DNA’s operating profit grew significantly in 2015 – mobile data traffic volumes triple in the 4G network

Summary

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period).

October–December 2015

• Net sales remained at a similar level year-on-year and amounted to EUR 213.9 million (215.7 million).
• EBITDA increased by 15.0 per cent to EUR 54.2 million (47.1 million). The EBITDA percentage of net sales increased and came to 25.3 per cent (21.8 per cent).
• Operating profit increased by 174.6 per cent to EUR 19.3 million (7.0 million), or 9.0 per cent of net sales (3.3 per cent).
• There were no non-recurring items affecting EBITDA or operating profit in neither the fourth quarter of 2015 or the reference period.
• Mobile communication subscription base grew by 1.5 per cent, reaching 2,618,000 (2,505,000) in total.
• Revenue per user (ARPU) for mobile communications amounted to EUR 17.0 (16.7).
• Mobile communication subscription turnover rate (CHURN) was 15.9 per cent (16.8 per cent).

January–December 2015

• Net sales remained at a similar level year-on-year and amounted to EUR 828.8 million (831.5 million).
• EBITDA increased by 12.6 per cent to EUR 227.7 million (202.2 million). The EBITDA percentage of net sales increased and came to 27.5 per cent (24.3 per cent).
• EBITDA excluding non-recurring items increased by 8.9 per cent and came to EUR 226.7 million (208.1 million).
• Operating profit increased by 185.5 per cent to EUR 73.1 million (25.6 million), or 8.8 per cent of net sales (3.1 per cent).
• Operating profit excluding non-recurring items increased by 36.4 per cent and came to EUR 72.0 million (52.8 million).
• Mobile communication subscription base grew by 4.5 per cent, reaching 2,618,000 (2,505,000) in total.

• Revenue per user (ARPU) for mobile communications amounted to EUR 17.0 (17.6).
• Mobile communication subscription turnover rate (CHURN) was 16.0 per cent (16.9 per cent).

• Fixed-network subscription base (voice, broadband and cable television) grew by 1.1 per cent and came to 1,120,000 subscriptions at the end of the fourth quarter (1,108,000).
• The Board of Directors proposes to the Annual General Meeting that a dividend of EUR 4.72 (3.54) per share be paid.

DNA’s outlook for 2016

Net sales are expected to remain at a similar level and operating profit is expected to grow significantly in 2016 compared to 2015. The Group’s financial position is expected to remain at a healthy level.

Key figures

Figures are unaudited.

CEO’s review

2015 was a successful year for DNA: we improved both our profitability and our customer satisfaction. The increased adoption of smart phones, tablets and other smart devices as well as the wider availability of 4G speeds significantly boosted data transfer volumes in 2015. The increased revenue from mobile data compensates for the drop in the revenue from voice calls. We are also satisfied with the notable growth of our corporate business since the TDC acquisition in 2014. We have managed to strengthen our position as a provider of competitive, high-quality services to businesses. As a recognition of our expertise, DNA Business scored top points in every corporate service category of the EPSI Rating* customer satisfaction survey forthe second year in a row. We also scored the highest points among consumer customer for mobile broadband.

Our net sales remained at a similar level year-on-year and amounted to EUR 828.8 million. In terms of sales revenue, mobile device sales were down from the levels reported in 2014, and interconnection revenue also fell. However, the growth of our service revenue brought our net sales to the level reported in 2014. Increased demand for mobile data and growth of our corporate services had a positive effect on our service revenue. The challenging economic situation and intense competition weakened the demand for pay-TV services in particular. Our EBITDA and operating profit grew significantly. Our EBITDA was boosted in particular by the strong growth of our service business and our improved operational efficiency. Our operating profit increased to EUR 73.1 million. The operating profit of the reference period was burdened by significant non-recurring items, but even without non-recurring items, our operating profit increased by 36.4 per cent and came to EUR 72.0 million. Profit for the financial period improved by as much as 304 per cent from the reference period.

Our subscription base grew further in 2015. Our mobile communication subscription base grew by 113,000, reaching 2,618,000 subscriptions in total. Fixed-network subscription base increased by 12,000, totalling 1,120,000 subscriptions at the end of the year. The growth in the number of fixed-network broadband and cable television subscriptions is compensating for the drop in the number of fixed-network voice subscriptions. Our mobile communication subscription turnover rate (CHURN) has decreased steadily over recent years. It was 16.9 per cent in 2014 and came to 16.0 per cent in 2015.

We successfully developed our operations according to our strategic objectives in 2015: our customer satisfaction results have developed very favourably, personnel satisfaction is at an all-time high and DNA’s profitability has also improved significantly. DNA’s cash flow after investments also improved notably. DNA’s operating profit was 8.8 per cent of net sales in 2015, in comparison to 3.1 per cent in 2014.

In corporate business, we significantly increased our subscription base and signed important new agreements in 2015. The acquisition of TDC’s Finnish operations has made us even better equipped to provide enterprise-class corporate network solutions, also at an international scale.

Data volumes in our 4G network tripled between the end of 2014 and end of 2015. Data usage per user is expected to grow further. We constructed almost 3,000 new base stations in 2015, some two thirds of them in the 4G network. This pace will continue in 2016. DNA’s 4G network currently covers almost 95% of the population, and will reach 99% by the end of 2016. The construction of the shared network that started in the late spring of 2015 proceeded according to plan and fast 4G connections were available in nearly all of Lapland by the end of the year.

We have made investments in consumer and corporate customer service centres, brand renewal and personnel development in recent years. We have also invested in modern IT systems, analytics tools and network services, which not only allow us to provide measurably good customer experience but also enable efficient and agile productisation and packaging. We will continue the systematic implementation of our strategy in 2016 with the aim of having the most satisfied customers. We will also continue to improve our profitability further. 

Signature

Jukka Leinonen
CEO

* The EPSI Rating Telecom Finland 2015 survey measured satisfaction among corporate and consumer customers in the following categories: mobile phone services, fixed-network broadband services and mobile broadband services. Participants rate seven factors in each category, including brand image, expectations, product quality, service quality, value for money, satisfaction and loyalty. The error margin of the results is +/- 2.5 index points.

DNA’s financial publications in 2016:

21 April 2016                        Interim Report January–March 2016
15 July 2016                         Interim Report January–June 2016
20 October 2016                   Interim Report January–September 2016

Additional information:

Jukka Leinonen, CEO, DNA Ltd, tel. +358 44 044 1000, jukka.leinonen(at)dna.fi (available from 2pm)
Timo Karppinen, CFO, DNA Ltd, tel.  +358 44 044 5007, timo.karppinen(at)dna.fi (available from 2pm)
DNA Corporate Communications, tel. +358 44 044 8000, viestinta@dna.fi

Distribution:
Key media

www.dna.fi

DNA Ltd’s Financial Statements Bulletin 2015 http://annualreporting.dna.fi/2015/Q4/en