TeliaSonera reported improving sales trends across its markets in the first quarter, with revenues in local currencies and excluding acquisitions up 2.5 percent from a year earlier. Reported revenues fell 3.9 percent to SEK 26.09 billion, due largely to forex effects. The organic growth was due largely to the activities in Eurasia, which posted revenues up 12.7 percent. The mobile division increased organic sales 4.9 percent, while the broadband division posted a decline of 4.1 percent. EBITDA, excluding one-time items, rose 1.6 percent year-on-year to SEK 8.96 billion, and the margin improved to 34.4 percent from 32.5. Net profit was up 6.4 percent to SEK 4.72 billion or SEK 1.05 per share, helped by lower interest charges. TeliaSonera generated SEK 3.37 billion in free cash flow during the period, up from SEK 3.26 billion a year earlier. The operator added 2.3 million new subscriptions in the quarter, of which 1.0 million at the consolidated operations and 1.3 million at associated companies, for a total 149.9 million at the end of March.
TeliaSonera said it was more optimistic about achieiving its full-year outlook for somewhat higher sales in local currencies and maintained its forecast for an unchanged underlying cost base in 2010. This follows accelerated revenue growth in Eurasia in Q1, an above-average performance in Sweden and a return to growth in Finland and Denmark. In addition to continuing the LTE roll-out in Sweden and Norway, the company confirmed plans to bid for forthcoming licences in Denmark and the Baltic countries. Thanks to the improved sales trends, the company plans to step up investments in expanding its fixed and mobile networks. However, some planned investments were delayed due to weather conditions in the Nordic region and negotiations with suppliers; Q1 capex dropped top SEK 2.0 billion from SEK 3.1 billion a year ago. Therefore, the investment level in 2010 may end up lower than planned at the beginning of this year, when the company forecast capex at somewhat below 15 percent of sales. The rest of the outlook for 2010 is unchanged, with adjusted EBITDA forecast up slightly.
The Mobile division reported flat sales at SEK 12.4 billion, while adjusted EBITDA improved 5 percent to SEK 3.56 billion as costs excluding Spain dropped 6.6 percent. In local currencies, sales grew in Sweden, Spain, Finland and Denmark, supported especially by mobile broadband, which added 436,000 subscribers over the 12 months to 1.175 million. Sales in Norway fell due to lower interconnect rates and postpaid voice revenues, and the Baltic markets remained under pressure due to the economic recession. During the quarter the number of mobile subscriptions rose by 264,000, with Spain, Finland and Denmark showing the largest increases. The total mobile base was 17.2 million at end-March. ARPU was down 10 percent from a year earlier to SEK 204, while churn was stable at 29 percent. Mobile capex decreased to SEK 614 million from SEK 745 million a year ago.
At the broadband division, sales fell 8 percent to SEK 10.1 billion, while adjusted EBITDA improved 1 percent to SEK 3.5 billion, driven by a 12.1 percent cut in costs. In Sweden, sales fell 3.2 percent to SEK 4.5 billion, an improvement compared to the previous quarter. Revenues from IPTV and VoIP subscriptions doubled compared to the corresponding quarter last year but could not fully compensate for the decline in traditional fixed-voice services, TeliaSonera said. In Finland, sales in local currency and excluding acquisitions decreased 7.1 percent, mainly due to a decline in traditional fixed-voice services. Across the company's operations, 6,000 broadband subscribers were added in the quarter for a total 2.354 million at end-March, while fixed-voice customers fell by 138,000 from end-2009 to 5.074 million. The total number of TV subscriptions rose by 13,000 to 823,000, of which 633,000 were IPTV subscriptions. The intake of VoIP subscriptions was 27,000 in the quarter, bringing the total number of VoIP users to 255,000. Fixed network capex fell to SEK 800 million from SEK 1.1 billion year ago as harsh weather conditions slowed some work. TeliaSonera said around 80 percent of spending is going towards fibre and IP services.
Eurasia reported sales down 8 percent to SEK 3.4 billion, hurt by exchange rate effects. Excluding these, sales growth doubled from Q4 to 12.7 percent. Adjusted EBITDA was also down 8 percent to SEK 1.7 billion. Sales in local currencies was strongest in Uzbekistan, up 50.1 percent, and Tajiskistan, up 41.5 percent, thanks to strong subscriber intake. In Kazakhstan, sales rose 11.7 percent as the economy improved and price plans were revamped, while Armenia still suffered from the weak economy and changes in interconnect prices last year, posting a 1.9 percent drop in revenues in local currency. A total 700,000 subscribers were added in the quarter, of which almost half in Kazakhstan, to finish March with a base of 23.0 million at the consolidated operations. Capex fell to SEK 513 million from SEK 973 million a year ago, due largely to the timing of investments.
