Annual Report • Jan 30, 2014
Annual Report
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| SEK in millions, except key ratios, per share data and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 26,503 | 27,069 | -2.1 | 101,700 | 104,898 | -3.0 |
| Change % local FX ex acquisitions and disposals | -0.2 | -0.2 | ||||
| Addressable cost base¹) | 7,466 | 7,394 | 1.0 | 28,380 | 29,644 | -4.3 |
| Change % local FX ex acquisitions and disposals | 2.8 | -1.6 | ||||
| EBITDA¹) excl. non-recurring items² ) |
8,728 | 9,002 | -3.0 | 35,584 | 36,171 | -1.6 |
| Margin (%) | 32.9 | 33.3 | 35.0 | 34.5 | ||
| Operating income | 4,560 | 7,826 | -41.7 | 24,462 | 28,400 | -13.9 |
| Operating income excl. non-recurring items | 7,100 | 7,636 | -7.0 | 28,534 | 28,682 | -0.5 |
| Net income | 2,695 | 7,168 | -62.4 | 16,767 | 21,168 | -20.8 |
| of which attributable to owners of the parent | 2,190 | 6,880 | -68.2 | 14,970 | 19,886 | -24.7 |
| Earnings per share (SEK) | 0.51 | 1.59 | -67.9 | 3.46 | 4.59 | -24.6 |
| Return on equity (%, rolling 12 months) | 15.9 | 20.5 | 15.9 | 20.5 | ||
| CAPEX-to-sales (%) | 22.8 | 17.8 | 16.1 | 15.0 | ||
| Free cash flow | 2,126 | 2,934 | -27.5 | 16,310 | 23,740 | -31.3 |
1) Please refer to the last page for definitions. 2) Non-recurring items; see table on page 25.
TeliaSonera AB (publ), Corporate Reg. No. 556103-4249, Registered office: Stockholm. Tel. +46 8 504 550 00. www.teliasonera.com
"It is clear that 2013 was an eventful and challenging year for TeliaSonera and the telecoms industry. Overall performance was impacted by modest economic growth, regulatory effects and rapidly changing customer behavior. In this environment, we are pleased to close the year with virtually flat organic revenues, a slight increase in our EBITDA margin, excluding nonrecurring items, to 35.0 percent and solid free cash flow of SEK 16.3 billion.
In the fourth quarter, organic revenues stayed more or less unchanged year over year, while the EBITDA margin declined marginally. We continued to develop our data centric pricing models and invested further in network coverage and quality across our footprint. In addition, we secured crucial mobile spectrum in Finland and Norway. In Sweden, performance in the consumer segment was encouraging, with good demand for fiber within Broadband Services and positive contribution to billed revenue growth in Mobility Services. However, overall performance was adversely impacted by challenges in the enterprise area. In Finland, revenue pressure eased and profitability improved despite a difficult macroeconomic environment. Our Eurasian operations delivered another quarter with strong profitability, which is reassuring as we continue to form the business for the future.
Since I assumed responsibility in September, a key task has been to develop the strategic roadmap for TeliaSonera's journey ahead. An important step in this process was taken in December when we finalized our new operating model, a country based structure that will be launched on April 1, 2014. The aim with this change is to reduce overall complexity within the group, enhance customer focus and clarify general accountability.
Together with increased focus from group functions, the new structure will facilitate one common agenda across the company. We need to improve our competitive position going forward, particularly within the enterprise area, and expect to deliver further updates on this process and give more color to our overall journey ahead during the course of 2014.
Creating a sustainable business is a key part of our strategic initiatives and significant measures have been taken in order to strengthen corporate governance. The roll-out of our code of ethics and conduct training continues, with focus on anti-corruption. The board has adopted a new freedom of expression policy in Telecommunications, which will be a vital tool for us when we deal with these issues in the markets where we operate. We monitor the progress through our newly established GREC (Governance, Risk, Ethics and Compliance) Committee, where the entire Group Management is present.
As a result of our strong cash flow generation and solid financial position, the board proposes a dividend of SEK 3.00 for 2013, an increase by 5.3 percent, corresponding to a pay-out ratio of EPS of 87 percent."
Net sales in local currencies, excluding acquisitions and disposals, are expected to be around the same level as in 2013. Currency fluctuations may have a material impact on reported figures in Swedish krona.
The EBITDA margin, excluding non-recurring items, is expected to be around the same level as in 2013 (35.0 percent).
The CAPEX-to-sales ratio is expected to be approximately 15 percent, excluding license and spectrum fees.
In the third quarter report of 2012, TeliaSonera announced efficiency measures with a target to reduce the cost base by SEK 2 billion net over a period of two years ending 2014, affecting 2,000 employees.
The redundancies related to the efficiency measures have been completed and the nonrecurring costs amounted to SEK 1.2 billion in 2013.
The accumulated savings amounted to approximately SEK 1 billion at the end of 2013.
Net sales in local currencies, excluding acquisitions and disposals, decreased 0.2 percent. In reported currency, net sales decreased 2.1 percent to SEK 26,503 million (27,069). The negative effect of exchange rate fluctuations was 1.1 percent and the negative effect of acquisitions and disposals was 0.8 percent.
In Mobility Services, net sales in local currencies, excluding acquisitions and disposals, decreased 2.5 percent. In reported currency, net sales decreased 2.3 percent to SEK 12,783 million (13,080).
In Broadband Services, net sales in local currencies, excluding acquisitions and disposals, decreased 1.7 percent. In reported currency, net sales decreased 3.9 percent to SEK 8,690 million (9,039).
In Eurasia, net sales in local currencies, excluding acquisitions and disposals, increased 7.7 percent. Net sales in reported currency increased 0.3 percent to SEK 5,241 million (5,223).
The number of subscriptions increased by 6.0 million from the end of the fourth quarter of 2012 to 189.0 million. In the consolidated operations the number of subscriptions increased by 1.3 million to 72.5 million. In the associated companies, the number of subscriptions increased by 4.7 million to 116.5 million. During the fourth quarter, the total number of subscriptions decreased by 0.2 million in the consolidated operations and increased by 3.3 million in the associated companies.
Mobility services Broadband services Eurasia Other operations
The addressable cost base in local currencies, excluding acquisitions and disposals, increased 2.8 percent. In reported currency, the addressable cost base increased 1.0 percent to SEK 7,466 million (7,394).
EBITDA, excluding non-recurring items, increased 0.1 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 3.0 percent to SEK 8,728 million (9,002). The EBITDA margin, excluding non-recurring items, decreased to 32.9 percent (33.3).
Operating income, excluding non-recurring items, decreased 7.0 percent to SEK 7,100 million (7,636). Income from associated companies, excluding non-recurring items, decreased to SEK 1,689 million (1,866).
Non-recurring items affecting operating income totaled SEK -2,540 million (189), mainly due to write downs, scrapping and costs related to personnel reductions.
Financial items totaled SEK -739 million (-803) of which SEK -721 million (-769) related to net interest expenses.
Income taxes increased to SEK 1,126 million (-145). The effective tax rate in the quarter was 29.5 percent (-2.1), mainly due to the one-time effect of SEK 675 million related to the net deferred tax asset decrease as a result of a reduction of the corporate income tax in Finland from 24.5 percent to 20.0 percent. In the fourth quarter of 2012 the income tax was heavily impacted by the one-time effect related to the net deferred tax liability decrease connected to the tax rate reduction in Sweden.
Non-controlling interests in subsidiaries increased to SEK 505 million (288) of which SEK 453 million (225) was related to the Eurasian operations and SEK 35 million (50) to LMT and TEO.
Net income attributable to owners of the parent company decreased 68.2 percent to SEK 2,190 million (6,880) and earnings per share decreased to SEK 0.51 (1.59).
CAPEX increased to SEK 6,047 million (4,813) and the CAPEX-to-sales ratio to 22.8 percent (17.8). The CAPEX-to-sales ratio, excluding license and spectrum fees, increased to 18.9 percent (17.3).
Free cash flow decreased to SEK 2,126 million (2,934).
Net debt decreased to SEK 55,774 million at the end of the fourth quarter (56,782 at the end of the third quarter of 2013). The net debt/EBITDA ratio was 1.57 (1.58 at the end of the third quarter of 2013).
The equity/assets ratio was 39.5 percent (40.9 percent at the end of the third quarter of 2013).
Net sales in local currencies, excluding acquisitions and disposals, decreased 0.2 percent. In reported currency, net sales decreased 3.0 percent to SEK 101,700 million (104,898). The negative effect of exchange rate fluctuations was 2.1 percent and the negative effect of acquisitions and disposals was 0.7 percent.
The addressable cost base in local currencies, excluding acquisitions and disposals, decreased 1.6 percent. In reported currency, the addressable cost base decreased 4.3 percent to SEK 28,380 million (29,644).
EBITDA, excluding non-recurring items, increased 1.7 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 1.6 percent to SEK 35,584 million (36,171). The EBITDA margin, excluding non-recurring items, increased to 35.0 percent (34.5).
Operating income, excluding non-recurring items, decreased 0.5 percent to SEK 28,534 million (28,682). Income from associated companies, excluding non-recurring items, increased to SEK 5,986 million (5,488).
Non-recurring items affecting operating income totaled SEK -4,072 million (-282), mainly related to write downs, scrapping and costs related to personnel reductions.
Financial items totaled SEK -3,094 million (-3,918) of which SEK -2,918 million (-3,181) related to net interest expenses.
Income taxes increased to SEK 4,601 million (3,314). The effective tax rate was 21.5 percent (13.5). A one-time effect of SEK 675 million related to the net deferred tax asset was recorded in the fourth quarter of 2013, as a result of a reduction of the corporate income tax in Finland from 24.5 percent to 20.0 percent. The effective tax rate going forward is expected to be around 20 percent. In 2012 the income tax was heavily impacted by the tax rate reduction in Sweden.
Non-controlling interests in subsidiaries increased to SEK 1,797 million (1,282) of which SEK 1,619 million (1,042) was related to the Eurasian operations and SEK 133 million (197) to LMT and TEO.
Net income attributable to owners of the parent company decreased 24.7 percent to SEK 14,970 million (19,886) and earnings per share decreased to SEK 3.46 (4.59).
CAPEX increased to SEK 16,332 million (15,685) and the CAPEX-to-sales ratio to 16.1 percent (15.0). The CAPEX-to-sales ratio, excluding license and spectrum fees, decreased to 14.3 percent (14.6).
Free cash flow decreased to SEK 16,310 million (23,740). Free cash flow excluding dividends from MegaFon increased to SEK 14,370 million (12,014).
On April 2, 2013, TeliaSonera announced that it had decided to continue developing its Spanish operator Yoigo.
On April 3, 2013, six new members of the board were elected and the board members are Marie Ehrling, Chair, Olli-Pekka Kallasvuo, Vice-Chair, Mats Jansson, Mikko Kosonen, Nina Linander, Martin Lorentzon, Per-Arne Sandström and Kersti Strandqvist. At the statutory meeting, it was decided to establish a Sustainability and Ethics Committee.
On October 3, 2013, TeliaSonera announced that Sverker Hannervall had been appointed acting President of business area Mobility Services. He assumed the position with immediate effect and remained in his position as member of Group Management and Head of Business Services. He succeeded Tero Kivisaari, whose role in TeliaSonera's criticized investments in Uzbekistan, and the attention surrounding them, made it impossible for him to act with the internal and external authority necessary.
On October 30, 2013, TeliaSonera announced that its subsidiary in Finland, Sonera, invested in new 4G frequencies in the 800 MHz band. Sonera secured 2*10 MHz frequencies in the 800 MHz band. The licenses granted for the 800 MHz band are valid for 20 years starting from 2014, and the price for the new frequency blocks was EUR 41.2 million including the administrative fees for the auction. The payment to Ficora will be made in five parts during the next five years.
● On January 16, 2014, TeliaSonera announced that the Year-end Report 2013 would include one-time related items. In the fourth quarter of 2013, operating income was impacted by one-time related items of SEK -2,524 million, of which SEK -2,331 million related to non-cash write-downs, primarily of goodwill, and scrapping of IT platforms.
The TeliaSonera share is listed on NASDAQ OMX Stockholm and NASDAQ OMX Helsinki. The share's settlement price in Stockholm increased 21.5 percent in 2013, from SEK 44.06 to SEK 53.55. The highest share price was SEK 54.90 (49.33) and the lowest SEK 41.80 (41.43). The number of shareholders decreased from 553,631 to 529,394. Ownership by the Swedish state was 37.3 percent and the Finnish state's holding was 10.1 percent. Holdings outside Sweden and Finland increased to 25.6 percent from 22.4 percent.
TeliaSonera shall target a solid investment grade long-term credit rating (A- to BBB+) to secure the company's strategically important financial flexibility for investments in future growth, both organically and by acquisitions. The ordinary dividend shall be at least 50 percent of net income attributable to owners of the parent company. In addition, excess capital shall be returned to shareholders after the Board of Directors has taken into consideration the company's cash at hand, cash flow projections and investment plans in a medium term perspective, as well as capital market conditions.
For 2013, the Board of Directors proposes to the Annual General Meeting (AGM) an ordinary dividend of SEK 3.00 (2.85) per share, totaling SEK 13.0 billion (12.3), or 87 percent (62) 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 2, 2014, and that the first day of trading in shares excluding rights to dividend be set for April 3, 2014. The recommended record date at Euroclear Sweden for the right to receive dividend will be April 7, 2014. If the AGM votes to approve the Board's proposals, the dividend is expected to be distributed by Euroclear Sweden on April 10, 2014.
The Annual General Meeting (AGM) will be held on April 2, 2014, at 14:00 CET at Cirkus, Stockholm. Notice of the meeting will be posted on www.teliasonera.com, and advertised in the newspapers at the end of February 2014. The record date entitling shareholders to attend the meeting will be March 27, 2014. Shareholders may file notice of intent to attend the AGM from the end of February 2014. TeliaSonera must receive notice of attendance no later than March 27, 2014.
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 12,783 | 13,080 | -2.3 | 48,873 | 50,637 | -3.5 |
| Chg % local FX ex acquisitions and disposals | -2.5 | -2.5 | ||||
| EBITDA excl. non-recurring items | 3,624 | 3,700 | -2.1 | 14,689 | 14,718 | -0.2 |
| Margin (%) | 28.4 | 28.3 | 30.1 | 29.1 | ||
| Operating income | 1,347 | -434 | 9,012 | 4,229 | 113.1 | |
| Operating income excl. non-recurring items | 2,483 | 2,670 | -7.0 | 10,433 | 10,429 | 0.0 |
| CAPEX | 2,733 | 1,368 | 99.8 | 5,811 | 4,496 | 29.2 |
| Subscriptions, period-end (thousands) | 20,497 | 20,537 | -0.2 | 20,497 | 20,537 | -0.2 |
| Employees, period-end | 6,347 | 6,720 | -5.6 | 6,347 | 6,720 | -5.6 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 2.5 percent. In reported currency, net sales decreased 2.3 percent to SEK 12,783 million (13,080). The positive effect of exchange rate fluctuations was 0.2 percent. Reduced regulated mobile interconnect revenues impacted revenues by -3.5 percent compared to the corresponding period last year.
In Sweden, net sales decreased 5.4 percent to SEK 4,369 million (4,620), largely due to lower equipment sales and reduced regulated interconnect rates. Billed revenues declined marginally, largely explained by weaker performance in the B2B area. The new data centric pricing models, with flat rates for voice and messaging together with bucket priced data, were further amended in the quarter.
In Finland, net sales in local currency decreased 5.4 percent to the equivalent of SEK 1,967 million (2,020), mainly explained by lower equipment sales and reduced regulated interconnect rates. Pressure on billed revenues eased further and growth in the consumer segment turned positive. In total, 47,000 new subscriptions were added in the quarter.
In Norway, net sales in local currency decreased 1.4 percent to the equivalent of SEK 1,682 million (1,858). Billed revenue growth remained positive in the quarter, while reported sales growth continued to be impacted by lower contribution from interconnect and wholesale.
In Denmark, net sales in local currency decreased 9.4 percent to the equivalent of SEK 1,171 million (1,257). The decline in reported sales growth is explained by reduced regulated interconnect and lower equipment sales, while billed revenue growth remained positive.
provides mobile telecommunication services to the consumer and enterprise mass markets. Services include mobile voice and mobile data for phones, mobile broadband, mobile content, data access via WLAN Hotspots and Wireless Office. The business area comprises operations in Sweden, Finland, Norway, Denmark, Lithuania, Latvia, Estonia and Spain.
In Estonia, Latvia and Lithuania, net sales in local currencies decreased 16.5 percent, 16.3 percent and 12.0 percent, respectively, to the equivalent of SEK 330 million (383), SEK 375 million (440) and SEK 300 million (332), respectively. In all three countries, reported revenue growth continued to be burdened by reduced interconnect revenues, but also pressure on billed revenues. In Lithuania and Latvia, sales growth was also negatively impacted by lower equipment sales.
In Spain, net sales in local currency increased 16.2 percent to the equivalent of SEK 2,602 million (2,178), mainly explained by strong equipment sales with a higher share of 4G enabled devices. Billed revenue growth slowed but remained positive and a total of 63,000 new subscriptions were added in the quarter.
The number of subscriptions remained unchanged from the end of the fourth quarter of 2012 at 20.5 million. Growth was strongest in Spain and Finland with an increase of 0.2 million and 0.1 million to 3.9 million and 3.3 million subscriptions, respectively. During the quarter the total number of subscriptions decreased by 0.2 million, due to a change in churn policy of pre-paid subscriptions in Lithuania with an impact of -0.3 million.
EBITDA, excluding non-recurring items, decreased 1.8 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, decreased 2.1 percent to SEK 3,624 million (3,700). The EBITDA margin was stable at 28.4 percent (28.3).
In Sweden, the EBITDA margin increased to 40.6 percent (39.7), mainly explained by improved gross margin. Scrapping of IT systems impacted EBITDA by SEK -15 million. In Finland, the EBITDA margin increased to 33.0 percent (26.2) due largely to stronger gross margin and reduced IT and personnel costs.
In Norway, the EBITDA margin increased slightly to 30.4 percent (30.2) mainly as a result of reduced costs. In Denmark, the EBITDA margin increased to 14.7 percent (13.9) predominantly explained by lower costs for IT and marketing.
The EBITDA margins in Estonia and Latvia increased to 25.2 percent (21.1) and to 33.9 percent (28.0), respectively, helped by stronger gross margins. In Lithuania, the EBITDA margin decreased to 18.0 percent (21.4), partly explained by higher marketing costs.
In Spain, the EBITDA margin decreased to 9.6 percent (14.9). EBITDA includes a net gain of SEK 179 million related to divestment of mobile towers. Profitability was negatively impacted by higher retention and subscriber acquisition costs. Handset subsidies increased due to a larger share of 4G enabled handsets and it was a higher gross intake in the quarter.
CAPEX increased to SEK 2,733 million (1,368) and the CAPEX-to-sales ratio to 21.4 percent (10.5). CAPEX, excluding licenses and spectrum fees, increased to SEK 1,771 million (1,341) and the CAPEX-to-sales ratio increased to 13.9 percent (10.3). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 891 million (2,332).
Net sales in local currencies, excluding acquisitions and disposals, decreased 2.5 percent. In reported currency, net sales decreased 3.5 percent to SEK 48,873 million (50,637). The negative effect of exchange rate fluctuations was 1.0 percent.
EBITDA, excluding non-recurring items, increased 0.7 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 0.2 percent to SEK 14,689 million (14,718). The EBITDA margin increased to 30.1 percent (29.1).
CAPEX increased to SEK 5,811 million (4,496) and the CAPEX-to-sales ratio to 11.9 percent (8.9). CAPEX, excluding licenses and spectrum fees, increased to SEK 4,842 million (4,397) and the CAPEX-to-sales ratio increased to 9.9 percent (8.7). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 8,878 million (10,222).
| SEK in millions, except margins and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 12,783 | 13,080 | -2.3 | 48,873 | 50,637 | -3.5 |
| of which Sweden | 4,369 | 4,620 | -5.4 | 16,853 | 17,297 | -2.6 |
| of which Finland | 1,967 | 2,020 | -2.6 | 7,523 | 8,173 | -8.0 |
| of which Norway | 1,682 | 1,858 | -9.5 | 6,797 | 7,582 | -10.4 |
| of which Denmark | 1,171 | 1,257 | -6.8 | 4,350 | 4,835 | -10.0 |
| of which Lithuania | 300 | 332 | -9.6 | 1,158 | 1,277 | -9.3 |
| of which Latvia | 375 | 440 | -14.8 | 1,492 | 1,608 | -7.2 |
| of which Estonia | 330 | 383 | -13.8 | 1,284 | 1,515 | -15.2 |
| of which Spain | 2,602 | 2,178 | 19.5 | 9,467 | 8,382 | 12.9 |
| EBITDA excl. non-recurring items | 3,624 | 3,700 | -2.1 | 14,689 | 14,718 | -0.2 |
| of which Sweden | 1,773 | 1,834 | -3.3 | 7,458 | 7,382 | 1.0 |
| of which Finland | 650 | 530 | 22.6 | 2,637 | 2,446 | 7.8 |
| of which Norway | 511 | 561 | -8.9 | 2,148 | 2,414 | -11.0 |
| of which Denmark | 172 | 175 | -1.7 | 639 | 549 | 16.4 |
| of which Lithuania | 54 | 71 | -23.9 | 280 | 339 | -17.4 |
| of which Latvia | 127 | 123 | 3.3 | 449 | 543 | -17.3 |
| of which Estonia | 83 | 81 | 2.5 | 388 | 417 | -7.0 |
| of which Spain | 251 | 324 | -22.5 | 690 | 627 | 10.0 |
| Margin (%), total | 28.4 | 28.3 | 30.1 | 29.1 | ||
| Margin (%), Sweden | 40.6 | 39.7 | 44.3 | 42.7 | ||
| Margin (%), Finland | 33.0 | 26.2 | 35.1 | 29.9 | ||
| Margin (%), Norway | 30.4 | 30.2 | 31.6 | 31.8 | ||
| Margin (%), Denmark | 14.7 | 13.9 | 14.7 | 11.4 | ||
| Margin (%), Lithuania | 18.0 | 21.4 | 24.2 | 26.5 | ||
| Margin (%), Latvia | 33.9 | 28.0 | 30.1 | 33.8 | ||
| Margin (%), Estonia | 25.2 | 21.1 | 30.2 | 27.5 | ||
| Margin (%), Spain | 9.6 | 14.9 | 7.3 | 7.5 |
| Net sales in local currencies and excluding acquisitions |
Oct-Dec | Jan-Dec |
|---|---|---|
| Change (%), total | -2.5 | -2.5 |
| Change (%), Sweden | -5.4 | -2.6 |
| Change (%), Finland | -5.4 | -7.4 |
| Change (%), Norway | -1.4 | -5.9 |
| Change (%), Denmark | -9.4 | -9.2 |
| Change (%), Lithuania | -12.0 | -8.8 |
| Change (%), Latvia | -16.3 | -6.2 |
| Change (%), Estonia | -16.5 | -14.8 |
| Change (%), Spain | 16.2 | 13.6 |
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 8,690 | 9,039 | -3.9 | 33,510 | 35,723 | -6.2 |
| Chg % local FX ex acquisitions and disposals | -1.7 | -3.2 | ||||
| EBITDA excl. non-recurring items | 2,300 | 2,540 | -9.4 | 9,778 | 11,004 | -11.1 |
| Margin (%) | 26.5 | 28.1 | 29.2 | 30.8 | ||
| Operating income | 590 | -547 | 4,023 | 4,054 | -0.8 | |
| Operating income excl. non-recurring items | 1,098 | 1,354 -18.9 | 4,970 | 6,242 | -20.4 | |
| CAPEX | 1,642 | 1,640 | 0.1 | 4,755 | 5,445 | -12.7 |
| Subscriptions, period-end (thousands) | ||||||
| Broadband | 2,474 | 2,532 | -2.3 | 2,474 | 2,532 | -2.3 |
| Fixed voice and VoIP | 3,918 | 4,269 | -8.2 | 3,918 | 4,269 | -8.2 |
| TV | 1,429 | 1,332 | 7.3 | 1,429 | 1,332 | 7.3 |
| Employees, period-end | 12,263 | 13,571 | -9.6 | 12,263 | 13,571 | -9.6 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 1.7 percent. Net sales in reported currency decreased 3.9 percent to SEK 8,690 million (9,039). The positive effect of exchange rates was 0.8 percent and the negative impact from acquisitions and disposals was 3.0 percent.
In Sweden, net sales decreased 3.6 percent to SEK 4,918 million (5,102) as a result of continued decline in fixed telephony and challenging conditions in the B2B segment. In the consumer segment, demand for our fiber services remained strong.
In Finland, net sales in local currency decreased 5.5 percent to the equivalent of SEK 1,348 million (1,385), mainly related to a decline in traditional fixed telephony and price pressure in the B2B segment.
In Denmark, net sales in local currency decreased 2.2 percent to the equivalent of SEK 269 million (267).
Services provides mass-market services for connecting homes and offices. Services include broadband over copper, fiber and cable, TV, voice over internet, home communications services, IP-VPN/Business internet, leased lines and traditional telephony. The business area operates the group common core network, including the data network of the international carrier business. The business area comprises operations in Sweden, Finland, Denmark, Lithuania, Latvia (49 percent), Estonia and international carrier operations.
In Estonia, net sales in local currency decreased 6.2 percent to the equivalent of SEK 435 million (451). In Lithuania, net sales in local currency decreased 5.7 percent to the equivalent of SEK 458 million (474). Both operations continued to be impacted by pressure on traditional fixed voice services.
In International Carrier, net sales in local currencies increased 13.1 percent to the equivalent of SEK 1,532 million (1,358) mainly related to an increase in fixed voice volumes.
The number of subscriptions for broadband access decreased to 2.5 million, a decline by 30,000 from the fourth quarter of 2012, explained by the divestiture of NextGenTel in Norway with 184,000 subscriptions. During the quarter the number of subscriptions increased by 40,000.
The total number of TV subscriptions increased by 97,000 from the end of the fourth quarter of 2012 and increased by 31,000 during the quarter to 1.4 million.
The number of traditional fixed voice subscriptions decreased by 368,000 from the end of the fourth quarter of 2012 to 2.7 million, and were down by 87,000 in the quarter. The intake of VoIP subscriptions was 24,000 in the quarter, bringing the total number of VoIP subscriptions to 0.8 million.
EBITDA, excluding non-recurring items, decreased 8.3 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, decreased 9.4 percent to SEK 2,300 million (2,540). The EBITDA margin decreased to 26.5 percent (28.1).
In Sweden, the EBITDA margin decreased to 32.8 percent (35.8), mainly explained by extra maintenance costs of SEK 143 million related to four major storms.
In Finland, the EBITDA margin increased to 20.5 percent (18.5), helped by gains from overall efficiency measures. In Denmark, the EBITDA margin fell to 9.7 percent (11.2).
In Lithuania, the EBITDA margin increased to 38.2 percent (37.3) and in Estonia the EBITDA margin increased to 26.4 percent (24.6).
In International Carrier, the EBITDA margin decreased to 6.1 percent (6.6), due to a higher share of voice revenues.
CAPEX was stable at SEK 1,642 million (1,640) and the CAPEX-to-sales ratio increased to 18.9 percent (18.1). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 658 million (900).
Net sales in local currencies, excluding acquisitions and disposals, decreased 3.2 percent. In reported currency, net sales decreased 6.2 percent to SEK 33,510 million (35,723). The negative effect of exchange rate fluctuations was 0.4 percent and the negative impact from acquisitions and disposals was 2.6 percent.
EBITDA, excluding non-recurring items, decreased 9.7 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, decreased 11.1 percent to SEK 9,778 million (11,004). The EBITDA margin decreased to 29.2 percent (30.8).
CAPEX decreased to SEK 4,755 million (5,445) and the CAPEX-to-sales ratio to 14.2 percent (15.2). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 5,023 million (5,559).
| SEK in millions, except margins and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 8,690 | 9,039 | -3.9 | 33,510 | 35,723 | -6.2 |
| of which Sweden | 4,918 | 5,102 | -3.6 | 19,120 | 20,043 | -4.6 |
| of which Finland | 1,348 | 1,385 | -2.7 | 5,232 | 5,584 | -6.3 |
| of which Norway | 2 | 279 | – | 89 | 1,083 | – |
| of which Denmark | 269 | 267 | 0.7 | 1,009 | 1,092 | -7.6 |
| of which Lithuania | 458 | 474 | -3.4 | 1,805 | 1,915 | -5.7 |
| of which Estonia | 435 | 451 | -3.5 | 1,692 | 1,761 | -3.9 |
| of which International Carrier | 1,532 | 1,358 | 12.8 | 5,584 | 5,388 | 3.6 |
| EBITDA excl. non-recurring items | 2,300 | 2,540 | -9.4 | 9,778 | 11,004 | -11.1 |
| of which Sweden | 1,613 | 1,829 | -11.8 | 6,916 | 7,747 | -10.7 |
| of which Finland | 277 | 256 | 8.2 | 1,198 | 1,351 | -11.3 |
| of which Norway | 0 | 48 | – | -4 | 184 | – |
| of which Denmark | 26 | 30 | -13.3 | 92 | 125 | -26.4 |
| of which Lithuania | 175 | 177 | -1.1 | 747 | 774 | -3.5 |
| of which Estonia | 115 | 111 | 3.6 | 461 | 463 | -0.4 |
| of which International Carrier | 94 | 89 | 5.6 | 368 | 361 | 1.9 |
| Margin (%), total | 26.5 | 28.1 | 29.2 | 30.8 | ||
| Margin (%), Sweden | 32.8 | 35.8 | 36.2 | 38.7 | ||
| Margin (%), Finland | 20.5 | 18.5 | 22.9 | 24.2 | ||
| Margin (%), Norway | 0.0 | 17.2 | -4.5 | 17.0 | ||
| Margin (%), Denmark | 9.7 | 11.2 | 9.1 | 11.4 | ||
| Margin (%), Lithuania | 38.2 | 37.3 | 41.4 | 40.4 | ||
| Margin (%), Estonia | 26.4 | 24.6 | 27.2 | 26.3 | ||
| Margin (%), International Carrier | 6.1 | 6.6 | 6.6 | 6.7 |
| Net sales in local currencies and excluding acquisitions |
Oct-Dec | Jan-Dec |
|---|---|---|
| Change (%), total | -1.7 | -3.2 |
| Change (%), Sweden | -3.6 | -4.7 |
| Change (%), Finland | -5.5 | -5.8 |
| Change (%), Norway | – | -16.0 |
| Change (%), Denmark | -2.2 | -6.9 |
| Change (%), Lithuania | -5.7 | -5.2 |
| Change (%), Estonia | -6.2 | -3.4 |
| Change (%), International Carrier | 13.1 | 5.2 |
| SEK in millions, except margins, operational data and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 5,241 | 5,223 | 0.3 | 20,414 | 19,731 | 3.5 |
| Chg % local FX ex acquisitions and disposals | 7.7 | 11.5 | ||||
| EBITDA excl. non-recurring items | 2,774 | 2,652 | 4.6 | 10,796 | 9,976 | 8.2 |
| Margin (%) | 52.9 | 50.8 | 52.9 | 50.6 | ||
| Income from associated companies | 1,696 | 7,252 -76.6 | 5,926 | 13,815 | -57.1 | |
| of which Russia | 890 | 6,579 -86.5 | 3,128 | 11,542 | -72.9 | |
| of which Turkey | 800 | 673 | 18.9 | 2,779 | 2,280 | 21.9 |
| Operating income | 3,222 | 8,952 -64.0 | 12,510 | 20,629 | -39.4 | |
| Operating income excl. non-recurring items | 3,791 | 3,718 | 2.0 | 13,714 | 12,340 | 11.1 |
| CAPEX | 1,268 | 1,484 -14.6 | 4,712 | 4,739 | -0.6 | |
| Subscriptions, period-end (thousands) | ||||||
| Subsidiaries | 44,177 | 42,535 | 3.9 | 44,177 | 42,535 | 3.9 |
| Associated companies | 115,500 | 110,700 | 4.3 | 115,500 | 110,700 | 4.3 |
| Employees, period-end | 4,904 | 4,980 | -1.5 | 4,904 | 4,980 | -1.5 |
Net sales in local currencies, excluding acquisitions and disposals, increased 7.7 percent. Net sales in reported currency increased 0.3 percent to SEK 5,241 million (5,223). The negative effect from exchange rate fluctuations was 7.6 percent and the positive impact from acquisitions and disposals was 0.2 percent.
In Kazakhstan, net sales in local currency increased 1.3 percent to the equivalent of SEK 2,111 million (2,159). Price erosion for voice services remained intense, but data revenue growth remained strong and currently represents more than 15 percent of overall revenue.
In Azerbaijan, net sales in local currency decreased 0.6 percent to the equivalent of SEK 958 million (984), mainly due to lower interconnect rates.
In Uzbekistan, net sales in local currency increased 25.5 percent to the equivalent of SEK 821 million (749). The overall growth slowed somewhat, due to tougher comparable numbers as one competitor left the market in mid-2012.
In Tajikistan, net sales in local currency increased 1.6 percent to the equivalent of SEK 234 million (244). Growth was negatively affected by increased price competition on international traffic.
mobile operations in Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova and Nepal. The business area also includes TeliaSonera's shareholding in Russian MegaFon (25 percent) and Turkish Turkcell (38 percent). The main strategy is to create shareholder value by increasing mobile penetration and introducing value-added services in each respective country.
In Georgia, net sales in local currency decreased 4.1 percent to the equivalent of SEK 227 million (247), impacted by an earlier lost government tender.
In Moldova, net sales in local currency decreased 0.2 percent to the equivalent of SEK 129 million (140).
In Nepal, net sales in local currency increased 25.5 percent to the equivalent of SEK 767 million (716). Growth is supported by a larger number of subscriptions and sequentially stable ARPU.
The number of subscriptions in the consolidated operations was 44.2 million, an increase by 1.6 million, from the end of the fourth quarter of 2012. Growth was strongest in Nepal and Kazakhstan with a rise of 1.8 million and 0.8 million to 10.9 million and 14.3 million subscriptions, respectively. During the fourth quarter, the total number of subscriptions in the consolidated operations increased by 39,000. Nepal and Kazakhstan showed the largest rises with an increase of 107,000 and 56,000 subscriptions, respectively.
EBITDA, excluding non-recurring items, increased 13.1 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, increased 4.6 percent to SEK 2,774 million (2,652). The EBITDA margin increased to 52.9 percent (50.8).
In Kazakhstan, the EBITDA margin increased to 57.1 percent (53.6), supported by a higher gross margin and lower operating expenses. In Azerbaijan, the EBITDA margin improved to 52.6 percent (49.2), as reduced interconnect revenues were offset by implemented efficiency measures.
In Uzbekistan, the EBITDA margin increased to 49.1 percent (43.0), due to improved gross margin and a larger share of active subscriptions. EBITDA was negatively affected by SEK 52 million related to scrapping of IT systems. In Tajikistan, the EBITDA margin decreased to 49.1 percent (50.8), due to heavy price pressure on international traffic.
In Georgia, the EBITDA margin fell to 37.9 percent (39.7), negatively influenced by reduced revenues due to a lower customer base. In Moldova, the EBITDA margin decreased to 35.7 percent (37.9), as a result of higher interconnect costs due to increased share of off-net traffic.
In Nepal, the EBITDA margin decreased to 59.8 percent (62.8).
CAPEX decreased to SEK 1,268 million (1,484) and the CAPEX-to-sales ratio to 24.2 percent (28.4). CAPEX, excluding licenses and spectrum fees, decreased to SEK 1,199 million (1,387) and the CAPEX-to-sales ratio decreased to 22.9 percent (26.6). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, increased to SEK 1,506 million (1,168).
Net sales in local currencies, excluding acquisitions and disposals, increased 11.5 percent. In reported currency, net sales increased 3.5 percent to SEK 20,414 million (19,731). The negative effect from exchange rate fluctuations was 8.4 percent and the positive impact from acquisitions and disposals was 0.4 percent.
EBITDA, excluding non-recurring items, increased 17.0 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, increased 8.2 percent to SEK 10,796 million (9,976). The EBITDA margin increased to 52.9 percent (50.6).
CAPEX decreased slightly to SEK 4,712 million (4,739) and the CAPEX-to-sales ratio to 23.1 percent (24.0). CAPEX, excluding licenses and spectrum fees, decreased to SEK 3,914 million (4,486) and the CAPEX-to-sales ratio decreased to 19.2 percent (22.7). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, increased to SEK 6,084 million (5,237).
| SEK in millions, except margins and changes |
Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 5,241 | 5,223 | 0.3 | 20,414 | 19,731 | 3.5 |
| of which Kazakhstan | 2,111 | 2,159 | -2.2 | 8,111 | 8,256 | -1.8 |
| of which Azerbaijan | 958 | 984 | -2.6 | 3,824 | 3,934 | -2.8 |
| of which Uzbekistan | 821 | 749 | 9.6 | 3,118 | 2,369 | 31.6 |
| of which Tajikistan | 234 | 244 | -4.1 | 932 | 927 | 0.5 |
| of which Georgia | 227 | 247 | -8.1 | 915 | 1,011 | -9.5 |
| of which Moldova | 129 | 140 | -7.9 | 512 | 536 | -4.5 |
| of which Nepal | 767 | 716 | 7.1 | 3,023 | 2,716 | 11.3 |
| EBITDA excl. non-recurring items | 2,774 | 2,652 | 4.6 | 10,796 | 9,976 | 8.2 |
| of which Kazakhstan | 1,206 | 1,158 | 4.1 | 4,481 | 4,602 | -2.6 |
| of which Azerbaijan | 504 | 484 | 4.1 | 1,912 | 1,964 | -2.6 |
| of which Uzbekistan | 403 | 322 | 25.2 | 1,680 | 904 | 85.8 |
| of which Tajikistan | 115 | 124 | -7.3 | 472 | 470 | 0.4 |
| of which Georgia | 86 | 98 | -12.2 | 385 | 397 | -3.0 |
| of which Moldova | 46 | 53 | -13.2 | 185 | 193 | -4.1 |
| of which Nepal | 459 | 450 | 2.0 | 1,803 | 1,614 | 11.7 |
| Margin (%), total | 52.9 | 50.8 | 52.9 | 50.6 | ||
| Margin (%), Kazakhstan | 57.1 | 53.6 | 55.2 | 55.7 | ||
| Margin (%), Azerbaijan | 52.6 | 49.2 | 50.0 | 49.9 | ||
| Margin (%), Uzbekistan | 49.1 | 43.0 | 53.9 | 38.2 | ||
| Margin (%), Tajikistan | 49.1 | 50.8 | 50.6 | 50.7 | ||
| Margin (%), Georgia | 37.9 | 39.7 | 42.1 | 39.3 | ||
| Margin (%), Moldova | 35.7 | 37.9 | 36.1 | 36.0 | ||
| Margin (%), Nepal | 59.8 | 62.8 | 59.6 | 59.4 |
| Net sales in local currencies and excluding acquisitions |
Oct-Dec | Jan-Dec |
|---|---|---|
| Change (%), total | 7.7 | 11.5 |
| Change (%), Kazakhstan | 1.3 | 3.1 |
| Change (%), Azerbaijan | -0.6 | 1.0 |
| Change (%), Uzbekistan | 25.5 | 51.2 |
| Change (%), Tajikistan | 1.6 | 5.8 |
| Change (%), Georgia | -4.1 | -5.3 |
| Change (%), Moldova | -0.2 | 3.3 |
| Change (%), Nepal | 25.5 | 27.0 |
MegaFon (associated company, in which TeliaSonera holds 25.2 percent and consolidates 27.2 percent, reported with one-quarter lag) in Russia reported a subscription base of 68.3 million, an increase of 3.5 million compared to the corresponding period last year and 2.3 million higher than the previous quarter.
TeliaSonera's income from Russia decreased to SEK 890 million (6,578). Income excluding non-recurring items decreased to SEK 856 million (1,201).
TeliaSonera's income from Russia decreased to SEK 3,128 million (11,542). The Russian ruble depreciated 4.1 percent against the Swedish krona which had a negative impact of SEK 36 million. Income excluding non-recurring items decreased to SEK 3,093 million (3,151).
Turkcell (associated company, in which TeliaSonera holds 38.0 percent, reported with one-quarter lag) in Turkey reported a subscription base of 35.0 million, a decrease of 0.2 million compared to the corresponding period last year and an increase by 0.3 million compared to the previous quarter. In Ukraine, the number of subscriptions increased by 1.5 million to 12.2 million compared to the corresponding period last year and by 0.7 million during the quarter.
TeliaSonera's income from Turkey increased to SEK 800 million (673).
TeliaSonera's income from Turkey increased to SEK 2,779 million (2,280). The Turkish lira depreciated 7.8 percent against the Swedish krona, which had a negative impact of SEK 173 million.
| SEK in millions, except changes | Oct-Dec 2013 |
Oct-Dec 2012 |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 966 | 1,053 | -8.3 | 3,556 | 3,799 | -6.4 |
| EBITDA excl. non-recurring items | 30 | 142 -78.9 | 321 | 483 | -33.5 | |
| Income from associated companies | -2 | -15 -86.7 | -1 | -50 | -98.0 | |
| Operating income | -599 | -113 | -1,083 | -503 | 115.3 | |
| Operating income excl. non-recurring items | -271 | -74 | -583 | -319 | 82.8 | |
| CAPEX | 403 | 321 | 25.5 | 1,054 | 1,014 | 3.9 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 8.8 percent. In reported currency, net sales decreased 8.3 percent to SEK 966 million (1,053).
EBITDA, excluding non-recurring items, fell 78.9 percent to SEK 30 million (142) in reported currency.
Stockholm, January 30, 2014
Johan Dennelind President and CEO
comprise Other Business Services, TeliaSonera Holding and Corporate functions. Other Business Services is responsible for sales of managed-services solutions to business customers in the Nordic countries.
| SEK in millions, except per share data, number of shares and changes |
Oct-Dec 2013 |
Oct-Dec 20121) |
Chg (%) |
Jan-Dec 2013 |
Jan-Dec 20121) |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 26,503 | 27,069 | -2.1 | 101,700 | 104,898 | -3.0 |
| Cost of sales | -16,108 | -15,454 | 4.2 | -57,883 | -58,350 | -0.8 |
| Gross profit | 10,395 | 11,615 | -10.5 | 43,817 | 46,548 | -5.9 |
| Selling, admin. and R&D expenses | -6,034 | -6,028 | 0.1 | -22,631 | -24,037 | -5.8 |
| Other operating income and expenses, net | -1,525 | -5,004 | -69.5 | -2,745 | -7,979 | -65.6 |
| Income from associated companies and joint ventures | 1,724 | 7,243 | -76.2 | 6,021 | 13,868 | -56.6 |
| Operating income | 4,560 | 7,826 | -41.7 | 24,462 | 28,400 | -13.9 |
| Finance costs and other financial items, net | -739 | -803 | -8.0 | -3,094 | -3,918 | -21.0 |
| Income after financial items | 3,821 | 7,023 | -45.6 | 21,368 | 24,482 | -12.7 |
| Income taxes | -1,126 | 145 | -4,601 | -3,314 | 38.8 | |
| Net income | 2,695 | 7,168 | -62.4 | 16,767 | 21,168 | -20.8 |
| Items that may be reclassified to net income: | ||||||
| Foreign currency translation differences | 899 | 1,122 | -3,809 | -2,432 | ||
| Income from associate companies and joint ventures | -33 | 62 | -153 | -260 | ||
| Cash flow hedges | -68 | -38 | 334 | 28 | ||
| Available-for-sale financial instruments | -3 | -1 | -2 | 24 | ||
| Income tax relating to items that will be reclassified | 320 | 361 | 367 | -439 | ||
| Items that will not be reclassified to net income: | ||||||
| Remeasurements of defined benefit pension plans | 1,350 | 73 | 4,402 | -1,635 | ||
| Income tax relating to items that will not be reclassified | -280 | -89 | -966 | 361 | ||
| Associates' remeasurements of defined benefit pension plans | -9 | |||||
| Other comprehensive income | 2,185 | 1,490 | 164 | -4,353 | ||
| Total comprehensive income | 4,880 | 8,658 | 16,931 | 16,815 | ||
| Net income attributable to: | ||||||
| Owners of the parent | 2,190 | 6,880 | 14,970 | 19,886 | ||
| Non-controlling interests | 505 | 288 | 1,797 | 1,282 | ||
| Total comprehensive income attributable to: | ||||||
| Owners of the parent | 4,310 | 8,468 | 15,260 | 15,797 | ||
| Non-controlling interests | 570 | 190 | 1,671 | 1,018 | ||
| Earnings per share (SEK), basic and diluted | 0.51 | 1.59 | 3.46 | 4.59 | ||
| 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 | 8,309 | 8,280 | 0.4 | 33,656 | 35,074 | -4.0 |
| EBITDA excl. non-recurring items | 8,728 | 9,002 | -3.0 | 35,584 | 36,171 | -1.6 |
| Depreciation, amortization and impairment losses | -5,473 | -7,697 | -28.9 | -15,215 | -20,542 | -25.9 |
| Operating income excl. non-recurring items | 7,100 | 7,636 | -7.0 | 28,534 | 28,682 | -0.5 |
1) Certain restatements have been made, see reference on page 25.
| SEK in millions | Dec 31, 2013 |
Dec 31, 20121) |
|---|---|---|
| Assets | ||
| Goodwill and other intangible assets | 81,522 | 83,278 |
| Property, plant and equipment | 64,792 | 62,657 |
| Investments in associates and joint ventures, deferred tax assets and other non-current assets |
38,073 | 38,858 |
| Long-term interest-bearing receivables | 9,479 | 10,880 |
| Total non-current assets | 193,866 | 195,673 |
| Inventories | 1,582 | 1,623 |
| Trade receivables, current tax assets and other receivables | 19,346 | 22,298 |
| Short-term interest-bearing receivables | 6,313 | 3,647 |
| Cash and cash equivalents | 31,721 | 29,805 |
| Total current assets | 58,962 | 57,373 |
| Total assets | 252,828 | 253,046 |
| Equity and liabilities | ||
| Equity attributable to owners of the parent | 108,324 | 105,150 |
| Equity attributable to non-controlling interests | 4,610 | 3,956 |
| Total equity | 112,934 | 109,106 |
| Long-term borrowings | 80,089 | 82,184 |
| Deferred tax liabilities, other long-term provisions | 21,781 | 25,035 |
| Other long-term liabilities | 1,356 | 1,190 |
| Total non-current liabilities | 103,226 | 108,409 |
| Short-term borrowings | 10,634 | 9,403 |
| Trade payables, current tax liabilities, short-term provisions and other current liabilities | 26,034 | 26,128 |
| Total current liabilities | 36,668 | 35,531 |
| Total equity and liabilities | 252,828 | 253,046 |
1) Certain restatements have been made, see reference on page 25.
| SEK in millions | Oct-Dec 2013 |
Oct-Dec 20121) |
Jan-Dec 20133) |
Jan-Dec 20121)2) |
|---|---|---|---|---|
| Cash flow before change in working capital | 6,506 | 6,819 | 30,306 | 39,952 |
| Change in working capital | 863 | 864 | 730 | -1,073 |
| Cash flow from operating activities | 7,369 | 7,683 | 31,036 | 38,879 |
| Cash CAPEX | -5,243 | -4,749 | -14,726 | -15,139 |
| Free cash flow | 2,126 | 2,934 | 16,310 | 23,740 |
| Cash flow from other investing activities | 168 | 8,061 | 361 | 8,780 |
| Total cash flow from investing activities | -5,075 | 3,312 | -14,365 | -6,359 |
| Cash flow before financing activities | 2,294 | 10,995 | 16,671 | 32,520 |
| Cash flow from financing activities | 2,048 | 7,463 | -15,013 | -15,231 |
| Cash flow for the period | 4,342 | 18,458 | 1,658 | 17,289 |
| Cash and cash equivalents, opening balance | 27,211 | 11,289 | 29,805 | 12,631 |
| Cash flow for the period | 4,342 | 18,458 | 1,658 | 17,289 |
| Exchange rate differences | 168 | 58 | 258 | -115 |
| Cash and cash equivalents, closing balance | 31,721 | 29,805 | 31,721 | 29,805 |
1) Certain restatements have been made, see reference on page 25.
2) Including dividends from MegaFon net of taxes of SEK 11,726 million.
| Jan-Dec 2013 | Jan-Dec 2012 | |||||
|---|---|---|---|---|---|---|
| SEK in millions | Owners of the parent |
Non controlling interests |
Total equity | Owners of the parent |
Non controlling interests |
Total equity |
| Opening balance | 105,150 | 3,956 | 109,106 | 115,589 | 7,353 | 122,942 |
| Effect of change in accounting principle1) | – | – | – | -3,016 | – | -3,016 |
| Adjustment of opening balance related to Turkcell (inflation accounting in Belarus) |
– | – | – | 110 | – | 110 |
| Dividends | -12,340 | -1,017 | -13,357 | -12,341 | -3,127 | -15,468 |
| Business combinations | – | – | – | – | -9 | -9 |
| Repurchased treasury shares | -4 | – | -4 | – | – | – |
| Acquisition of non-controlling interest | – | – | – | -10,724 | -1,970 | -12,694 |
| Disposal of non-controlling interest | – | – | – | 2,639 | 748 | 3,387 |
| Other transactions with owners | – | – | – | – | -57 | -57 |
| Total comprehensive income | 15,260 | 1,671 | 16,931 | 15,797 | 1,018 | 16,815 |
| Share-based payments | 18 | – | 18 | 16 | – | 16 |
| Effect of equity transactions in associates | 240 | – | 240 | -2,920 | – | -2,920 |
| Closing balance | 108,324 | 4,610 | 112,934 | 105,150 | 3,956 | 109,106 |
1) See reference below.
As in the annual accounts for 2012, TeliaSonera's consolidated financial statements as of and for the year ended December 31, 2013, 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.
IASB has published amendments to IAS 19 "Defined Benefit Plans: Employee Contributions" applicable for annual periods beginning on or after July 1, 2014. IAS 19 requires an entity to consider contributions from employees or third parties when accounting for defined benefit plans. The amendments explain that the methods permitted for attributing contributions from employees or third parties will differ depending on if the contributions are dependent on the number of years of the employee's service or not. TeliaSonera is presently analyzing the effects of the amendments if any.
IASB has also published IFRS 9 Financial Instruments: Hedge Accounting and amendments to IFRS 7 Financial Instruments: Disclosures and IAS 39 Financial Instruments: Recognition and Measurement. Summary of key changes:
The new model in IFRS 9 more closely aligns hedge accounting with risk management activities undertaken by companies when hedging their financial and non-financial risk exposures. The change in accounting would mean that gains, caused by a worsening in an entity's own credit risk on liabilities recognized at fair value, are no longer recognized in profit or loss but in other comprehensive income (OCI). The amendments will facilitate earlier application (of this accounting principle without full IFRS 9 application) and will allow an entity to continue to measure its financial instruments in accordance with IAS 39 but to choose to recognize changes in own credit in OCI.
IASB has removed the January 1, 2015 mandatory effective date of IFRS 9, to provide sufficient time for preparers of financial statements to make the transition to the new requirements and decided that a new date should be decided upon when the entire IFRS 9 project is closer to completion. TeliaSonera is presently analyzing the effects of the amendments of IAS 39 and IFRS 7. TeliaSonera will consider IFRS 9's full impact when the standard is completed by the Board.
For information, see corresponding section in TeliaSonera's Interim Report January-March 2013.
| SEK in millions | Oct-Dec 2013 |
Oct-Dec 2012 |
Jan-Dec 2013 |
Jan-Dec 2012 |
|---|---|---|---|---|
| Within EBITDA | -419 | -723 | -1,928 | -1,097 |
| Restructuring charges, synergy implementation costs, etc.: | ||||
| Mobility Services | -88 | -191 | -373 | -228 |
| Broadband Services | -67 | -350 | -486 | -633 |
| Eurasia | -102 | -143 | -349 | -287 |
| Other operations | -160 | -39 | -331 | -147 |
| of which TeliaSonera Holding | -9 | 11 | -3 | -48 |
| Capital gains/losses | -2 | 0 | -389 | 198 |
| Within Depreciation, amortization and impairment losses | -2,156 | -4,466 | -2,179 | -7,565 |
| Impairment losses, accelerated depreciation: | ||||
| Mobility Services | -1,048 | -2,914 | -1,048 | -5,984 |
| Broadband Services | -439 | -1,551 | -462 | -1,555 |
| Eurasia | -500 | – | -500 | – |
| Other operations | -169 | -1 | -169 | -26 |
| Within Income from associated companies and joint ventures | 35 | 5,378 | 35 | 8,380 |
| Capital gains/losses | 35 | 5,378 | 35 | 8,380 |
| Total | -2,540 | 189 | -4,072 | -282 |
| SEK in millions | Dec 31, 2013 |
Dec 31, 20121) |
|---|---|---|
| Deferred tax assets | 5,493 | 7,410 |
| Deferred tax liabilities | -10,063 | -10,287 |
| Net deferred tax liabilities (-)/assets (+) | -4,570 | -2,877 |
1) Certain restatements have been made, see reference above.
| SEK in millions | Oct-Dec 2013 |
Oct-Dec 20121) |
Jan-Dec 2013 |
Jan-Dec 20121) |
|---|---|---|---|---|
| Mobility Services | 1,347 | -434 | 9,012 | 4,229 |
| Broadband Services | 590 | -547 | 4,023 | 4,054 |
| Eurasia | 3,222 | 8,952 | 12,510 | 20,629 |
| Other operations | -599 | -113 | -1,083 | -503 |
| Total segments | 4,560 | 7,858 | 24,462 | 28,409 |
| Elimination of inter-segment profits | 0 | -32 | 0 | -9 |
| Group | 4,560 | 7,826 | 24,462 | 28,400 |
1) Certain restatements have been made, see reference on page 25.
| SEK in millions | Oct-Dec 2013 |
Oct-Dec 2012 |
Jan-Dec 2013 |
Jan-Dec 2012 |
|---|---|---|---|---|
| CAPEX | 6,047 | 4,813 | 16,332 | 15,685 |
| Intangible assets | 1,670 | 614 | 3,322 | 2,174 |
| Property, plant and equipment | 4,377 | 4,199 | 13,010 | 13,511 |
| Acquisitions and other investments | 255 | 384 | 1,461 | 1,905 |
| Asset retirement obligations | 167 | 361 | 220 | 651 |
| Goodwill and fair value adjustments | 52 | 0 | 1,038 | 1,206 |
| Equity holdings | 36 | 23 | 203 | 48 |
| Total | 6,302 | 5,197 | 17,793 | 17,590 |
In the 2013 annual impairment tests, the recoverable amounts for Mobility Services Denmark, Broadband Services Denmark and Mobility Services Lithuania fell short of the carrying values and hence, related goodwill was impaired. Accordingly, under IAS 36, goodwill impairment charges of SEK 756 million, SEK 143 million and SEK 269 million, respectively, were recognized in the fourth quarter and classified as non-recurring items. The Danish goodwill impairment losses were based on higher weighted average cost of capital (WACC). In addition, for the mobile operations in both countries long-term assumptions for the CAPEX-to-sales ratio were revised upwards. For Lithuania, the impairment test was also impacted by a decrease of the total value of the Lithuanian mobile market due to stiff competition and price pressure. The uncertainty regarding recoverable values for the Danish operations was disclosed in TeliaSonera's Annual Report 2012.
Further, an intangible asset impairment charge totaling SEK 500 million related to the Kazakh operations acquired in January 2013 was recognized in the fourth quarter and classified as a non-recurring item. The charge is related to frequency permits in the Wimax operation in Kazakhstan and is based on the view that it will take longer than expected to achieve full use of the acquired frequencies due to the current lack of of a 4G license.
| Long-term and Short-term Borrowings1) | Dec 31, 2013 | Dec 31, 2012 | |||
|---|---|---|---|---|---|
| SEK in millions | Carrying value | Fair value | Carrying value | Fair value 2) | |
| Long-term borrowings | |||||
| Open-market financing program borrowings in fair value hedge | |||||
| relationships | 19,289 | 20,225 | 17,600 | 18,016 | |
| Interest rate swaps at fair value | 254 | 254 | 340 | 340 | |
| Cross currency interest rate swaps at fair value | 1,630 | 1,630 | 1,956 | 1,956 | |
| Subtotal | 21,173 | 22,109 | 19,896 | 20,312 | |
| Open-market financing program borrowings | 57,026 | 60,698 | 59,915 | 67,234 | |
| Other borrowings at amortized cost | 1,834 | 1,834 | 2,311 | 2,311 | |
| Subtotal | 80,033 | 84,641 | 82,122 | 89,857 | |
| Finance lease agreements | 56 | 56 | 62 | 62 | |
| Total long-term borrowings | 80,089 | 84,697 | 82,184 | 89,919 | |
| Short term borrowings | |||||
| Open-market financing program borrowings in fair value hedge | |||||
| relationships | 2,735 | 2,818 | 401 | 413 | |
| Interest rate swaps designated as hedging instruments | 31 | 31 | 29 | 29 | |
| Interest rate swaps held for trading | – | – | 42 | 42 | |
| Cross currency interest rate swaps held for trading | 17 | 17 | 343 | 343 | |
| Subtotal | 2,783 | 2,866 | 815 | 827 | |
| Utilized bank overdraft and short-term credit facilities at amortized | |||||
| cost | 811 | 811 | 423 | 423 | |
| Open-market financing program borrowings | 5,954 | 5,995 | 5,204 | 5,280 | |
| Other borrowings at amortized cost | 1,084 | 1,084 | 2,958 | 2,909 | |
| Subtotal | 10,632 | 10,756 | 9,400 | 9,439 | |
| Finance lease agreements | 3 | 3 | 3 | 3 | |
| Total short-term borrowings | 10,635 | 10,759 | 9,403 | 9,442 |
1) For financial assets, fair values equal carrying values. For information on fair value estimation, see TeliaSonera's Annual Report
2012, Note C3 to the consolidated financial statements.
2) Restated for comparability
| Financial Assets and Liabilities | Dec 31, 2013 | Dec 31, 2012 | ||||||
|---|---|---|---|---|---|---|---|---|
| by Fair Value Hierarchy Level1) | Carrying | of which | Carrying | of which | ||||
| SEK in millions | value | Level 1 | Level 2 | Level 3 | value | Level 1 | Level 2 | Level 3 |
| Financial assets at fair value | ||||||||
| Equity instruments available-for-sale | 190 | – | – | 190 | 189 | – | – | 189 |
| Equity instruments held-for-trading | 70 | – | – | 70 | 69 | – | – | 69 |
| Bonds available-for-sale | 162 | 160 | – | 2 | 4 | – | – | 4 |
| Derivatives designated as hedging | ||||||||
| instruments | 1,533 | – | 1,533 | – | 1,790 | – | 1,790 | – |
| Derivatives held-for-trading | 1,374 | – | 1,374 | – | 570 | – | 569 | – |
| Total financial assets at fair value by | ||||||||
| level | 3,329 | 160 | 2,907 | 262 | 2,622 | – | 2,359 | 262 |
| Financial liabilities at fair value | ||||||||
| Borrowings in fair value hedge | ||||||||
| relationships | 22,025 | – | 22,025 | – | 18,001 | – | 18,001 | – |
| Derivatives designated as hedging | ||||||||
| instruments | 496 | – | 496 | – | 802 | – | 802 | – |
| Derivatives held-for-trading | 1,607 | – | 1,607 | – | 2,044 | – | 2,044 | – |
| Total financial liabilities at fair value | ||||||||
| by level | 24,128 | – | 24,128 | – | 20,847 | – | 20,847 | – |
1) For information on fair value hierarchy levels and fair value estimation, see TeliaSonera's Annual Report 2012, Note C3 to the
consolidated financial statements.
In the year ended December 31, 2013, TeliaSonera purchased services for SEK 137 million, and sold services for SEK 226 million. Related parties in these transactions were mainly MegaFon, Turkcell and Lattelecom.
| SEK in millions | Dec 31, 2013 |
Dec 31, 2012 |
|---|---|---|
| Long-term and short-term borrowings | 90,723 | 91,586 |
| Less derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit collateral |
-2,878 | -2,175 |
| Less short-term investments, cash and bank | -32,071 | -29,968 |
| Net debt | 55,774 | 59,443 |
The rating from Standard & Poor's and Moody´s, respectively, remained unchanged with a credit rating on TeliaSonera AB of A-/A3 for long-term borrowings and A-2/P-2 for shortterm borrowings with a stable outlook.
2013 ended on a positive note and credit markets have continued to offer favorable new issue conditions for issuers. Central bank stimulus continue to build abundant liquidity in financial markets and enforces yield hunting themes among investors which keep yields and credit spreads low.
TeliaSonera issued SEK 1,850 million in a rare 10 year SEK transaction in the beginning of November. The three tranche deal was in one fixed tranche with an annual coupon of 3.625 percent and two floating tranches with a spread of 100 basis points to 3 month Stibor.
Credit markets are expected to stay positive for 2014 fueled by central bank liquidity. For TeliaSonera the funding need for 2014 is expected to be limited. The opportunistic approach remains to take advantage of attractive funding opportunities when they appear.
| Dec 31, 2013 |
Dec 31, 20121) |
|
|---|---|---|
| Return on equity (%, rolling 12 months) | 15.9 | 20.5 |
| Return on capital employed (%, rolling 12 months) | 13.9 | 14.9 |
| Equity/assets ratio (%) | 39.5 | 38.2 |
| Net debt/equity ratio (%) | 55.8 | 61.4 |
| Net debt/EBITDA rate excl. non-recurring items (multiple, rolling 12 months) |
1.57 | 1.64 |
| Net debt/assets ratio | 22.1 | 23.5 |
| Owners' equity per share (SEK) | 25.02 | 24.28 |
1) Certain restatements have been made, see reference on page 25.
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 5,934 million, MegaFon shares held by TCI, representing 4.9 percent of the issued shares in MegaFon, are presently pledged to Telia-Sonera. 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, 2013, the maximum potential future payments that TeliaSonera could be required to make under issued financial guarantees totaled SEK 315 million, of which SEK 284 million referred to guarantees for pension obligations. Collateral pledged totaled SEK 210 million.
As of December 31, 2013, contractual obligations totaled SEK 3,208 million, of which SEK 929 million referred to contracted build-out of TeliaSonera's fixed networks in Sweden.
For a minor business combination in the fourth quarter of 2013, the cost of combination totaled SEK 52 million and the net cash outflow SEK 52 million. Goodwill was SEK 0 million. The total cost of combination and fair values 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 adjustment.
| Condensed Income Statements SEK in millions |
Oct-Dec 2013 |
Oct-Dec 2012 |
Jan-Dec 2013 |
Jan-Dec 2012 |
|---|---|---|---|---|
| Net sales | 1 | 14 | 7 | 61 |
| Operating income | -920 | -338 | -1,023 | -436 |
| Income after financial items | -3,368 | -2,411 | 7,801 | 6,186 |
| Income before taxes | -207 | 120 | 17,862 | 13,954 |
| Net income | -206 | 89 | 16,860 | 12,327 |
For the full year period ended December 31, 2013, income before taxes improved from increased dividends which was offset by lower finance net.
| Condensed Balance Sheets SEK in millions |
Dec 31, 2013 |
Dec 31, 2012 |
|---|---|---|
| Non-current assets | 179,378 | 202,089 |
| Current assets | 64,302 | 63,876 |
| Total assets | 243,680 | 265,965 |
| Shareholders' equity | 86,661 | 81,871 |
| Untaxed reserves | 11,246 | 12,730 |
| Provisions | 571 | 539 |
| Liabilities | 145,202 | 170,825 |
| Total equity and liabilities | 243,680 | 265,965 |
Total investments in the period were SEK 1,090 million (21,723), of which SEK 1,052 million (20,695) referred to shareholder contributions to subsidiaries and associates.
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 5,934 million, MegaFon shares held by TCI, representing 4.9 percent of the issued shares in MegaFon, are presently pledged to the parent company. 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 geographic 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. Management 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. Additionally, these risks may affect TeliaSonera's share price from time to time.
TeliaSonera has an established risk management framework in place to regularly identify, analyze and assess, report business and financial 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 C27 and C35 to the consolidated financial statements in TeliaSonera's Annual Report 2012 for a detailed description of some of the factors that may affect TeliaSonera's business, financial position and results of operations.
In addition, risks and uncertainties that could specifically impact the quarterly results of operations during 2014 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 open-market 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.
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 non-recurring 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. 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 7 billion. Another risk is the potential establishment of foreign ownership restrictions or other potential actions against entities with foreign ownership, formally or informally. Weakening of the economies or currencies or other negative developments in these markets might have a significantly negative effect on TeliaSonera's results of operations.
Impairment losses and restructuring charges. TeliaSonera 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 shareholderrelated matters. One example where TeliaSonera is dependent on a minority owner is Fintur Holdings B.V. (Fintur's minority shareholder 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 Telia-Sonera 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 Telia-Sonera'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 Telia-Sonera, 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 TeliaSonera's results derives from Mega-Fon 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 in the board work of Turkcell. TeliaSonera might not be able to assure that the associated companies apply the same corporate responsibility 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.
Sustainability. TeliaSonera is subject to a number of sustainability related risks, including but not limited to, environment, network integrity, data security, corruption and human rights. 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 Telia-Sonera's sustainability requirements may damage customer or other stakeholders' perception of TeliaSonera and negatively impact TeliaSonera's business operations and its brand.
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 Telia-Sonera, 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.
Addressable cost base is defined as personnel costs, marketing costs and all other operating expenses other than purchases of goods and sub-contractor services as well as interconnect, roaming and other network-related costs. Addressable cost base does not include non-recurring items.
Billed revenues are defined as 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/assets ratio: Net debt expressed as a percentage of total assets.
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 2012, unless otherwise stated.
Annual General Meeting 2014 April 2, 2014 Interim Report January–March 2014 April 23, 2014 Interim Report January–June 2014 July 17, 2014 Interim Report January–September 2014 October 17, 2014 Year-end Report January–December 2014 January 29, 2015
TeliaSonera AB Investor Relations SE–106 63 Stockholm, Sweden Tel. +46 8 504 550 00 Fax +46 8 611 46 42 www.teliasonera.com
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 30, 2014.
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