8,104 | -13.1 |
| EBITDA excl. non-recurring items | 973 | 1,206 | -19.3 | 4,032 | 4,481 | -10.0 |
| Margin (%) | 52.6 | 57.1 | 55.6 | 55.2 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 13,099 | 14,307 | -8.4 | 13,099 | 14,307 | -8.4 |
Service revenues declined 11.2 percent in local currency, excluding acquisitions and disposals, burdened by lower voice and messaging revenues, due to change in market dynamics, lower regulated maximum tariffs and some one-off related items.
The EBITDA margin, excluding non-recurring items, dropped to 52.6 percent (57.1), mainly due to lower service revenues and increased low margin equipment sales.
The number of subscriptions fell by 10,000 in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 968 | 958 | 1.0 | 3,778 | 3,824 | -1.2 |
| Change (%) local organic | -8.2 | -5.3 | ||||
| of which service revenues (external) | 956 | 954 | 0.2 | 3,757 | 3,809 | -1.4 |
| EBITDA excl. non-recurring items | 496 | 505 | -1.8 | 2,042 | 1,912 | 6.8 |
| Margin (%) | 51.2 | 52.7 | 54.0 | 50.0 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 4,567 | 4,379 | 4.3 | 4,567 | 4,379 | 4.3 |
Service revenues declined 9.4 percent in local currency, excluding acquisitions and disposals. Higher data revenues could not compensate for lower voice revenues due to reduced regulated international tariffs, impact from regional campaigns as well as lower incoming traffic from Russia and some one-off related items.
The EBITDA margin, excluding non-recurring items, decreased to 51.2 percent (52.7), due to lower service revenues and somewhat higher sales commissions.
The number of subscriptions grew by 25,000 in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 963 | 821 | 17.4 | 3,613 | 3,118 | 15.9 |
| Change (%) local organic | 15.7 | 21.7 | ||||
| of which service revenues (external) | 962 | 820 | 17.3 | 3,607 | 3,115 | 15.8 |
| EBITDA excl. non-recurring items | 495 | 402 | 23.0 | 1,944 | 1,680 | 15.7 |
| Margin (%) | 51.4 | 49.0 | 53.8 | 53.9 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 8,574 | 8,496 | 0.9 | 8,574 | 8,496 | 0.9 |
Service revenues grew 15.7 percent in local currency, excluding acquisitions and disposals, mainly driven by higher data usage and a larger subscription base.
The EBITDA margin, excluding non-recurring items, increased to 51.4 percent (49.0), helped by higher revenues and cost optimization activities.
The number of subscriptions grew by 139,000 in the quarter, despite a new entrant in the market in December. Ucell launched commercial 4G services during the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 217 | 234 | -7.5 | 857 | 932 | -8.1 |
| Change (%) local organic | -12.3 | -9.5 | ||||
| of which service revenues (external) | 184 | 198 | -6.9 | 708 | 785 | -9.8 |
| EBITDA excl. non-recurring items | 72 | 115 | -37.4 | 364 | 472 | -22.8 |
| Margin (%) | 33.1 | 48.9 | 42.5 | 50.6 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 3,328 | 3,301 | 0.8 | 3,328 | 3,301 | 0.8 |
Service revenues declined 11.7 percent in local currency, excluding acquisitions and disposals, mainly due to a decline in international traffic and increased price competition in some of the regions.
The EBITDA margin, excluding non-recurring items, dropped to 33.1 percent (48.9). Profitability was impacted by lower sales, higher interconnect expenses, increased regulated cost for numbering pool and regional marketing campaigns.
The number of subscriptions grew by 53,000 in the quarter.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 227 | 227 | -0.1 | 874 | 915 | -4.5 |
| Change (%) local organic | -4.7 | -3.4 | ||||
| of which service revenues (external) | 214 | 224 | -4.6 | 813 | 901 | -9.8 |
| EBITDA excl. non-recurring items | 93 | 86 | 8.3 | 355 | 385 | -7.8 |
| Margin (%) | 41.0 | 37.8 | 40.6 | 42.0 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 2,088 | 1,803 | 15.8 | 2,088 | 1,803 | 15.8 |
Service revenues declined 8.9 percent in local currency, excluding acquisitions and disposals, mainly due to lower interconnect revenues. Billed revenues continued to grow, supported by strong data growth.
The EBITDA margin, excluding non-recurring items, rose to 41.0 percent (37.8), mainly due lower interconnect costs and cost savings.
The number of subscriptions grew by 42,000 in the quarter and by 285,000 during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 130 | 130 | 0.5 | 497 | 512 | -3.0 |
| Change (%) local organic | 2.1 | 2.5 | ||||
| of which service revenues (external) | 108 | 118 | -8.0 | 436 | 473 | -7.8 |
| EBITDA excl. non-recurring items | 33 | 47 | -28.7 | 131 | 185 | -29.2 |
| Margin (%) | 25.5 | 36.0 | 26.4 | 36.2 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 1,120 | 1,024 | 9.4 | 1,120 | 1,024 | 9.4 |
Service revenues declined 6.7 percent in local currency, excluding acquisitions and disposals, burdened by lower interconnect revenues and slightly lower billed revenues, as growth in data revenues could not fully compensate for lower voice revenues.
The EBITDA margin, excluding non-recurring items, fell to 25.5 percent (36.0), partly due to lower service revenues and higher share of low margin equipment sales.
The number of subscriptions grew by 27,000 in the quarter and by 96,000 during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 970 | 767 | 26.3 | 3,593 | 3,023 | 18.9 |
| Change (%) local organic | 15.0 | 18.9 | ||||
| of which service revenues (external) | 851 | 662 | 28.5 | 3,099 | 2,604 | 19.0 |
| EBITDA excl. non-recurring items | 572 | 459 | 24.5 | 2,155 | 1,803 | 19.5 |
| Margin (%) | 59.0 | 59.8 | 60.0 | 59.6 | ||
| Subscriptions, (thousands) | ||||||
| Mobile | 12,090 | 10,867 | 11.3 | 12,090 | 10,867 | 11.3 |
Service revenues rose 17.0 percent in local currency, excluding acquisitions and disposals, supported by continued strong data growth and increased voice traffic.
The EBITDA margin, excluding non-recurring items, fell marginally to 59.0 percent (59.8), mainly due to slightly higher marketing expenses.
The number of subscriptions grew by 62,000 in the quarter and by over 1.2 million during the year.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2014 |
Oct-Dec 2013 |
Chg (%) |
Jan-Dec 2014 |
Jan-Dec 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 1,792 | 1,825 | -1.8 | 7,043 | 6,668 | 5.6 |
| Change (%) local organic | -5.9 | 2.3 | ||||
| of which International Carrier | 1,526 | 1,533 | -0.5 | 5,964 | 5,584 | 6.8 |
| EBITDA excl. non-recurring items | -26 | 52 | – | 282 | 513 | -45.1 |
| of which International Carrier | 112 | 94 | 18.3 | 371 | 368 | 0.7 |
| Margin (%) | -1.4 | 2.8 | 4.0 | 7.7 | ||
| Income from associated companies | 1,519 | 1,687 | -9.9 | 4,463 | 5,906 | -24.4 |
| of which Russia | 646 | 890 | -27.4 | 2,247 | 3,128 | -28.2 |
| of which Turkey | 874 | 800 | 9.3 | 2,213 | 2,779 | -20.4 |
| Operating income | 1,368 | 1,058 | 29.3 | 3,597 | 4,731 | -24.0 |
| Operating income excl. non-recurring | ||||||
| items | 1,393 | 1,336 | 4.3 | 3,948 | 5,197 | -24.0 |
| CAPEX | 772 | 1,077 | -28.3 | 2,317 | 1,839 | 26.0 |
| Employees | 3,236 | 3,233 | 0.1 | 3,236 | 3,233 | 0.1 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 5.9 percent. In reported currency, net sales decreased 1.8 percent to SEK 1,792 million (1,825). The positive effect of exchange rate fluctuations was 4.1 percent.
EBITDA, excluding non-recurring items, decreased to SEK -26 million (52). The EBITDA margin, excluding non-recurring items, fell to -1.4 percent (2.8).
In International Carrier, net sales decreased 0.5 percent to SEK 1,526 million (1,533) and the EBITDA margin, excluding non-recurring items, increased to 7.3 percent (6.2).
Income from associated companies, excluding nonrecurring items, declined to SEK 1,519 million (1,687). The lower contribution from MegaFon in Russia is largely explained by currency effects and one-off items.
| SEK in millions, except per share data, number of shares and changes |
Oct-Dec 2014 |
Oct-Dec1) 2013 |
Chg (%) |
Jan- Dec 2014 |
Jan-Dec1) 2013 |
Chg (%) |
|---|---|---|---|---|---|---|
| 26,606 | 26,560 | 0.2 | 101,060 | 101,870 | -0.8 | |
| Net sales | -16,634 | -16,108 | 3.3 | -58,091 | -57,883 | 0.4 |
| Cost of sales | 9,972 | 10,452 | -4.6 | 42,969 | 43,987 | -2.3 |
| Gross profit | -6,142 | -6,091 | 0.8 | -22,987 | -22,801 | 0.8 |
| Selling, admin. and R&D expenses | -851 | -1,525 | -44.2 | -1,895 | -2,745 | -31.0 |
| Other operating income and expenses, net | ||||||
| Income from associated companies and joint ventures |
1,546 | 1,724 | -10.3 | 4,593 | 6,021 | -23.7 |
| Operating income | 4,525 | 4,560 | -0.8 | 22,679 | 24,462 | -7.3 |
| Finance costs and other financial items, net | -498 | -739 | -32.6 | -2,573 | -3,094 | -16.9 |
| Income after financial items | 4,027 | 3,821 | 5.4 | 20,107 | 21,368 | -5.9 |
| Income taxes | -1,157 | -1,126 | 2.7 | -4,508 | -4,601 | -2.0 |
| Net income | 2,870 | 2,695 | 6.5 | 15,599 | 16,767 | -7.0 |
| Items that may be reclassified to net income: | ||||||
| Foreign currency translation differences | 540 | 899 | 3,065 | -3,809 | ||
| Income from associated companies and joint ventures |
-49 | -33 | 9 | -153 | ||
| Cash flow hedges | 331 | -68 | 69 | 334 | ||
| Available-for-sale financial instruments | 1 | -3 | 3 | -2 | ||
| Income tax relating to items that will be reclassified |
425 | 320 | 845 | 367 | ||
| Items that will not be reclassified to net in | ||||||
| come: | 0 | |||||
| Remeasurements of defined benefit | ||||||
| pension plans | -366 | 1,350 | -3,953 | 4,402 | ||
| Income tax relating to items that will not | ||||||
| be reclassified | 107 | -280 | 870 | -966 | ||
| Associates' remeasurements of defined | ||||||
| benefit pension plans | 0 | 0 | 5 | -9 | ||
| Other comprehensive income | 989 | 2,185 | 911 | 164 | ||
| Total comprehensive income | 3,859 | 4,880 | 16,510 | 16,931 | ||
| Net income attributable to: | ||||||
| Owners of the parent | 2,938 | 2,190 | 14,502 | 14,970 | ||
| Non-controlling interests | -68 | 505 | 1,097 | 1,797 | ||
| Total comprehensive income attributable to: | ||||||
| Owners of the parent | 3,745 | 4,310 | 15,081 | 15,260 | ||
| Non-controlling interests | 114 | 570 | 1,429 | 1,671 | ||
| Earnings per share (SEK), basic and diluted | 0.68 | 0.51 | 3.35 | 3.46 | ||
| Number of shares (thousands) | ||||||
| Outstanding at period-end | 4,330,085 | 4,330,085 | 4,330,085 | 4,330,085 | ||
| Weighted average, basic and diluted | 4,330,085 | 4,330,085 | 4,330,085 | 4,330,085 | ||
| EBITDA | 8,409 | 8,309 | 1.2 | 33,675 | 33,656 | 0.1 |
| EBITDA excl. non-recurring items | 8,604 | 8,728 | -1.4 | 35,223 | 35,584 | -1.0 |
| Depreciation, amortization and impairment | ||||||
| losses | -5,429 | -5,473 | -0.8 | -15,589 | -15,215 | 2.5 |
| Operating income excl. non-recurring items | 6,757 | 7,100 | -4.8 | 26,656 | 28,534 | -6.6 |
1) Certain restatements have been made, see page 24.
| SEK in millions | Dec 31, 2014 |
Dec 31, 20131) |
|---|---|---|
| Assets | ||
| Goodwill and other intangible assets | 86,161 | 81,522 |
| Property, plant and equipment | 69,669 | 64,792 |
| Investments in associates and joint ventures, deferred tax assets and | ||
| other non-current assets | 40,256 | 37,202 |
| Long-term interest-bearing receivables | 14,336 | 9,479 |
| Total non-current assets | 210,422 | 192,995 |
| Inventories | 1,779 | 1,582 |
| Trade receivables, current tax assets and other receivables | 20,137 | 20,217 |
| Short-term interest-bearing receivables | 10,993 | 6,679 |
| Cash and cash equivalents | 28,735 | 31,355 |
| Total current assets | 61,644 | 59,833 |
| Total assets | 272,066 | 252,828 |
| Equity and liabilities | ||
| Equity attributable to owners of the parent | 111,383 | 108,324 |
| Equity attributable to non-controlling interests | 4,981 | 4,610 |
| Total equity | 116,364 | 112,934 |
| Long-term borrowings | 90,168 | 80,089 |
| Deferred tax liabilities, other long-term provisions | 26,108 | 21,781 |
| Other long-term liabilities | 1,887 | 1,356 |
| Total non-current liabilities | 118,163 | 103,226 |
| Short-term borrowings | 11,321 | 10,634 |
| Trade payables, current tax liabilities, short-term provisions and | ||
| other current liabilities | 26,218 | 26,034 |
| Total current liabilities | 37,539 | 36,668 |
| Total equity and liabilities | 272,066 | 252,828 |
1) Restated for comparability, see page 24.
| SEK in millions | Oct-Dec 2014 |
Oct-Dec 20131) |
Jan-Dec 2014 |
Jan-Dec 20131) |
|---|---|---|---|---|
| Cash flow before change in working capital | 6,401 | 6,506 | 29,366 | 30,306 |
| Change in working capital | 245 | 863 | -114 | 730 |
| Cash flow from operating activities | 6,645 | 7,369 | 29,252 | 31,036 |
| Cash CAPEX | -5,011 | -5,243 | -16,206 | -14,726 |
| Free cash flow | 1,635 | 2,126 | 13,046 | 16,310 |
| Cash flow from other investing activities | -6,774 | 177 | -5,774 | 82 |
| Total cash flow from investing activities | -11,784 | -5,066 | -21,979 | -14,644 |
| Cash flow before financing activities | -5,139 | 2,303 | 7,272 | 16,392 |
| Cash flow from financing activities | 3,369 | 2,048 | -10,269 | -15,013 |
| Cash flow for the period | -1,770 | 4,351 | -2,997 | 1,379 |
| Cash and cash equivalents, opening balance | 30,423 | 26,831 | 31,355 | 29,690 |
| Cash flow for the period | -1,770 | 4,351 | -2,997 | 1,379 |
| Exchange rate differences | 82 | 173 | 377 | 286 |
| Cash and cash equivalents, closing balance | 28,735 | 31,355 | 28,735 | 31,355 |
1) Restated for comparability, see page 24.
| Jan-Dec 2014 | Jan-Dec 2013 | ||||||
|---|---|---|---|---|---|---|---|
| SEK in millions | Owners of the parent |
Non controlling interests |
Total equity |
Owners of the parent |
Non controlling interests |
Total equity |
|
| Opening balance | 108,324 | 4,610 | 112,934 | 105,149 | 3,956 | 109,105 | |
| Dividends | -12,990 | -1,058 | -14,048 | -12,340 | -1,017 | -13,357 | |
| Repurchased treasury shares | -6 | – | -6 | -4 | – | -4 | |
| Total comprehensive income | 15,081 | 1,429 | 16,510 | 15,260 | 1,671 | 16,931 | |
| Share-based payments | 18 | – | 18 | 18 | – | 18 | |
| Effect of equity transactions in associates | 955 | – | 955 | 240 | – | 240 | |
| Closing balance | 111,383 | 4,981 | 116,364 | 108,324 | 4,610 | 112,934 |
As in the annual accounts for 2013, TeliaSonera's consolidated financial statements as of and for year ended December 31, 2014, have been prepared in accordance with International Financial Reporting Standards (IFRSs) and, given the nature of TeliaSonera's transactions, with IFRSs as adopted by the European Union. The parent company TeliaSonera AB'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. This report has been prepared in accordance with IAS 34 Interim Financial Reporting. The accounting policies adopted are consistent with those of the previous financial year, except as described below. All amounts in this report are presented in SEK millions, unless otherwise stated. Rounding differences may occur.
During the fourth quarter of 2014, the IASB issued amendments to IAS 1 "Presentation of Financial Statements: Disclosure Initiative" as part of a larger project to improve presentation and disclosures in financial reports and to encourage companies to apply judgment in determining what information to disclose and how to structure it in their financial statements. The amendments clarify rather than significantly change, existing IAS 1 requirements. The amendment clarifies that disclosures specifically required by an IFRS need only be provided if material; the list of line items in the statements specified by IAS 1 can be disaggregated
and aggregated as relevant in the financial statements. The amendments also make clear that there is flexibility in which order notes are presented and where accounting policies are presented. The structure of the annual report should be comparable and understandable between the years. The amendments are effective as of January 1, 2016. Earlier application is permitted.
See also TeliaSonera's Interim Report January-March 2014, January-June 2014 and January -September 2014 for standards published in the first, second and third quarters.
For comparability, reclassifications of balances between cash and cash equivalents and short-term investments, and reclassification between short-term and long-term non-interest bearing receivables have been made for 2013. The reclassifications have not affected net debt or operating cash flow.
For additional information, see corresponding section in TeliaSonera's Interim Report January-March 2014.
Comparative period figures have been restated to reflect the new organization effective April 1, 2014. The restatement is based on the assumption that the new organization would have been in place during all periods presented.
| SEK in millions | Oct-Dec 2014 |
Oct-Dec 2013 |
Jan-Dec 2014 |
Jan-Dec 2013 |
|---|---|---|---|---|
| Within EBITDA | -195 | -419 | -1,549 | -1,928 |
| Restructuring charges, synergy implementation costs, etc.: | ||||
| Region Sweden | -180 | -45 | -354 | -472 |
| Region Europe | -22 | -130 | -204 | -415 |
| Region Eurasia | 32 | -97 | -637 | -321 |
| Other operations | 81 | -144 | -246 | -331 |
| Capital gains/losses | -107 | -2 | -107 | -389 |
| Within Depreciation, amortization and impairment losses | -2,037 | -2,156 | -2,428 | -2,179 |
| Impairment losses, accelerated depreciation: | ||||
| Region Sweden | -29 | -296 | -29 | -296 |
| Region Europe | -152 | -1,191 | -152 | -1,213 |
| Region Eurasia | -1,855 | -500 | -2,246 | -500 |
| Other operations | -1 | -169 | -1 | -169 |
| Within Income from associated companies and joint ventures | – | 35 | – | 35 |
| Capital gains/losses | – | 35 | – | 35 |
| Total | -2,232 | -2,540 | -3,976 | -4,072 |
| SEK in millions | Dec 31, 2014 |
Dec 31, 2013 |
|---|---|---|
| Deferred tax assets | 5,955 | 5,493 |
| Deferred tax liabilities | -10,840 | -10,063 |
| Net deferred tax liabilities (-)/assets (+) | -4,885 | -4,570 |
| SEK in millions | Oct-Dec 2014 |
Oct-Dec 2013 |
Jan-Dec 2014 |
Jan-Dec 2013 |
|---|---|---|---|---|
| Region Sweden | 2,147 | 2,072 | 9,746 | 9,580 |
| Region Europe | 879 | -114 | 4,401 | 3,498 |
| Region Eurasia | 131 | 1,541 | 4,936 | 6,640 |
| Other operations | 1,368 | 1,058 | 3,597 | 4,731 |
| Total segments | 4,525 | 4,556 | 22,680 | 24,449 |
| Eliminations | 0 | 4 | 0 | 13 |
| Group | 4,525 | 4,560 | 22,679 | 24,462 |
| SEK in millions | Oct-Dec 2014 |
Oct-Dec 2013 |
Jan-Dec 2014 |
Jan-Dec 2013 |
|---|---|---|---|---|
| CAPEX | 5,652 | 6,047 | 16,679 | 16,332 |
| Intangible assets | 830 | 1,670 | 2,756 | 3,322 |
| Property, plant and equipment | 4,822 | 4,377 | 13,923 | 13,010 |
| Acquisitions and other investments | 254 | 255 | 1,220 | 1,461 |
| Asset retirement obligations | 105 | 167 | 171 | 220 |
| Goodwill and fair value adjustments | 138 | 52 | 1,004 | 1,038 |
| Equity holdings | 11 | 36 | 45 | 203 |
| Total | 5,906 | 6,302 | 17,899 | 17,793 |
| Dec 31, 2014 | Dec 31, 2013 | |||
|---|---|---|---|---|
| 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 | 26,955 | 34,726 | 19,289 | 20,225 |
| Interest rate swaps | 283 | 283 | 254 | 254 |
| Cross currency interest rate swaps | 1,577 | 1,577 | 1,630 | 1,630 |
| Subtotal | 28,814 | 36,585 | 21,173 | 22,109 |
| Open-market financing program borrowings | 57,861 | 63,534 | 57,026 | 60,698 |
| Other borrowings at amortized cost | 3,431 | 3,431 | 1,834 | 1,834 |
| Subtotal | 90,106 | 103,549 | 80,033 | 84,641 |
| Finance lease agreements | 62 | 62 | 56 | 56 |
| Total long-term borrowings | 90,168 | 103,611 | 80,089 | 84,697 |
| Short term borrowings | ||||
| Open-market financing program borrowings in | ||||
| fair value hedge relationships | 7,414 | 7,414 | 2,735 | 2,818 |
| Interest rate swaps | – | – | 31 | 31 |
| Cross currency interest rate swaps | 329 | 329 | 17 | 17 |
| Subtotal | 7,743 | 7,743 | 2,783 | 2,866 |
| Utilized bank overdraft and short-term credit | ||||
| facilities at amortized cost | 1,057 | 1,058 | 811 | 811 |
| Open-market financing program borrowings | 725 | 726 | 5,954 | 5,995 |
| Other borrowings at amortized cost | 1,786 | 1,786 | 1,083 | 1,083 |
| Subtotal | 11,311 | 11,313 | 10,631 | 10,755 |
| Finance lease agreements | 10 | 10 | 3 | 3 |
| Total short-term borrowings | 11,321 | 11,323 | 10,634 | 10,758 |
1) For financial assets, fair values equal carrying values. For information on fair value estimation, see TeliaSonera's Annual Report 2013, Note C3 to the consolidated financial statements.
| Dec 31, 2014 | Dec 31, 2013 | |||||||
|---|---|---|---|---|---|---|---|---|
| Financial assets and liabilities | of which | of which | ||||||
| by fair value hierarchy level1) SEK in millions |
Carrying value |
Level 1 |
Level 2 |
Level 3 |
Carrying value |
Level 1 |
Level 2 |
Level 3 |
| Financial assets at fair value | ||||||||
| Equity instruments available-for-sale | 228 | – | – | 228 | 190 | – | – | 190 |
| Equity instruments held-for-trading | 108 | – | – | 108 | 70 | – | – | 70 |
| Long- and short-term bonds availa | ||||||||
| ble-for-sale | 4,950 | 4,950 | – | – | 162 | 160 | – | 2 |
| Derivatives designated as hedging instruments |
3,901 | – | 3,901 | – | 1,533 | – | 1,533 | – |
| Derivatives held-for-trading | 1,923 | – | 1,868 | 55 | 1,374 | – | 1,374 | – |
| Total financial assets at fair value by level |
11,110 | 4,950 | 5,770 | 391 | 3,329 | 160 | 2,907 | 262 |
| Financial liabilities at fair value | ||||||||
| Borrowings in fair value hedge relationships |
34,369 | – | 34,369 | – | 22,025 | – | 22,025 | – |
| Derivatives designated as hedging instruments |
1,727 | – | 1,727 | – | 1,090 | – | 1,090 | – |
| Derivatives held-for-trading | 882 | – | 882 | – | 1,013 | – | 1,013 | – |
| Total financial liabilities at fair value by level |
36,978 | – | 36,978 | – | 24,128 | – | 24,128 | – |
1) For information on fair value hierarchy levels and fair value estimation, see TeliaSonera's Annual Report 2013, Note C3 to the consolidated financial statements.
In the year ended December 31, 2014, TeliaSonera purchased services for SEK 260 million, and sold services for SEK 360 million. Related parties in these transactions were mainly MegaFon, Turkcell and Lattelecom.
| SEK in millions | Dec 31, 2014 |
Dec 31, 2013 |
|---|---|---|
| Long-term and short-term borrowings | 101,489 | 90,723 |
| Less derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit support annex (CSA) |
-5,618 | -2,878 |
| Less long-term bonds available for sale | -4,671 | – |
| Less short-term investments, cash and bank | -31,880 | -32,071 |
| Net debt | 59,320 | 55,774 |
The underlying operating cash flow continued to be positive also in the fourth quarter of 2014.
The rating from Standard & Poor's remained unchanged with a credit rating on TeliaSonera AB of A- for long-term borrowings and A-2 for short-term borrowings with a stable outlook. Moodys´ has confirmed the long-term rating of A3 and P2 for short-term borrowings but changed the outlook to negative.
The favorable new issue terms are set to continue during the first quarter of 2015 with support from further central bank stimulus keeping underlying yields and credit spreads low.
TeliaSonera issued SEK 4 billion in a 5 year SEK transaction at the end of November. The two tranche deal had one fixed tranche with an annual coupon of 1.125 percent and a floating tranche with a spread of 53 basis points over 3 month Stibor.
With a solid liquidity position TeliaSonera has limited funding needs during 2015. The opportunistic strategy remains, to take advantage of attractive opportunities when they appear with a special focus on diversifying the investor base.
| Dec 31, 2014 |
Dec 31, 20131) |
|
|---|---|---|
| Return on equity (%, rolling 12 months) | 15.0 | 15.9 |
| Return on capital employed (%, rolling 12 months) | 12.2 | 13.5 |
| Equity/assets ratio (%) | 38.0 | 39.5 |
| Net debt/equity ratio (%) | 57.4 | 55.8 |
| Net debt/EBITDA rate excl. non-recurring items (multiple, rolling 12 months) | 1.68 | 1.57 |
| Net debt/assets ratio | 21.8 | 22.1 |
| Owners' equity per share (SEK) | 25.72 | 25.02 |
1) Recalculated to reflect reclassifications of underlying figures and certain definition changes. See pages 24 and 34.
TeliaSonera has sold all its shares in Telecominvest (TCI) to AF Telecom Holding (AFT). The purchase price has not been fully paid by AFT and in order to secure the value of TeliaSonera's receivable, presently SEK 4,925 million, MegaFon shares held by TCI, representing 3.27 percent of the shares in MegaFon, are presently pledged to TeliaSonera. Two tranches are remaining out of a total of five. The proper payment of the receivable is guaranteed by certain companies within the AFT Group and the bank accounts where TCI will collect dividends on the pledged shares have also been pledged to TeliaSonera.
As of December 31, 2014, the maximum potential future payments that TeliaSonera could be required to make under issued financial guarantees totaled SEK 320 million, of which SEK 287 million referred to guarantees for pension obligations. Collateral pledged totaled SEK 426 million.
As of December 31, 2014, contractual obligations totaled SEK 2,117 million, of which SEK 1,286 million referred to contracted build-out of TeliaSonera's fixed networks in Sweden.
The cost of all business combinations and fair values below were determined provisionally, as they are based on preliminary appraisals and subject to confirmation of certain facts. Thus, the purchase price accounting is subject to adjustments.
On October 1, 2014 TeliaSonera acquired all shares in Ipeer AB, a leading corporate supplier of cloud and hosting services in Sweden. As a result of the transaction, TeliaSonera supplements its product portfolio of network and access services and are able to offer its business customers in Sweden completely new total solutions.
The results of the acquired operations were included in the consolidated financial statements as of October 1, 2014. Goodwill is explained by the company's ability to generate new customers.
For a minor business combination in the fourth quarter of 2014, the cost of combination totaled SEK 7 million and the net cash outflow SEK 7 million. No goodwill was recognized.
For information on business combinations during the first nine-month period, see corresponding sections in TeliaSonera's Interim Report January-September, January-June 2014 and Interim Report January-March 2014.
| SEK in millions | Ipeer |
|---|---|
| Cost of combination | |
| Cash consideration | 143 |
| Contingent consideration | – |
| Total cost of the combination | 143 |
| Fair value of net assets acquired | |
| Intangible assets (mainly customer relations and technology) | 59 |
| Property, plant and equipment | 30 |
| Non-current receivables | 1 |
| Current receivables | 11 |
| Cash and cash equivalents | 3 |
| Total assets acquired | 105 |
| Deferred income tax liabilities | -13 |
| Other non-current liabilities | -18 |
| Current liabilities | -22 |
| Total liabilities assumed | -53 |
| Total fair value of net assets acquired | 51 |
| Goodwill | 92 |
| SEK in millions | Ipeer |
|---|---|
| Total cost of the combination paid in cash | 143 |
| Less cash and cash equivalents | -3 |
| Net cash outflow from the combination | 140 |
| Condensed income statements SEK in millions |
Oct-Dec 2014 |
Oct-Dec 2013 |
Jan-Dec 2014 |
Jan-Dec 2013 |
|---|---|---|---|---|
| Net sales | 0 | 1 | 4 | 7 |
| Operating income | -728 | -920 | -916 | -1,023 |
| Income after financial items | 3,658 | -3,368 | 2,493 | 7,801 |
| Income before taxes | 5,419 | -207 | 10,243 | 17,862 |
| Net income | 5,784 | -206 | 10,012 | 16,860 |
Income after financial items fell significantly as dividends from subsidiaries did not compensate for noncash write-downs of holdings in subsidiaries. Income after financial items was also affected by foreign exchange rate effects.
| Condensed balance sheets SEK in millions |
Dec 31, 2014 |
Dec 31, 2013 |
|---|---|---|
| Non-current assets | 155,495 | 179,378 |
| Current assets | 65,805 | 64,302 |
| Total assets | 221,300 | 243,680 |
| Shareholders' equity | 83,732 | 86,661 |
| Untaxed reserves | 11,476 | 11,246 |
| Provisions | 478 | 571 |
| Liabilities | 125,614 | 145,202 |
| Total equity and liabilities | 221,300 | 243,680 |
Total investments in the period were SEK 4,314 million (1,090), of which SEK 3,621 million (1,052) referred to shareholder contributions to subsidiaries.
In 2012, the parent company's shares in Telecominvest (TCI) were sold to AF Telecom Holding (AFT). The purchase price has not been fully paid by AFT and in order to secure the value of the parent company's receivable, presently SEK 4,925 million, MegaFon shares held by TCI, representing 3.27 percent of the shares in Mega-Fon, are presently pledged to the parent company. Two tranches are remaining out of a total of five. The proper payment of the receivable is guaranteed by certain companies within the AFT Group and the bank accounts where TCI will collect dividends on the pledged shares have also been pledged to the parent company.
TeliaSonera operates in a broad range of geographical product and service markets in the highly competitive and regulated telecommunications industry. As a result, TeliaSonera is subject to a variety of risks and uncertainties. TeliaSonera has defined risk as anything that could have a material adverse effect on the achievement of TeliaSonera's goals. Risks can be threats, uncertainties or lost opportunities relating to TeliaSonera's current or future operations or activities.
TeliaSonera 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. Risk management is an integrated part of TeliaSonera's business planning process and monitoring of business performance.
See Notes C26 and C34 to the consolidated financial statements in TeliaSonera's Annual Report 2013 for a detailed description of some of the factors that may affect TeliaSonera's business, brand perception, financial position, results of operations or the share price from time to time. Risks and uncertainties that could specifically impact the quarterly results of operations during 2015 include, but may not be limited to:
World economy changes. Changes in the global financial markets and the world economy are difficult to predict. TeliaSonera has a strong balance sheet and operates in a relatively non-cyclical or late-cyclical industry. However, a severe or long-term recession in the countries in which TeliaSonera operates would have an impact on its customers and may have a negative impact on its growth and results of operations through reduced telecom spending. The maturity schedule of TeliaSonera's loan portfolio is aimed to be evenly distributed over several years, and refinancing is expected to be made by using uncommitted openmarket debt financing programs and bank loans, alongside the company's free cash flow. In addition, TeliaSonera has committed lines of credit with banks that are deemed to be sufficient and may be utilized if the open-market refinancing conditions are poor. However, TeliaSonera's cost of funding might be higher, should there be changes in the global financial markets or the world economy.
International political developments. TeliaSonera has material investments and receivables in the Russian Federation related to its associated company OAO MegaFon and the international carrier operations. Following the conflict between the Russian Federation and Ukraine, the European Union and the United States have implemented sanctions directed towards individuals and corporates. The Russian Federation has as a consequence decided on certain counter actions. The sanctions and counter actions may negatively affect the Russian ruble. These developments, as well as other international political conflicts and developments affecting countries in which TeliaSonera is operating, may adversely impact TeliaSonera's cash flows, financial position and results of operations.
Competition and price pressure. TeliaSonera is subject to substantial and historically increasing competition and price pressure. Competition from a variety of sources, including current market participants, new entrants and new products and services, may adversely affect TeliaSonera's results of operations. Transition to new business models in the telecom industry may lead to structural changes and different competitive dynamics. Failure to anticipate and respond to industry dynamics, and to drive a change agenda to meet mature and developing demands in the marketplace, may affect TeliaSonera's customer relationships, service offerings and position in the value chain, and adversely impact its results of operations.
Investments in future growth. TeliaSonera is currently investing in future growth through, for example, sales and marketing expenditures to retain and acquire customers in most markets, build-up of its customer base in start-up operations and investments in infrastructure in all markets to improve capacity and access. While TeliaSonera believes that these investments will improve market position and financial results in the long term, they may not have the targeted positive effects yet in the short term and related expenditures may impact the results of operations both in the long and short term.
Non-recurring items. In accordance with their nature, non-recurring items such as capital gains and losses, restructuring costs, impairment charges, etc., may impact the quarterly results in the short term with amounts or timing that deviate from those currently expected. Depending on external factors or internal developments, TeliaSonera might also experience nonrecurring items that are not currently anticipated.
Emerging markets. TeliaSonera has made significant investments in telecom operators in Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova, Nepal, Russia and Turkey. Historically, the political, economic, legal and regulatory systems in these countries have been less predictable than in countries with more mature institutional structures. The future political situation in each of the emerging market countries may
remain unpredictable, and markets in which TeliaSonera operates may become unstable, even to the extent that TeliaSonera has to exit a country or a specific operation within a country. Another implication may be unexpected or unpredictable litigation cases. Other risks associated with operating in emerging market countries include foreign exchange restrictions, which could effectively prevent TeliaSonera from repatriating cash, e.g. by receiving dividends and repayment of loans, or from selling its investments. One example of this is TeliaSonera's business in Uzbekistan in which the group has a net exposure of approximately SEK 9.5 billion, including group companies' receivables totaling approximately SEK 6.8 billion, cash and cash equivalents of approximately SEK 1.4 billion and short-term investments of approximately SEK 0.7 billion. The net exposure increase in 2014 is due mainly to exchange rate effects, but also to growth in the underlying operations. Another risk is the potential establishment of foreign ownership restrictions or other potential actions against entities with foreign ownership, formally or informally. Such negative political or legal developments or weakening of the economies or currencies in these markets might have a significantly negative effect on TeliaSonera's results of operations and financial position.
Impairment losses and restructuring charges. Telia-Sonera could be required to recognize impairment losses with respect to assets if management's expectation of future cash flows attributable to these assets change, including but not limited to goodwill and fair value adjustments that TeliaSonera has recorded in connection with acquisitions that it has made or may make in the future. TeliaSonera has undertaken a number of restructuring and streamlining initiatives which have resulted in substantial restructuring and streamlining charges. Similar initiatives may be undertaken in the future. In addition to affecting TeliaSonera's results of operations, impairment losses and restructuring charges may adversely affect TeliaSonera's ability to pay dividends.
Shareholder matters in partly-owned subsidiaries. TeliaSonera conducts some of its activities, particularly outside of the Nordic region, through subsidiaries in which TeliaSonera does not have a 100 percent ownership. Under the governing documents for certain of these entities, the holders of non-controlling interests have protective rights in matters such as approval of dividends, changes in the ownership structure and other shareholder-related matters. One example where TeliaSonera is dependent on a minority owner is Fintur Holdings B.V. (Fintur's minority share-holder is Turkcell) which owns the operations in Kazakhstan, Azerbaijan, Georgia and Moldova. As a result, actions outside
TeliaSonera's control and adverse to its interests may affect TeliaSonera's position to act as planned in these partly owned subsidiaries.
Supply chain. TeliaSonera is reliant upon a limited number of suppliers to manufacture and supply network equipment and related software as well as terminals, to allow TeliaSonera to develop its networks and to offer its services on a commercial basis. TeliaSonera cannot be certain that it will be able to obtain network equipment or terminals from alternative suppliers on a timely basis if the existing suppliers are unable to satisfy TeliaSonera's requirements. In addition, like its competitors, TeliaSonera currently outsources many of its key support services, including network construction and maintenance in most of its operations. The limited number of suppliers of these services, and the terms of TeliaSonera's arrangements with current and future suppliers, may adversely affect TeliaSonera, including by restricting its operational flexibility. In connection with signing supplier contracts for delivery of terminals, TeliaSonera may also grant the supplier a guarantee to sell a certain number of each terminal model to its customers. Should the customer demand for a terminal model under such a guarantee turn out to be smaller than anticipated, TeliaSonera's results of operations may be adversely affected.
Associated companies. A significant portion of Telia-Sonera's results derives from associated companies, in particular MegaFon and Turkcell, which TeliaSonera does not control and which operate in growth markets but also in more volatile political, economic and legal environments. TeliaSonera has limited influence over the conduct of these businesses. Under the governing documents for certain of these entities, TeliaSonera's partners have control over or share control of key matters such as the approval of business plans and budgets, and decisions as to the timing and amount of cash distributions. The risk of actions outside TeliaSonera's or its associated companies' control and adverse to TeliaSonera's interests, or disagreement or deadlock, is inherent in associated companies and jointly controlled entities. One example of this is the current deadlock between the shareholders of Turkcell. Telia-Sonera might not be able to assure that the associated companies apply the same responsible business principles, increasing the risk for wrongdoings and reputational and financial losses. Variations in the financial performance of these associated companies have an impact on TeliaSonera's results of operations also in the short term.
Regulation. TeliaSonera operates in a highly regulated industry. The regulations to which TeliaSonera is subject impose significant limits on its flexibility to manage its business. Changes in legislation, regulation or government policy affecting TeliaSonera's business activities, as well as decisions by regulatory authorities or courts, including granting, amending or revoking of licenses to TeliaSonera or other parties, could adversely affect TeliaSonera's business and results.
Ethics and sustainability. TeliaSonera is subject to a number of ethics and sustainability related risks, including but not limited to, human rights, corruption, network integrity, data security and environment. Especially, the risk is high in emerging markets where historically, the political, economic, legal and regulatory systems have been less predictable than in countries with more mature institutional structures. Failure or perception of failure to adhere to TeliaSonera's ethics and sustainability requirements may damage customer or other stakeholders' perception of TeliaSonera and negatively impact TeliaSonera's business operations and its brand.
Review of Eurasian transactions. In April 2013, the Board of Directors assigned the international law firm Norton Rose Fulbright (NRF) to review transactions and agreements made in Eurasia by TeliaSonera in the past few years with the intention to give the Board a clear picture of the transactions and a risk assessment from a business ethics perspective. For advice on implications under Swedish legislation, the Board assigned two Swedish law firms. In consultation with the law firms, TeliaSonera has promptly taken steps, and will continue to take steps, in its business operations as well as in its governance structure and with its personnel which reflect concerns arising from the review. In addition to the NRF review, the Swedish Prosecution Authority's investigation with respect to Uzbekistan is ongoing and TeliaSonera continues to cooperate with and provide assistance to the Prosecutor. As TeliaSonera will carry on assessing its positions in the Eurasian jurisdictions, there is a risk that future actions taken by the company as a consequence of either the NRF review, the Swedish Prosecution Authority's investigation, or TeliaSonera's own successive improvements to its ethical standards and procedures may adversely impact the results of operations and financial position in TeliaSonera's operations in the Eurasian jurisdictions. Another risk is presented by the Swedish Prosecution Authority's notification in the beginning of 2013 within the investigation of TeliaSonera's transactions in Uzbekistan, that the Authority is separately investigating the possibility of seeking a corporate fine against TeliaSonera, which under the Swedish Criminal Act can be levied up to a maximum amount of SEK 10 million, and forfeiture of any proceeds to TeliaSonera resulting from the alleged crimes. The Swedish Prosecution Authority may take similar actions with respect to transactions made or agreements entered into by TeliaSonera relating to operations in its other Eurasian markets. Further, actions taken, or to be taken, by the police, prosecution or regulatory authorities in other jurisdictions against TeliaSonera's operations or transactions, or against third parties, whether they be Swedish or non-Swedish individuals or legal entities, might directly or indirectly harm TeliaSonera's business, results of operations, financial position or brand reputation.
This report contains statements concerning, among other things, TeliaSonera's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent TeliaSonera's future expectations. TeliaSonera 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 forward-looking statement. Such important factors include, but may not be limited to: TeliaSonera'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 TeliaSonera, 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, TeliaSonera undertakes no obligation to update any of them in light of new information or future events.
TeliaSonera has its roots in the Nordic telecom market and holds strong positions in the Nordic and Baltic countries, Eurasia and Spain. Our core business is to create better communication opportunities for people and businesses through mobile and broadband communication services.
For more information about TeliaSonera, see www.teliasonera.com.
Billed revenues: Voice, messaging, data and content.
EBITDA: Earnings Before Interest, Tax, Depreciation and Amortization. Equals operating income before depreciation, amortization and impairment losses and before income from associated companies.
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 short term investments, long-term bonds available for sale and cash/cash equivalents.
Net debt/assets ratio: Net debt expressed as a percentage of total assets.
Non-recurring 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.
Return on capital employed*: Operating income plus financial revenues excluding FX gains expressed as a percentage of average capital employed.
Service revenues (external): External net sales excluding equipment sales.
* Definition changed as of the fourth quarter of 2014. Historical returns have been recalculated.
In this report, comparative figures are provided in parentheses following the operational and financial results and refer to the same item in the fourth quarter of 2013, unless otherwise stated.
Annual General Meeting 2015 April 8, 2015
Interim Report January–March 2015 April 21, 2015
Interim Report January–June 2015 July 17, 2015
Interim Report January–September 2015 October 20, 2015
TeliaSonera AB www.teliasonera.com/investors Tel. +46 8 504 550 00
TeliaSonera AB discloses the information provided herein pursuant to the Swedish Securities Markets Act and/or the Swedish Financial Instruments Trading Act. The information was submitted for publication at 07:00 CET on January, 29, 2015.
35 TeliaSonera AB (publ) Corporate Reg. No. 556103-4249, Registered office: Stockholm Tel. +46 8 504 550 00. www.teliasonera.com
January–December 2014 Q4
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