Earnings Release • Oct 17, 2013
Earnings Release
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| SEK in millions, except key ratios, per share data and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 25,381 | 25,842 | -1.8 | 75,197 | 77,829 | -3.4 |
| Change % local FX ex acquisitions and disposals | 0.0 | -0.2 | ||||
| Addressable cost base¹) | 6,760 | 7,146 | -5.4 | 20,914 | 22,250 | -6.0 |
| Change % local FX ex acquisitions and disposals | -3.9 | -3.0 | ||||
| EBITDA¹) excl. non-recurring items² ) |
9,419 | 9,283 | 1.5 | 26,856 | 27,169 | -1.2 |
| Margin (%) | 37.1 | 35.9 | 35.7 | 34.9 | ||
| Operating income | 7,130 | 6,762 | 5.4 | 19,902 | 20,574 | -3.3 |
| Operating income excl. non-recurring items | 7,721 | 6,878 | 12.3 | 21,434 | 21,046 | 1.8 |
| Net income | 5,135 | 4,353 | 18.0 | 14,072 | 14,001 | 0.5 |
| of which attributable to owners of the parent | 4,641 | 4,032 | 15.1 | 12,780 | 13,007 | -1.7 |
| Earnings per share (SEK) | 1.07 | 0.93 | 15.1 | 2.95 | 3.00 | -1.7 |
| Return on equity (%, rolling 12 months) | 21.5 | 18.7 | 21.5 | 18.7 | ||
| CAPEX-to-sales (%) | 15.9 | 12.5 | 13.7 | 14.0 | ||
| Free cash flow | 7,308 | 3,825 | 91.1 | 14,184 | 20,806 | -31.8 |
1) Please refer to the last page for definitions. 2) Non-recurring items; see table on page 22.
TeliaSonera AB (publ), Corporate Reg. No. 556103-4249, Registered office: Stockholm. Tel. +46 8 504 550 00. www.teliasonera.com
"In the third quarter, organic revenues stayed flat and margins improved further compared to the corresponding period last year. Revenues continued to be impacted by difficult economic environment in our markets and lower regulated mobile termination rates, while profitability was supported by a further reduction in the cost base.
Demand for mobile data remains strong and our new data centric pricing models continue to gain traction across Scandinavia. It is particularly encouraging to report positive billed revenue growth in all three markets where these price plans have been introduced, reinforcing our view that we are on the right track.
The rapid development of our industry continues and legacy is being replaced with new technologies and business models. We maintain an active role in this migration by expanding high speed internet via fiber and 4G. Our ambition is to offer the best customer experience through high-quality networks and it is vital for our investment decisions that we can rely upon a transparent and predictable regulatory framework.
My initial observations as new CEO are that TeliaSonera has a solid asset base with a diversified product portfolio, attractive footprint, strong brands and competent people. The mix of mature and emerging markets give us a robust foundation. However, in recent years our position has weakened in too many of our markets and it is essential to strengthen our competitiveness going forward. In a fast changing environment we have to understand our customers' requirements and further develop a company culture that encourages agility and innovation.
In order to compete effectively and to support long term profitability, it is crucial to have an efficient organization and an appropriate cost base. We have to reduce complexity to enable an effective way of working, accelerate decision making and ensure our employees stay skilled and motivated.
It is obvious that managing our business in a sustainable way is vital to our reputation and future success. We need to further develop and strengthen our governance as well as secure common values within the group. It is important for all our stakeholders that we act responsibly and we also want to make sure our partners through the whole value chain of TeliaSonera behave in a similar responsible way. By this we can create a sustainable company presence in all our markets.
Since I took over as CEO, some measures to strengthen governance have been taken. A new compliance function has been established with direct reporting line to me. Furthermore, a new CEO office function will support the Eurasia review the board has initiated, as well as leading the program for TeliaSonera's journey ahead. In addition, a new group function for Strategy, Mergers & Acquisitions and Innovation will enable a holistic view on TeliaSonera's future development.
The next phase of our journey has just begun and based on the performance for the first nine months we reiterate our full year 2013 outlook."
Net sales in local currencies, excluding acquisitions and disposals, are expected to be flat. Currency fluctuations may have a material impact on reported figures in Swedish krona.
The EBITDA margin, excluding non-recurring items, is expected to increase slightly compared to last year (2012: 34.5 percent).
The CAPEX-to-sales ratio is expected to be approximately 14 percent, excluding license and spectrum fees (2012: 14.6 percent).
As announced in the third quarter of 2012, efficiency measures including personnel reductions net of 2,000 employees will lower the cost base by SEK 2 billion net over a period of two years. The savings amounted to SEK 0.2 billion in 2012 and an additional SEK 0.6 billion was recorded in the first nine months of 2013.
During 2013, 1,800 employees in the Nordics and Baltics will be affected and around 1,460 people have been given notice year to date.
Total costs for the reductions are estimated to SEK 1.7 billion, of which SEK 1.4 billion in 2013. Costs of SEK 1.0 billion have been recorded year to date. The redundancies will be completed by early 2014 at the latest.
Net sales in local currencies, excluding acquisitions and disposals, were stable. In reported currency, net sales decreased 1.8 percent to SEK 25,381 million (25,842). The negative effect of exchange rate fluctuations was 0.9 percent and the negative effect of acquisitions and disposals was 0.9 percent.
In Mobility Services, net sales in local currencies, excluding acquisitions and disposals, decreased 3.0 percent. In reported currency, net sales decreased 2.1 percent to SEK 12,208 million (12,476).
In Broadband Services, net sales in local currencies, excluding acquisitions and disposals, decreased 2.4 percent. In reported currency, net sales decreased 4.5 percent to SEK 8,252 million (8,644).
In Eurasia, net sales in local currencies, excluding acquisitions and disposals, increased 11.1 percent. Net sales in reported currency increased 3.1 percent to SEK 5,292 million (5,133).
Mobility services Broadband services Eurasia Other operations
The number of subscriptions increased by 6.9 million from the end of the third quarter of 2012 to 185.8 million. In the consolidated operations the number of subscriptions increased by 3.2 million to 72.7 million. In the associated companies, the number of subscriptions increased by 3.7 million to 113.1 million. During the third quarter, the total number of subscriptions increased by 0.9 million in the consolidated operations and by 1.4 million in the associated companies.
The addressable cost base in local currencies, excluding acquisitions and disposals, decreased 3.9 percent. In reported currency, the addressable cost base decreased 5.4 percent to SEK 6,760 million (7,146).
EBITDA, excluding non-recurring items, increased 3.8 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 1.5 percent to SEK 9,419 million (9,283). The EBITDA margin, excluding non-recurring items, increased to 37.1 percent (35.9).
Operating income, excluding non-recurring items, increased 12.3 percent to SEK 7,721 million (6,878). Income from associated companies, excluding non-recurring items, increased to SEK 1,503 million (833).
Non-recurring items affecting operating income totaled SEK -591 million (-116), mainly related to efficiency measures and the divestment of Nepal Satellite which generated a capital loss of SEK 389 million.
Financial items totaled SEK -752 million (-977) of which SEK -670 million (-750) related to net interest expenses.
Income taxes decreased to SEK 1,243 million (1,432). The effective tax rate decreased to 19.5 percent (24.8) due to increased earnings from associated companies and reduced tax rate in Sweden.
Non-controlling interests in subsidiaries increased to SEK 494 million (321) of which SEK 447 million (271) was related to the Eurasian operations and SEK 38 million (39) to LMT and TEO.
Net income attributable to owners of the parent company increased 15.1 percent to SEK 4,641 million (4,032) and earnings per share to SEK 1.07 (0.93).
CAPEX increased to SEK 4,027 million (3,240) and the CAPEX-to-sales ratio increased to 15.9 percent (12.5). The CAPEX-to-sales ratio, excluding license and spectrum fees, increased to 14.3 percent (12.5).
Free cash flow increased to SEK 7,308 million (3,825) mainly explained by dividend from MegaFon and positive changes in working capital.
Net debt decreased to SEK 56,782 million at the end of the third quarter (66,151 at the end of the second quarter of 2013). The net debt/EBITDA ratio was 1.58 (1.85 at the end of the second quarter of 2013).
The equity/assets ratio was 40.9 percent (41.2 percent at the end of the second quarter of 2013).
Net sales in local currencies, excluding acquisitions and disposals, decreased 0.2 percent. In reported currency, net sales decreased 3.4 percent to SEK 75,197 million (77,829). The negative effect of exchange rate fluctuations was 2.5 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 3.0 percent. In reported currency, the addressable cost base decreased 6.0 percent to SEK 20,914 million (22,250).
EBITDA, excluding non-recurring items, increased 2.2 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 1.2 percent to SEK 26,856 million (27,169). The EBITDA margin, excluding non-recurring items, increased to 35.7 percent (34.9).
Operating income, excluding non-recurring items, increased 1.8 percent to SEK 21,434 million (21,046). Income from associated companies, excluding non-recurring items, increased to SEK 4,297 million (3,623).
Non-recurring items affecting operating income totaled SEK -1,532 million (-471), mainly related to efficiency measures.
Financial items totaled SEK -2,355 million (-3,114) of which SEK -2,197 million (-2,412) related to net interest expenses.
Income taxes increased to SEK 3,475 million (3,459). The effective tax rate was 19.8 percent (19.8).
Non-controlling interests in subsidiaries increased to SEK 1,292 million (994) of which SEK 1,166 million (817) was related to the Eurasian operations and SEK 98 million (147) to LMT and TEO.
Net income attributable to owners of the parent company decreased 1.7 percent to SEK 12,780 million (13,007) and earnings per share to SEK 2.95 (3.00).
CAPEX decreased to SEK 10,285 million (10,872) and the CAPEX-to-sales ratio decreased to 13.7 percent (14.0). The CAPEX-to-sales ratio, excluding license and spectrum fees, decreased to 12.7 percent (13.7).
Free cash flow decreased to SEK 14,184 million (20,806). Free cash flow excluding dividends from MegaFon net of taxes was SEK 12,244 million (9,080).
● 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 remains in his current 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.
| SEK in millions, except margins, operational data and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 12,208 | 12,476 | -2.1 | 36,090 | 37,557 | -3.9 |
| Chg % local FX ex acquisitions and disposals | -3.0 | -2.5 | ||||
| EBITDA excl. non-recurring items | 3,834 | 3,658 | 4.8 | 11,065 | 11,018 | 0.4 |
| Margin (%) | 31.4 | 29.3 | 30.7 | 29.3 | ||
| Operating income | 2,801 | 2,542 | 10.2 | 7,665 | 4,663 | 64.4 |
| Operating income excl. non-recurring items | 2,813 | 2,579 | 9.1 | 7,950 | 7,759 | 2.5 |
| CAPEX | 1,136 | 944 | 20.3 | 3,078 | 3,128 | -1.6 |
| Subscriptions, period-end (thousands) | 20,718 | 20,170 | 2.7 | 20,718 | 20,170 | 2.7 |
| Employees, period-end | 6,373 | 6,747 | -5.5 | 6,373 | 6,747 | -5.5 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 3.0 percent. In reported currency, net sales decreased 2.1 percent to SEK 12,208 million (12,476). The positive effect of exchange rate fluctuations was 0.9 percent.
In Sweden, net sales decreased 0.5 percent to SEK 4,159 million (4,180). Billed revenue growth improved further in the quarter with higher demand for mobile data, while total revenue growth continued to be affected by reduced regulated interconnect rates. Our new pricing models, with flat fees for unlimited voice and messaging, combined with bucket-pricing for data, accounted for close to 30 percent of new sales in the B2C and B2B segments combined.
In Finland, net sales in local currency decreased 7.2 percent to the equivalent of SEK 1,856 million (1,938). Lower interconnect rates continued to burden total revenue growth, but pressure on billed revenue eased further in the quarter with 38,000 post-paid subscriptions added in the quarter. There was a slight stabilization in the consumer market in the quarter, but price competition remained intense within the B2B area.
In Norway, net sales in local currency decreased 4.3 percent to the equivalent of SEK 1,713 million (1,866). Billed revenue growth turned positive in the quarter, while total sales were impacted by lower interconnect rates and reduced wholesale revenues.
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 Denmark, net sales in local currency decreased 4.2 percent to the equivalent of SEK 1,083 million (1,090), significantly impacted by reduced regulated interconnect. Billed revenue growth continued to increase, helped by primarily increased growth in data. The new price models contributed positively to ARPU and around 40 percent of the subscription base has been migrated.
In Estonia, Latvia and Lithuania, net sales in local currencies decreased 14.8 percent, 4.4 percent and 10.0 percent, respectively, to the equivalent of SEK 338 million (387), SEK 386 million (395) and SEK 291 million (313), respectively. All operations were burdened by pressure on billed revenues and impact from reduced interconnect rates. In Estonia and Lithuania sales were also affected by lower growth in equipment sales.
In Spain, net sales in local currency increased 1.1 percent to the equivalent of SEK 2,395 million (2,317). Reported revenue growth was significantly impacted by major reductions in regulated interconnect rates, but also billed revenue growth slowed as a result of higher pressure on voice revenues. The competitive environment is challenging and churn increased in the quarter.
The number of subscriptions increased by 0.5 million from the end of the third quarter of 2012 to 20.7 million. Growth was strongest in Spain and Sweden with an increase of 0.3 million and 0.1 million to 3.8 million and 6.6 million subscriptions, respectively. During the quarter the total number of subscriptions remained flat.
EBITDA, excluding non-recurring items, increased 4.5 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, increased 4.8 percent to SEK 3,834 million (3,658). The EBITDA margin increased to 31.4 percent (29.3).
In Sweden, the EBITDA margin increased to 46.7 percent (44.1), largely due to improved gross margin in combination with reduced cost for personnel, IT and sales and marketing. In Finland, the EBITDA margin increased to 34.9 percent (30.3) helped by an improved gross margin as well as reduced operating expenses.
In Norway, the EBITDA margin increased to 34.7 percent (33.1), mainly explained by improved gross margin and reduced costs for subsidies and marketing. In Denmark, the EBITDA margin increased to 16.9 percent (12.6), helped by lower operating expenses.
The EBITDA margin in Estonia increased to 32.8 percent (29.2) due to higher gross margin. In Latvia and Lithuania, the EBITDA margins decreased to 30.8 percent (33.2) and 25.8 percent (27.5), respectively, as cost cuts did not offset the revenue decline.
In Spain, the EBITDA margin increased to 6.9 percent (6.2), partly helped by lower sales and marketing costs.
CAPEX increased to SEK 1,136 million (944) and the CAPEX-to-sales ratio increased to 9.3 percent (7.6). CAPEX, excluding licenses and spectrum fees, increased to SEK 1,136 million (944) and the CAPEX-to-sales ratio to 9.3 percent (7.6). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 2,698 million (2,714).
| SEK in millions, except margins and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 12,208 | 12,476 | -2.1 | 36,090 | 37,557 | -3.9 |
| of which Sweden | 4,159 | 4,180 | -0.5 | 12,484 | 12,677 | -1.5 |
| of which Finland | 1,856 | 1,938 | -4.2 | 5,556 | 6,153 | -9.7 |
| of which Norway | 1,713 | 1,866 | -8.2 | 5,115 | 5,724 | -10.6 |
| of which Denmark | 1,083 | 1,090 | -0.6 | 3,179 | 3,578 | -11.2 |
| of which Lithuania | 291 | 313 | -7.0 | 858 | 945 | -9.2 |
| of which Latvia | 386 | 395 | -2.3 | 1,117 | 1,168 | -4.4 |
| of which Estonia | 338 | 387 | -12.7 | 954 | 1,132 | -15.7 |
| of which Spain | 2,395 | 2,317 | 3.4 | 6,865 | 6,204 | 10.7 |
| EBITDA excl. non-recurring items | 3,834 | 3,658 | 4.8 | 11,065 | 11,018 | 0.4 |
| of which Sweden | 1,944 | 1,843 | 5.5 | 5,685 | 5,548 | 2.5 |
| of which Finland | 647 | 588 | 10.0 | 1,987 | 1,916 | 3.7 |
| of which Norway | 594 | 617 | -3.7 | 1,637 | 1,853 | -11.7 |
| of which Denmark | 183 | 137 | 33.6 | 467 | 374 | 24.9 |
| of which Lithuania | 75 | 86 | -12.8 | 226 | 268 | -15.7 |
| of which Latvia | 119 | 131 | -9.2 | 322 | 420 | -23.3 |
| of which Estonia | 111 | 113 | -1.8 | 305 | 336 | -9.2 |
| of which Spain | 165 | 143 | 15.4 | 439 | 303 | 44.9 |
| Margin (%), total | 31.4 | 29.3 | 30.7 | 29.3 | ||
| Margin (%), Sweden | 46.7 | 44.1 | 45.5 | 43.8 | ||
| Margin (%), Finland | 34.9 | 30.3 | 35.8 | 31.1 | ||
| Margin (%), Norway | 34.7 | 33.1 | 32.0 | 32.4 | ||
| Margin (%), Denmark | 16.9 | 12.6 | 14.7 | 10.5 | ||
| Margin (%), Lithuania | 25.8 | 27.5 | 26.3 | 28.4 | ||
| Margin (%), Latvia | 30.8 | 33.2 | 28.8 | 36.0 | ||
| Margin (%), Estonia | 32.8 | 29.2 | 32.0 | 29.7 | ||
| Margin (%), Spain | 6.9 | 6.2 | 6.4 | 4.9 |
| SEK in millions, except margins, operational data and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 8,252 | 8,644 | -4.5 | 24,820 | 26,684 | -7.0 |
| Chg % local FX ex acquisitions and disposals | -2.4 | -3.7 | ||||
| EBITDA excl. non-recurring items | 2,599 | 2,874 | -9.6 | 7,478 | 8,464 | -11.6 |
| Margin (%) | 31.5 | 33.2 | 30.1 | 31.7 | ||
| Operating income | 1,304 | 1,629 -20.0 | 3,433 | 4,601 | -25.4 | |
| Operating income excl. non-recurring items | 1,405 | 1,671 -15.9 | 3,872 | 4,888 | -20.8 | |
| CAPEX | 1,217 | 1,202 | 1.2 | 3,113 | 3,805 | -18.2 |
| Subscriptions, period-end (thousands) | ||||||
| Broadband | 2,434 | 2,507 | -2.9 | 2,434 | 2,507 | -2.9 |
| Fixed voice and VoIP | 3,995 | 4,351 | -8.2 | 3,995 | 4,351 | -8.2 |
| TV | 1,398 | 1,289 | 8.5 | 1,398 | 1,289 | 8.5 |
| Employees, period-end | 12,518 | 13,606 | -8.0 | 12,518 | 13,606 | -8.0 |
Net sales in local currencies, excluding acquisitions and disposals, decreased 2.4 percent. Net sales in reported currency decreased 4.5 percent to SEK 8,252 million (8,644). The positive effect of exchange rates was 0.9 percent and the negative impact from acquisitions and disposals was 3.0 percent.
In Sweden, net sales decreased 4.6 percent to SEK 4,660 million (4,883). The subscription base increased for all IP-based services, but continued to decline in traditional fixed telephony. Price pressure remained intense in the B2B segment with high activity in the public and large corporate segments. The roll-out of fiber to single homes gained further momentum and the number of new connections year to date has already passed last year's full year figure.
In Finland, net sales in local currency decreased 7.5 percent to the equivalent of SEK 1,273 million (1,335), mainly related to high competition in the B2B area and a decline in traditional fixed telephony.
In Denmark, net sales in local currency decreased 8.1 percent to the equivalent of SEK 248 million (261) explained by price pressure in the B2B segment.
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 2.6 percent to the equivalent of SEK 439 million (439). In Lithuania, net sales in local currency decreased 4.5 percent to the equivalent of SEK 457 million (462). Broadband subscriptions increased on both markets, but were more than offset by a decline in traditional fixed telephony.
In International Carrier, net sales in local currencies increased 10.8 percent to the equivalent of SEK 1,422 million (1,289) related to higher volumes of voice traffic.
The number of subscriptions for broadband access decreased to 2.4 million, a decline of 73,000 from the third 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 rose by 109,000 from the third quarter of 2012 and by 28,000 during the quarter to 1.4 million.
The number of traditional fixed voice subscriptions decreased by 387,000 from the end of the third quarter of 2012 to 2.8 million, and were down 97,000 during the quarter. The intake of VoIP subscriptions was 35,000 in the quarter, bringing the total number of VoIP subscriptions to 0.7 million.
EBITDA, excluding non-recurring items, decreased 8.9 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, decreased 9.6 percent to SEK 2,599 million (2,874). The EBITDA margin decreased to 31.5 percent (33.2).
In Sweden, the EBITDA margin decreased to 39.9 percent (40.7). Reduced operating expenses did not fully compensate for the revenue decline.
In Finland, the EBITDA margin decreased to 25.6 percent (28.6). In Denmark, the EBITDA margin decreased to 6.5 percent (11.1) partly explained by higher IT costs.
In Lithuania, the EBITDA margin decreased to 43.1 percent (43.5) and in Estonia the EBITDA margin decreased to 27.3 percent (28.2).
In International Carrier, the EBITDA margin decreased to 5.7 percent (8.4) mainly related to a higher share of low margin voice traffic.
CAPEX increased to SEK 1,217 million (1,202) and the CAPEX-to-sales ratio increased to 14.7 percent (13.9). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 1,382 million (1,672).
| SEK in millions, except margins and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 8,252 | 8,644 | -4.5 | 24,820 | 26,684 | -7.0 |
| of which Sweden | 4,660 | 4,883 | -4.6 | 14,202 | 14,941 | -4.9 |
| of which Finland | 1,273 | 1,335 | -4.6 | 3,884 | 4,199 | -7.5 |
| of which Norway | – | 263 | 87 | 804 | -89.2 | |
| of which Denmark | 248 | 261 | -5.0 | 740 | 825 | -10.3 |
| of which Lithuania | 457 | 462 | -1.1 | 1,347 | 1,441 | -6.5 |
| of which Estonia | 439 | 439 | 0.0 | 1,257 | 1,310 | -4.0 |
| of which International Carrier | 1,422 | 1,289 | 10.3 | 4,052 | 4,030 | 0.5 |
| EBITDA excl. non-recurring items | 2,599 | 2,874 | -9.6 | 7,478 | 8,464 | -11.6 |
| of which Sweden | 1,859 | 1,985 | -6.3 | 5,303 | 5,918 | -10.4 |
| of which Finland | 326 | 382 | -14.7 | 921 | 1,095 | -15.9 |
| of which Norway | – | 46 | -4 | 136 | ||
| of which Denmark | 16 | 29 | -44.8 | 66 | 95 | -30.5 |
| of which Lithuania | 197 | 201 | -2.0 | 572 | 597 | -4.2 |
| of which Estonia | 120 | 124 | -3.2 | 346 | 352 | -1.7 |
| of which International Carrier | 81 | 108 | -25.0 | 274 | 272 | 0.7 |
| Margin (%), total | 31.5 | 33.2 | 30.1 | 31.7 | ||
| Margin (%), Sweden | 39.9 | 40.7 | 37.3 | 39.6 | ||
| Margin (%), Finland | 25.6 | 28.6 | 23.7 | 26.1 | ||
| Margin (%), Norway | – | 17.5 | -4.6 | 16.9 | ||
| Margin (%), Denmark | 6.5 | 11.1 | 8.9 | 11.5 | ||
| Margin (%), Lithuania | 43.1 | 43.5 | 42.5 | 41.4 | ||
| Margin (%), Estonia | 27.3 | 28.2 | 27.5 | 26.9 | ||
| Margin (%), International Carrier | 5.7 | 8.4 | 6.8 | 6.7 |
| excluding acquisitions | Jul-Sep | Jan-Sep |
|---|---|---|
| Change (%), total | -2.4 | -3.7 |
| Change (%), Sweden | -4.6 | -5.0 |
| Change (%), Finland | -7.5 | -5.9 |
| Change (%), Norway | – | – |
| Change (%), Denmark | -8.1 | -8.5 |
| Change (%), Lithuania | -4.5 | -5.0 |
| Change (%), Estonia | -2.6 | -2.4 |
| Change (%), International Carrier | 10.8 | 2.5 |
| SEK in millions, except margins, operational data and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 5,292 | 5,133 | 3.1 | 15,173 | 14,508 | 4.6 |
| Chg % local FX ex acquisitions and disposals | 11.1 | 12.9 | ||||
| EBITDA excl. non-recurring items | 2,853 | 2,584 | 10.4 | 8,022 | 7,324 | 9.5 |
| Margin (%) | 53.9 | 50.3 | 52.9 | 50.5 | ||
| Income from associated companies | 1,477 | 804 | 83.7 | 4,230 | 6,563 | -35.5 |
| of which Russia | 793 | 173 | 2,238 | 4,963 | -54.9 | |
| of which Turkey | 675 | 631 | 7.0 | 1,979 | 1,607 | 23.1 |
| Operating income | 3,167 | 2,615 | 21.1 | 9,288 | 11,677 | -20.5 |
| Operating income excl. non-recurring items | 3,574 | 2,652 | 34.8 | 9,923 | 8,622 | 15.1 |
| CAPEX | 1,472 | 855 | 72.2 | 3,444 | 3,255 | 5.8 |
| Subscriptions, period-end (thousands) | ||||||
| Subsidiaries | 44,138 | 41,152 | 7.3 | 44,138 | 41,152 | 7.3 |
| Associated companies | 112,200 | 108,400 | 3.5 | 112,200 | 108,400 | 3.5 |
| Employees, period-end | 5,007 | 5,043 | -0.7 | 5,007 | 5,043 | -0.7 |
Net sales in local currencies, excluding acquisitions and disposals, increased 11.1 percent. Net sales in reported currency increased 3.1 percent to SEK 5,292 million (5,133). The negative effect from exchange rate fluctuations was 8.3 percent. The positive effect from acquisitions and disposals was 0.3 percent.
In Kazakhstan, net sales in local currency increased 3.0 percent to the equivalent of SEK 2,099 million (2,131). There was further pressure on voice services, but revenue growth was boosted by strong growth for data. The overall market remained competitive, but no new major aggressive campaigns were launched in the quarter.
In Azerbaijan, net sales in local currency increased 5.4 percent to the equivalent of SEK 1,001 million (982). Billed revenue growth improved in the quarter, partly explained by somewhat easier comparable number due to promotional campaigns last year.
In Uzbekistan, net sales in local currency increased 36.6 percent to the equivalent of SEK 813 million (684). The overall growth rate slowed compared to the levels reported in the first half of 2013, explained by tougher comparable numbers as a competitor exited the market in the third quarter of 2012.
In Tajikistan, net sales in local currency increased 10.0 percent to the equivalent of SEK 252 million (242). Billed revenue growth improved as a result of favorable development for both voice and data services.
Eurasia comprises mobile operations in Kazakhstan, Azerbaijan, Uzbekistan, Tajikistan, Georgia, Moldova and Nepal. The business area is also responsible for developing 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 9.0 percent to the equivalent of SEK 248 million (283), mainly explained by a lower subscription base related to a lost government tender in the first half of 2013.
In Moldova, net sales in local currency increased 2.9 percent to the equivalent of SEK 136 million (140) as both voice and data revenues continued to grow. The number of subscriptions declined in the quarter as inactive subscriptions were removed.
In Nepal, net sales in local currency increased 28.6 percent to the equivalent of SEK 749 million (669) helped by a higher number of subscriptions and strong growth for data.
The number of subscriptions in the consolidated operations was 44.1 million, an increase by 3.0 million, from the end of the third quarter of 2012. Growth was strongest in Nepal and Kazakhstan with a rise of 2.2 million and 1.6 million to 10.8 million and 14.3 million subscriptions, respectively. During the third quarter, the total number of subscriptions in the consolidated operations increased by 0.9 million. Nepal and Uzbekistan showed the largest rises with an increase of 0.4 million and 0.4 million subscriptions, respectively.
EBITDA, excluding non-recurring items, increased 18.2 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding nonrecurring items, increased 10.4 percent to SEK 2,853 million (2,584). The EBITDA margin increased to 53.9 percent (50.3).
In Kazakhstan, the EBITDA margin decreased to 54.6 percent (56.3), due to lower gross margin driven by network related expenses. In Azerbaijan, the EBITDA margin increased to 54.9 percent (50.3), helped by improved gross margin and cost saving actions.
In Uzbekistan, the EBITDA margin increased to 56.1 percent (39.8), boosted by higher revenues and good cost control. In Tajikistan, the EBITDA margin increased to 52.4 percent (52.1), helped by reduced operating expenses.
In Georgia, the EBITDA margin increased to 43.5 percent (42.4), supported by lower subsidies and sales commission costs. In Moldova, the EBITDA margin decreased to 37.5 percent (37.9), due largely to a reduced gross margin.
In Nepal, the EBITDA margin increased to 56.9 percent (54.3), helped by continued revenue growth.
CAPEX increased to SEK 1,472 million (855) and the CAPEX-to-sales ratio increased to 27.8 percent (16.7). CAPEX, excluding licenses and spectrum fees, increased to SEK 1,086 million (853) and the CAPEX-to-sales ratio to 20.5 percent (16.6). Cash flow, measured as EBITDA, excluding non-recurring items, minus CAPEX, decreased to SEK 1,381 million (1,729).
| SEK in millions, except margins and changes |
Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 5,292 | 5,133 | 3.1 | 15,173 | 14,508 | 4.6 |
| of which Kazakhstan | 2,099 | 2,131 | -1.5 | 6,000 | 6,097 | -1.6 |
| of which Azerbaijan | 1,001 | 982 | 1.9 | 2,866 | 2,950 | -2.8 |
| of which Uzbekistan | 813 | 684 | 18.9 | 2,297 | 1,620 | 41.8 |
| of which Tajikistan | 252 | 242 | 4.1 | 698 | 683 | 2.2 |
| of which Georgia | 248 | 283 | -12.4 | 688 | 764 | -9.9 |
| of which Moldova | 136 | 140 | -2.9 | 383 | 396 | -3.3 |
| of which Nepal | 749 | 669 | 12.0 | 2,256 | 2,000 | 12.8 |
| EBITDA excl. non-recurring items | 2,853 | 2,584 | 10.4 | 8,022 | 7,324 | 9.5 |
| of which Kazakhstan | 1,146 | 1,200 | -4.5 | 3,275 | 3,444 | -4.9 |
| of which Azerbaijan | 550 | 494 | 11.3 | 1,408 | 1,480 | -4.9 |
| of which Uzbekistan | 456 | 272 | 67.6 | 1,277 | 582 | 119.4 |
| of which Tajikistan | 132 | 126 | 4.8 | 357 | 346 | 3.2 |
| of which Georgia | 108 | 120 | -10.0 | 299 | 299 | 0.0 |
| of which Moldova | 51 | 53 | -3.8 | 139 | 140 | -0.7 |
| of which Nepal | 426 | 363 | 17.4 | 1,344 | 1,164 | 15.5 |
| Margin (%), total | 53.9 | 50.3 | 52.9 | 50.5 | ||
| Margin (%), Kazakhstan | 54.6 | 56.3 | 54.6 | 56.5 | ||
| Margin (%), Azerbaijan | 54.9 | 50.3 | 49.1 | 50.2 | ||
| Margin (%), Uzbekistan | 56.1 | 39.8 | 55.6 | 35.9 | ||
| Margin (%), Tajikistan | 52.4 | 52.1 | 51.1 | 50.7 | ||
| Margin (%), Georgia | 43.5 | 42.4 | 43.5 | 39.1 | ||
| Margin (%), Moldova | 37.5 | 37.9 | 36.3 | 35.4 | ||
| Margin (%), Nepal | 56.9 | 54.3 | 59.6 | 58.2 |
| Net sales in local currencies and | ||
|---|---|---|
| ----------------------------------- | -- | -- |
| excluding acquisitions | Jul-Sep | Jan-Sep |
|---|---|---|
| Change (%), total | 11.1 | 12.9 |
| Change (%), Kazakhstan | 3.0 | 3.7 |
| Change (%), Azerbaijan | 5.4 | 1.5 |
| Change (%), Uzbekistan | 36.6 | 63.8 |
| Change (%), Tajikistan | 10.0 | 7.3 |
| Change (%), Georgia | -9.0 | -5.6 |
| Change (%), Moldova | 2.9 | 4.6 |
| Change (%), Nepal | 28.6 | 27.5 |
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 66.0 million, an increase of 2.4 million compared to the corresponding period last year and 1.2 million higher than the previous quarter.
TeliaSonera's income from Russia increased to SEK 793 million (173). The contribution last year was impacted by high interest expenses and negative effect from exchange rates. The Russian ruble depreciated 5.5 percent against the Swedish krona which had a negative impact of SEK 46 million.
Turkcell (associated company, in which TeliaSonera holds 38.0 percent, reported with one-quarter lag) in Turkey reported a subscription base of 34.7 million, stable compared to the corresponding period last year and a decrease by 0.2 million subscriptions compared to the previous quarter. In Ukraine, the number of subscriptions increased by 1.4 million to 11.5 million compared to the corresponding period last year and increased by 0.4 million during the quarter.
TeliaSonera's income from Turkey increased to SEK 675 million (631). The Turkish lira depreciated 3.1 percent against the Swedish krona, which had a negative impact of SEK 22 million.
| SEK in millions, except changes | Jul-Sep 2013 |
Jul-Sep 2012 |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 2012 |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 815 | 793 | 2.8 | 2,590 | 2,746 | -5.7 |
| EBITDA excl. non-recurring items | 133 | 160 -16.9 | 291 | 341 | -14.7 | |
| Income from associated companies | 0 | -2 | 1 | -35 | ||
| Operating income | -142 | -31 | -484 | -390 | ||
| Operating income excl. non-recurring items | -72 | -30 | -312 | -245 | ||
| CAPEX | 202 | 248 -18.5 | 651 | 693 | -6.1 |
Net sales in local currencies, excluding acquisitions and disposals, increased 1.2 percent. In reported currency, net sales increased 2.8 percent to SEK 815 million (793).
EBITDA, excluding non-recurring items, decreased 16.9 percent to SEK 133 million (160) in reported currency.
Stockholm, October 17, 2013
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.
We have reviewed this report for the period January 1, 2013 to September 30, 2013 for TeliaSonera AB. The Board of Directors and the CEO are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Swedish Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.
We conducted our review in accordance with the Swedish Standard on Review Engagements SÖG 2410, Review of Interim Report Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing, ISA, and other generally accepted auditing standards in Sweden. The procedures performed in a review do not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Based on our review, nothing has come to our attention that causes us to believe that the interim report is not prepared, in all material respects, in accordance with IAS 34 and the Swedish Annual Accounts Act, regarding the Group, and with the Swedish Annual Accounts Act, regarding the Parent Company.
Stockholm, October 17, 2013
PricewaterhouseCoopers AB
Anders Lundin Jeanette Skoglund Authorized Public Accountant Authorized Public Accountant Auditor in charge
| SEK in millions, except per share data, number of shares and changes |
Jul-Sep 2013 |
Jul-Sep 20121) |
Chg (%) |
Jan-Sep 2013 |
Jan-Sep 20121) |
Chg (%) |
|---|---|---|---|---|---|---|
| Net sales | 25,381 | 25,842 | -1.8 | 75,197 | 77,829 | -3.4 |
| Cost of sales | -13,823 | -14,099 | -2.0 | -41,775 | -42,896 | -2.6 |
| Gross profit | 11,558 | 11,743 | -1.6 | 33,422 | 34,933 | -4.3 |
| Selling, admin. and R&D expenses | -5,447 | -5,808 | -6.2 | -16,597 | -18,009 | -7.8 |
| Other operating income and expenses, net | -484 | -6 | -1,220 | -2,975 | -59.0 | |
| Income from associated companies and joint ventures | 1,503 | 833 | 80.4 | 4,297 | 6,625 | -35.1 |
| Operating income | 7,130 | 6,762 | 5.4 | 19,902 | 20,574 | -3.3 |
| Finance costs and other financial items, net | -752 | -977 | -23.0 | -2,355 | -3,114 | -24.4 |
| Income after financial items | 6,378 | 5,785 | 10.3 | 17,547 | 17,460 | 0.5 |
| Income taxes | -1,243 | -1,432 | -13.2 | -3,475 | -3,459 | 0.5 |
| Net income | 5,135 | 4,353 | 18.0 | 14,072 | 14,001 | 0.5 |
| Items that may be reclassified to net income: | ||||||
| Foreign currency translation differences | -4,178 | -4,474 | -4,708 | -3,554 | ||
| Income from associate companies and joint ventures | -46 | -36 | -120 | -322 | ||
| Cash flow hedges | 132 | 65 | 402 | 66 | ||
| Available-for-sale financial instruments | 1 | 24 | 1 | 25 | ||
| Income tax relating to items that will be reclassified | -162 | -554 | 47 | -800 | ||
| Items that will not be reclassified to net income: | ||||||
| Remeasurements of defined benefit pension plans | 1,257 | -1,915 | 3,052 | -1,708 | ||
| Income tax relating to items that will not be reclassified | -291 | 504 | -686 | 450 | ||
| Associates' remeasurements of defined benefit pension plans | -18 | – | -9 | – | ||
| Other comprehensive income | -3,305 | -6,386 | 2,021 | -5,843 | ||
| Total comprehensive income | 1,830 | -2,033 | 12,051 | 8,158 | ||
| Net income attributable to: | ||||||
| Owners of the parent | 4,641 | 4,032 | 12,780 | 13,007 | ||
| Non-controlling interests | 494 | 321 | 1,292 | 994 | ||
| Total comprehensive income attributable to: | ||||||
| Owners of the parent | 1,556 | -1,681 | 10,950 | 7,329 | ||
| Non-controlling interests | 274 | -352 | 1,101 | 829 | ||
| Earnings per share (SEK), basic and diluted | 1.07 | 0.93 | 2.95 | 3.00 | ||
| 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 | 8,829 | 9,167 | 25,347 | 26,794 | ||
| EBITDA excl. non-recurring items | 9,419 | 9,283 | 26,856 | 27,169 | ||
| Depreciation, amortization and impairment losses | -3,201 | -3,239 | -9,742 | -12,845 | ||
| Operating income excl. non-recurring items | 7,721 | 6,878 | 21,434 | 21,046 |
1) Certain restatements have been made, see reference on page 21.
| SEK in millions | Sep 30, 2013 |
Dec 31, 20121) |
|---|---|---|
| Assets | ||
| Goodwill and other intangible assets | 81,037 | 83,278 |
| Property, plant and equipment | 62,434 | 62,657 |
| Investments in associates and joint ventures, deferred tax assets and other non-current assets |
37,276 | 38,858 |
| Long-term interest-bearing receivables | 8,802 | 10,880 |
| Total non-current assets | 189,549 | 195,673 |
| Inventories | 1,448 | 1,623 |
| Trade receivables, current tax assets and other receivables | 20,053 | 22,298 |
| Short-term interest-bearing receivables | 4,186 | 3,647 |
| Cash and cash equivalents | 27,211 | 29,805 |
| Total current assets | 52,898 | 57,373 |
| Total assets | 242,447 | 253,046 |
| Equity and liabilities | ||
| Equity attributable to owners of the parent | 104,009 | 105,150 |
| Equity attributable to non-controlling interests | 4,308 | 3,956 |
| Total equity | 108,317 | 109,106 |
| Long-term borrowings | 76,617 | 82,184 |
| Deferred tax liabilities, other long-term provisions | 21,786 | 25,035 |
| Other long-term liabilities | 1,149 | 1,190 |
| Total non-current liabilities | 99,552 | 108,409 |
| Short-term borrowings | 10,018 | 9,403 |
| Trade payables, current tax liabilities, short-term provisions and other current liabilities | 24,560 | 26,128 |
| Total current liabilities | 34,578 | 35,531 |
| Total equity and liabilities | 242,447 | 253,046 |
1) Certain restatements have been made, see reference on page 21.
| SEK in millions | Jul-Sep 20133) |
Jul-Sep 20121) |
Jan-Sep 20133) |
Jan-Sep 20121)2) |
|---|---|---|---|---|
| Cash flow before change in working capital | 10,472 | 7,845 | 23,800 | 33,133 |
| Change in working capital | 590 | -780 | -133 | -1,937 |
| Cash flow from operating activities | 11,062 | 7,065 | 23,667 | 31,196 |
| Cash CAPEX | -3,754 | -3,240 | -9,483 | -10,390 |
| Free cash flow | 7,308 | 3,825 | 14,184 | 20,806 |
| Cash flow from other investing activities | 1,077 | -153 | 193 | 719 |
| Total cash flow from investing activities | -2,677 | -3,393 | -9,290 | -9,671 |
| Cash flow before financing activities | 8,385 | 3,672 | 14,377 | 21,525 |
| Cash flow from financing activities | 505 | -2,312 | -17,061 | -22,694 |
| Cash flow for the period | 8,890 | 1,360 | -2,684 | -1,169 |
| Cash and cash equivalents, opening balance | 18,128 | 10,110 | 29,805 | 12,631 |
| Cash flow for the period | 8,890 | 1,360 | -2,684 | -1,169 |
| Exchange rate differences | 193 | -181 | 90 | -173 |
| Cash and cash equivalents, closing balance | 27,211 | 11,289 | 27,211 | 11,289 |
1) Certain restatements have been made, see reference on page 21.
2) Including dividends from MegaFon net of taxes of SEK 11,726 million.
| Jan-Sep 2013 | Jan-Sep 2012 | |||||||
|---|---|---|---|---|---|---|---|---|
| SEK in millions | Owners of the parent |
Non controlling interests |
Total equity | Owners of the parent |
Non controlling interests |
Total equity | ||
| Opening balance | 105,149 | 3,956 | 109,105 | 115,589 | 7,353 | 122,942 | ||
| Change in accounting policy for defined benefit pension plans1) |
– | – | – | -2,878 | – | -2,878 | ||
| Adjustment of opening balance related to Turkcell (inflation accounting in Belarus) |
– | – | – | 110 | – | 110 | ||
| Dividends | -12,340 | -749 | -13,089 | -12,341 | -2,371 | -14,712 | ||
| Business combinations | – | – | – | – | 17 | 17 | ||
| Repurchased treasury shares | -4 | – | -4 | – | – | – | ||
| Acquisition of non-controlling interest | – | – | – | -10,803 | -1,986 | -12,789 | ||
| Other transactions with owners | – | – | – | – | -35 | -35 | ||
| Total comprehensive income | 10,950 | 1,101 | 12,051 | 7,329 | 829 | 8,158 | ||
| Share-based payments | 14 | – | 14 | 13 | – | 13 | ||
| Effect of equity transactions in associates | 240 | – | 240 | – | – | – | ||
| Closing balance | 104,009 | 4,308 | 108,317 | 97,019 | 3,807 | 100,826 |
1) See reference below.
As in the annual accounts for 2012, TeliaSonera's consolidated financial statements of and for the nine-month period ended September 30, 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.
For information, see corresponding section in TeliaSonera's Interim Report January-March 2013.
| SEK in millions | Jul-Sep 2013 |
Jul-Sep 2012 |
Jan-Sep 2013 |
Jan-Sep 2012 |
|---|---|---|---|---|
| Within EBITDA | -590 | -115 | -1,509 | -374 |
| Restructuring charges, synergy implementation costs, etc.: | ||||
| Mobility Services | -11 | -15 | -285 | -37 |
| Broadband Services | -102 | -40 | -419 | -283 |
| Eurasia | -19 | -37 | -247 | -144 |
| Other operations | -69 | -2 | -171 | -108 |
| of which TeliaSonera Holding | 3 | 2 | 6 | -59 |
| Capital gains/losses | -389 | -21 | -387 | 198 |
| Within Depreciation, amortization and impairment losses | -1 | -1 | -23 | -3,099 |
| Impairment losses, accelerated depreciation: | ||||
| Broadband Services | -1 | -2 | -23 | -4 |
| Mobility Services | – | – | – | -3,070 |
| Other operations | – | 1 | – | -25 |
| Within Income from associated companies and joint ventures | – | – | – | 3,002 |
| Impairment losses | – | – | – | – |
| Capital gains/losses | – | – | – | 3,002 |
| Total | -591 | -116 | -1,532 | -471 |
| SEK in millions | Sep 30, 2013 |
Dec 31, 20121) |
|---|---|---|
| Deferred tax assets | 6,198 | 7,410 |
| Deferred tax liabilities | -10,050 | -10,287 |
| Net deferred tax liabilities (-)/assets (+) | -3,852 | -2,877 |
1) Certain restatements have been made, see reference on page 21.
| SEK in millions | Jul-Sep 2013 |
Jul-Sep 20121) |
Jan-Sep 2013 |
Jan-Sep 20121) |
|---|---|---|---|---|
| Mobility Services | 2,801 | 2,542 | 7,665 | 4,663 |
| Broadband Services | 1,304 | 1,629 | 3,433 | 4,601 |
| Eurasia | 3,167 | 2,615 | 9,288 | 11,677 |
| Other operations | -142 | -31 | -484 | -390 |
| Total segments | 7,130 | 6,755 | 19,902 | 20,551 |
| Elimination of inter-segment profits | – | 7 | – | 23 |
| Group | 7,130 | 6,762 | 19,902 | 20,574 |
1) Certain restatements have been made, see reference on page 21.
| SEK in millions | Jul-Sep 2013 |
Jul-Sep 2012 |
Jan-Sep 2013 |
Jan-Sep 2012 |
|---|---|---|---|---|
| CAPEX | 4,027 | 3,240 | 10,285 | 10,872 |
| Intangible assets | 669 | 483 | 1,652 | 1,560 |
| Property, plant and equipment | 3,358 | 2,757 | 8,633 | 9,312 |
| Acquisitions and other investments | 11 | 126 | 1,206 | 1,521 |
| Asset retirement obligations | 6 | 92 | 53 | 290 |
| Goodwill and fair value adjustments | – | 34 | 986 | 1,206 |
| Equity holdings | 5 | 0 | 167 | 25 |
| Total | 4,038 | 3,366 | 11,491 | 12,393 |
| Long-term and Short-term Borrowings1) | Sep 30, 2013 | Dec 31, 2012 | ||
|---|---|---|---|---|
| SEK in millions | Carrying value | Fair value | Carrying value | Fair value |
| Long-term borrowings | ||||
| Open-market financing program borrowings in fair value hedge | ||||
| relationships | 18,819 | 18,819 | 17,600 | 17,600 |
| Interest rate swaps at fair value | 244 | 244 | 340 | 340 |
| Cross currency interest rate swaps at fair value | 1,665 | 1,665 | 1,956 | 1,956 |
| Subtotal | 20,728 | 20,728 | 19,896 | 19,896 |
| Open-market financing program borrowings | 54,545 | 61,588 | 59,915 | 71,146 |
| Other borrowings at amortized cost | 1,285 | 1,285 | 2,311 | 2,311 |
| Subtotal | 76,558 | 83,601 | 82,122 | 93,353 |
| Finance lease agreements | 59 | 59 | 62 | 62 |
| Total long-term borrowings | 76,617 | 83,660 | 82,184 | 93,415 |
| Short term borrowings | ||||
| Open-market financing program borrowings in fair value hedge | ||||
| relationships | 2,626 | 2,626 | 401 | 401 |
| Interest rate swaps designated as hedging instruments | 27 | 27 | 29 | 29 |
| Interest rate swaps held for trading | 43 | 43 | 42 | 42 |
| Cross currency interest rate swaps held for trading | – | – | 343 | 343 |
| Subtotal | 2,696 | 2,696 | 815 | 815 |
| Utilized bank overdraft and short-term credit facilities at amortized | ||||
| cost | 1,906 | 1,906 | 423 | 423 |
| Open-market financing program borrowings | 5,322 | 5,402 | 5,204 | 5,285 |
| Other borrowings at amortized cost | 91 | 64 | 2,958 | 2,909 |
| Subtotal | 10,015 | 10,068 | 9,400 | 9,432 |
| Finance lease agreements | 3 | 3 | 3 | 3 |
| Total short-term borrowings | 10,018 | 10,071 | 9,403 | 9,435 |
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.
| Financial Assets and Liabilities | Sep 30, 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 | 186 | – | – | 186 | 189 | – | – | 189 |
| Equity instruments held-for-trading | 70 | – | – | 70 | 69 | – | – | 69 |
| Bonds available-for-sale | 174 | 172 | – | 2 | 4 | – | – | 4 |
| Derivatives designated as hedging | ||||||||
| instruments | 1,259 | – | 1,259 | – | 1,790 | – | 1,790 | – |
| Derivatives held-for-trading | 670 | – | 670 | – | 570 | – | 569 | – |
| Total financial assets at fair value by | ||||||||
| level | 2,359 | 172 | 1,929 | 258 | 2,622 | – | 2,359 | 262 |
| Financial liabilities at fair value | ||||||||
| Borrowings in fair value hedge | ||||||||
| relationships | 21,556 | – | 21,556 | – | 18,001 | – | 18,001 | – |
| Derivatives designated as hedging | ||||||||
| instruments | 429 | – | 429 | – | 802 | – | 802 | – |
| Derivatives held-for-trading | 1,550 | – | 1,550 | – | 2,044 | – | 2,044 | – |
| Total financial liabilities at fair value | ||||||||
| by level | 23,535 | – | 23,535 | – | 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 nine-month period ended September 30, 2013, TeliaSonera purchased services for SEK 92 million, and sold services for SEK 140 million. Related parties in these transactions were mainly MegaFon, Turkcell and Lattelecom.
| SEK in millions | Sep 30, 2013 |
Dec 31, 2012 |
|---|---|---|
| Long-term and short-term borrowings | 86,635 | 91,586 |
| Less derivatives recognized as financial assets and hedging long-term and short-term borrowings and related credit collateral |
-2,319 | -2,175 |
| Less short-term investments, cash and bank | -27,534 | -29,968 |
| Net debt | 56,782 | 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.
Despite worries in US for central bank downsizing their asset purchasing program with increased interest rate volatility as an effect, the corporate credit market in Europe had a robust third quarter with healthy new issuance volume and stable credit spreads. New issuance volumes in EUR however were well below third quarter last year mainly due to a very active third quarter 2012.
TeliaSonera issued a EUR 350 million 20 year public transaction end of August with a coupon of 3.50 percent. With limited funding needs for the remaining year, the opportunistic approach remains to take advantage of attractive funding opportunities when they appear.
| Sep 30, 2013 |
Dec 31, 20121) |
|
|---|---|---|
| Return on equity (%, rolling 12 months) | 21.5 | 20.5 |
| Return on capital employed (%, rolling 12 months) | 16.2 | 14.9 |
| Equity/assets ratio (%) | 40.9 | 38.2 |
| Net debt/equity ratio (%) | 57.3 | 61.4 |
| Net debt/EBITDA rate excl. non-recurring items | ||
| (multiple, rolling 12 months) | 1.58 | 1.64 |
| Net debt/assets ratio | 23.4 | 23.5 |
| Owners' equity per share (SEK) | 24.0 | 24.3 |
1) Certain restatements have been made, see reference on page 21.
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 5,885 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 September 30, 2013, the maximum potential future payments that TeliaSonera could be required to make under issued financial guarantees totaled SEK 344 million, of which SEK 317 million referred to guarantees for pension obligations. Collateral pledged totaled SEK 208 million.
As of September 30, 2013, contractual obligations totaled SEK 2,294 million, of which SEK 1,326 million referred to contracted build-out of TeliaSonera's fixed networks in Sweden.
For information on business combinations during the nine-month period, see corresponding sections in TeliaSonera's Interim Report January-June 2013 and Interim Report January-March 2013.
| Condensed Income Statements SEK in millions |
Jul-Sep 2013 |
Jul-Sep 2012 |
Jan-Sep 2013 |
Jan-Sep 2012 |
|---|---|---|---|---|
| Net sales | 1 | 16 | 6 | 47 |
| Operating income | 110 | -136 | -102 | -98 |
| Income after financial items | 2,938 | 3,239 | 17,307 | 13,934 |
| Income before taxes | 2,764 | 2,926 | 18,069 | 13,834 |
| Net income | 2,148 | 2,169 | 17,066 | 12,238 |
For the nine-month period ended September 30, 2013, income after financial items improved as higher non-taxable dividends from subsidiaries more than compensated for negative foreign currency effects.
| Condensed Balance Sheets SEK in millions |
Sep 30, 2013 |
Dec 31, 2012 |
|---|---|---|
| Non-current assets | 183,847 | 202,089 |
| Current assets | 56,567 | 63,876 |
| Total assets | 240,414 | 265,965 |
| Shareholders' equity | 86,911 | 81,871 |
| Untaxed reserves | 11,968 | 12,730 |
| Provisions | 798 | 539 |
| Liabilities | 140,737 | 170,825 |
| Total equity and liabilities | 240,414 | 265,965 |
Total investments in the period were SEK 35 million (21,479), of which SEK 21 million (21,448) 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 5,885 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.
Risks and uncertainties that could specifically impact the quarterly results of operations during 2013 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.
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.
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 third quarter of 2012, unless otherwise stated.
Year-end Report January–December 2013 January 30, 2014 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 October 17, 2013.
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