TeliaSonera reported a fall in second-quarter revenues, hurt by negative currency effects, while its net profit improved strongly due to lower restructuring and financing charges. Net sales fell 1.7 percent to SEK 26.96 billion, but were up 3.3 percent in local currencies and excluding acquisitions. The underlying revenue increase outpaced a 1.9 percent rise in the adjusted cost base. EBITDA, excluding non-recurring items, increased 1.9 percent to SEK 9.21 billion, and the margin rose to 34.2 percent from 33.0 a year ago. Net profit improved to SEK 5.24 billion from SEK 4.47 billion a year earlier, and free cash flow was up 26.5 percent to SEK 3.93 billion. Across the company's operations, TeliaSonera said it saw continued double-digit revenue growth in Eurasia due to improved macroeconomic conditions, some early signs of recovery in Estonia, and continued strength in the Nordic countries from mobile data sales. The operator added a total 2.5 million new susbcribers during the quarter, of which 1.8 million in the consolidated operations and 0.7 million in the associated companies, for a total 152.4 million at end-June. TeliaSonera said it expects full-year sales to grow in line with the underlying increase of 2.9 percent seen in the first half; that compares to a previous outlook for somewhat higher sales in local currencies. Capex is forecast at 14-15 percent of sales in the full year, versus 11.6 percent in H1, and the annual adjusted EBITDA margin should be somewhat higher on a flat underlying cost base. TeliaSonera said capital expenditures will be driven by continued investments in broadband and mobile capacity as well as in network expansion in Eurasia. The company would also like to increase spending on fibre in Sweden, but blamed the slower roll-out on regulatory obstacles. The operator also confirmed that it's testing LTE with select customers in a number of Nordic markets outside the initial launch countries of Norway and Sweden.
The company's mobile activities recorded a 2 percent drop in quarterly sales to SEK 12.62 billion, but the figure was up 4.1 percent when excluding currency effects and acquisitions. The underlying growth was led by Spain, up 50.7 percent, and Sweden, up 6.2 percent, while revenues in Finland rose 3.5 percent. The number of mobile subscribers rose by 300,000 in the quarter, to a total 17.56 million. Adjusted EBITDA increased 2.3 percent to SEK 3.80 billion, with the margin rising to 30.1 percent from 28.8, on the back of a 0.4 percent cut in the underlying cost base. In Spain, the EBITDA loss narrowed to SEK 121 million from SEK 327 million a year ago, due to higher net sales and a higher share of on-net traffic. Sweden posted an EBITDA margin of 41.4 percent, up from 39.6 last year, due to increased revenues and higher profitability in mobile data, while the margin in Finland fell to 31.1 percent from 33.0, mainly as a result of higher subsidies, higher roaming costs and a dilutive effect from higher equipment sales.
At the fixed-line activities, sales fell 5.9 percent to SEK 10.10 billion and were down 2.8 percent in local currencies and excluding acquisitions. In Sweden, sales fell 2.2 percent to SEK 4.61 billion, an improvement compared to the previous quarter, while underlying sales in Finland were down 6.2 percent, mainly due to a decline in traditional fixed-voice services. This was partly offset by 2.5 percent sales growth in Denmark and the takeover of Tele2 Norway's activities. The total subscriber base was up by 9,000 from Q1 to 2.4 million, including a net loss of 130,000 fixed-voice customers. Fixed-line EBITDA, excluding non-recurring items, was down 4.2 percent to SEK 3.20 billion, or 0.3 percent excluding forex and acquisitions. The underlying cost base was down 5.7 percent year-on-year, helping the EBITDA margin improve to 31.6 percent from 31.1 last year.
At the activities in Eurasia, sales rose 8.1 percent to SEK 4.09 billion and EBITDA was up 7 percent to SEK 2.06 billion. Organic revenue growth was 14.8 percent. Income from associate companies fell to SEK 1.94 billion from SEK 2.24 billion due a lower contribution from Turkcell. TeliaSonera said it rebranded its operations in Azerbaijan and Moldova during the second quarter and all Eurasian countries except Uzbekistan have now adopted a common brand platform.
