TeliaSonera reported higher sales for the first quarter, thanks to growth in emerging markets and smartphones, while EBITDA declined due to price pressure in its main Nordic markets. Sales rose 3.5 percent from a year earlier to SEK 25.69 billion, while adjusted EBITDA dropped 0.7 percent to SEK 7.44 billion. Excluding currency and acquisition effects, sales were up 2.9 percent, and EBITDA fell 1.4 percent. Operating profit, excluding non-recurring items, decreased 8.5 percent to SEK 6.64 billion, and profit from associated companies fell 36.2 percent to SEK 1.03 billion. As a result, net profit was down 15.9 percent to SEK 3.91 billion, and EPS dropped to SEK 0.90 from SEK 1.04 a year ago. Free cash flow fell 17.2 percent to SEK 2.19 billion, due to higher capex and interest expense. The operator added 1.2 million subscribers at its consolidated companies and 1.1 million at associated companies in the quarter, for a total 172.4 million at the end of March.
TeliaSonera maintained its full-year outlook for organic sales growth of 1-2 percent, a stable adjusted EBITDA margin and capex at 13-14 percent of sales, excluding spectrum and licence fees. The company highlighted the need to move to new pricing models for mobile data services, to offset the drop in voice revenues and increased competition. In addition to new tiered pricing and lower roaming rates, it confirmed plans to start charging for mobile VoIP in Spain and Sweden in the coming months. TeliaSonera said it will continue to adapt prices and look for cost cuts in order to maintain its EBITDA margins.
The company's mobile activities increased sales 3 percent to SEK 12.50 billion, while adjusted EBITDA fell 3 percent to SEK 3.64 billion. Sales in Sweden improved 5.4 percent, thanks to growth in mobile data services and smartphones, offsetting flat voice revenues. EBITDA rose 6.9 percent thanks to lower staff costs and more own-channel sales. In Finland, revenues fell 0.5 percent, as lower voice and interconnect revenues offset 25 percent growth in data; EBITDA was largely stable thanks to lower costs. Norway revenues were down 8.8 percent as minute prices, equipment sales and wholesale revenues fell, and revenues in Denmark dropped 6.6 percent due to price competition and lower termination rates since the start of March. Despite the weak economy, sales in Spain were still up 25.4 percent in local currency. EBITDA was lower in Spain amid higher churn and spending on network upgrades.
TeliaSonera's fixed-line division posted flat sales of SEK 9.02 billion, and EBITDA fell 8 percent to SEK 2.83 billion. Sales fell 3.7 percent in Sweden and 4.1 percent in Finland, as growth in TV and broadband could not offset lower telephony revenues. Both countries posted lower EBITDA margins, despite reduced costs. Meanwhile, Denmark and Norway both posted slightly higher sales, and Estonia and Lithuania were also slightly positive. The operator's broadband base grew by 12,000 customers in the quarter to 2.5 million, and TV subscribers were up by 41,000 to 1.2 million. The number of fixed-voice subscriptions decreased by 327,000 in the three months to 3.9 million This includes a one-time correction of 201,000 in Sweden to exclude mobile Centrex customers.
At the Eurasia activities, sales and EBITDA both rose 15 percent, to respectively SEK 4.45 billion and SEK 2.26 billion. Kazakhstan slowed to organic sales growth of 3.2 percent, amid increased competition from Tele2, while Azerbaijan increased sales 11 percent, supported by new price plans. Uzbekistan and Tajikistan both grew sales over 20 percent, while Georgia posted a 4.2 percent drop due to lower prices.
