TeliaSonera Year-end Report January–December 2014

FOURTH QUARTER SUMMARY

• Net sales in local currencies, excluding acquisitions and disposals, decreased 2.2 percent. In reported currency, net sales increased 0.2 percent to SEK 26,606 million (26,560). Service revenues in local currencies, excluding acquisitions and disposals, decreased 2.2 percent.
• EBITDA, excluding non-recurring items, decreased 3.5 percent in local currencies, excluding acquisitions and disposals. In reported currency, EBITDA, excluding non-recurring items, decreased 1.4 percent to SEK 8,604 million (8,728). The EBITDA margin, excluding non-recurring items, decreased to 32.3 percent (32.9).
• Operating income, excluding non-recurring items, decreased 4.8 percent to SEK 6,757 million (7,100).
• Net income attributable to owners of the parent company increased 34.2 percent to SEK 2,938 million (2,190) and earnings per share to SEK 0.68 (0.51).
• Free cash flow decreased to SEK 1,635 million (2,126) due to changes in working capital.

• Net sales in local currencies, excluding acquisitions and disposals, decreased 1.8 percent. In reported currency, net sales decreased 0.8 percent to SEK 101,060 million (101,870). Service revenues in local currencies, excluding acquisitions and disposals, decreased 1.0 percent.
• Net income attributable to owners of the parent company decreased 3.1 percent to SEK 14,502 million (14,970) and earnings per share to SEK 3.35 (3.46).
• Free cash flow decreased to SEK 13,046 million (16,310) due to higher cash CAPEX and changes in working capital.
• The board of Directors proposes an ordinary dividend of SEK 3.00 per share (3.00), totaling SEK 13.0 billion (13.0) or 90 percent (87) of net income attributable to owners of the parent company.     

” In 2014, growth in our industry remained modest, but despite some revenue headwind, TeliaSonera maintained an EBITDA margin, excluding non-recurring items, of 34.9 percent, on par with last year and in line with our projections.

In the fourth quarter, organic service revenues declined by 2.2 percent, impacted by a more challenging macro-economic environment in Eurasia. Due to the somewhat slower overall revenue development, group EBITDA declined by 3.5 percent on a comparable basis.

In Sweden, we continued to upgrade our networks in order to meet the increasing customer demand for high speed internet access. In December we celebrated the five year anniversary of our mobile 4G launch and our network now covers more than 99 percent of the population. Mobile service revenue growth improved to nearly 2 percent, supported by further increase in data usage. The share of 4G enabled handsets in our networks continued to rise and total 4G traffic surpassed 3G. Our fiber network was further expanded in the quarter, now reaching more than 1.1 million Swedish households.

We continue to seek structural opportunities within our footprint with the aim to strengthen our core operations. In early December, we entered into an agreement with Telenor to merge our respective Danish operations into a new joint venture. This market has been in obvious need for consolidation and by this transaction we establish a strong challenger with major synergy potential.

In Eurasia, profitability declined slightly compared to the corresponding period last year, as increased uncertainty regarding overall economic growth impacted our operations in key markets like Kazakhstan and Azerbaijan. We continue to monitor the situation closely and follow the development market by market.

Following a period of change, we have now started our journey towards the new TeliaSonera. We have high ambitions for the future and in 2015 we will execute on our investment plans to drive growth and strengthen long term competitiveness. This involves a further push for fiber in Sweden, new B2B solutions and upgrade of networks across our footprint. We will step up the pace in our business transformation, which is necessary in order to reduce complexity and bring down cost.

We remain determined to create a long term sustainable business as this is important to us and all our stakeholders. In the past year, we have made significant progress in this field by strengthening our governance and processes, areas that we will continuously develop also in the future. Our commitment was supported and visible in our latest employee survey.

In line with our dividend policy and based on the performance in 2014, also reflecting our solid financial position, the board proposes a maintained dividend of SEK 3.00 per share, corresponding to 90 percent pay-out of earnings per share.

In 2015, we target EBITDA around the same level as in 2014, excluding non-recurring items, in local currencies, excluding acquisitions and disposals, and foresee CAPEX of around SEK 17 billion, excluding license and spectrum fees.”

Stockholm, January 29, 2015

Johan Dennelind
President and CEO
  
Questions regarding the reports

TeliaSonera AB
www.teliasonera.com/investors
Tel. +46 8 504 550 00

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, 29, 2015.