Telia Lietuva results for the three months of 2018

The Board of Telia Lietuva, AB (hereinafter "Telia Lietuva” or "the Company”) approved unaudited Telia Lietuva, AB Consolidated Interim Financial Statements, prepared according to International Financial Reporting Standards as adopted by the European Union, for the three months’ period ended 31 March 2018.

First quarter of 2018*:
- Total revenue amounted to EUR 90.8 million, up by 6.9 per cent over the revenue of EUR 84.9 million in Q1 2017.
- EBITDA, excluding non-recurring items, was EUR 31 million, an increase by 8.6 per cent over the restated EBITDA, excluding non-recurring items, of EUR 28.5 million a year ago.
- Free cash flow amounted to EUR 5.4 million and was almost 2.3 time higher than a year ago when it amounted to 2.4 million.

Management comment:
One year has already passed since we started to operate under Telia brand and offer fixed and mobile communications services from a single point. Apart of new services, such as hybrid-type Internet that combined copper line and mobile Internet technologies, the most striking evidence of the value created by the merger of fixed and mobile operations is a success of the converged offer "Telia One”.

In February 2018, we have reached the milestone of 10 thousand customers that had used converged offer "Telia One”. It means that more than 10 thousand Telia Lietuva customers and counting are enjoying higher speed, more data and more TV content because they use both fixed and mobile services.

In January, we were the first in Lithuania to present "Super VDSL” (S-VDSL) technology, which provides up to 250 Mbps Internet via copper lines. More than 2 thousand customers already switched from DSL to S-VDSL technology.

Positive intake of a new customers which accelerated with the launch of the converged offer "Telia One” in October 2017 continued. Over the year the number of:
- IPTV users increased by 10.3 per cent up to 215 thousand,
- FTTH Internet customers by 6.8 per cent up to 268 thousand,
- Post-paid mobile service users by 3.6 per cent up to 1,093 thousand.

The growing number of customers, galloping usage of mobile data and continuous demand for equipment led to growth in total revenue by 6.9 per cent, whereof revenue from:
- equipment sales increased by 22.3 per cent,
- billed mobile services by 11.6 per cent,
- TV and IT services, respectively, by 7.7 and 7.8 per cent.

Higher revenue in combination with cost control and operations efficiency improvements resulted in EBITDA, excluding non-recurring items, growth over the year by 8.6 per cent, and EBITDA, including non-recurring items, margin for the first quarter of 2018 stood at 34.1 per cent (33.6 per cent a year ago).

The Company’s investments which during the first quarter of 2018 amounted to EUR 13.6 million (EUR 12.9 million a year ago) besides continuing expansion of network capacities and access are allocated into development of IT systems under ongoing business transformation program. As a result, 166 thousand customers or one third of home service users are already migrated into a new SAP CRM system. Under transformation program we are also revising our services and products portfolio with the aim to terminate provision of less profitable services.

In March 2018, Telia Lietuva has become the first IT company in the Baltic States to receive a certificate from the software manufacturer SAP, which allows the Company to serve the IT systems of the largest enterprises. At the same time, the Company announced the launch of Telia IT Academy in Šiauliai, where SAP top-level professionals will share their knowledge and experience with the academy participants.

Following the Company’s dividend policy which requires that the Company’s net debt to EBITDA ratio should not be higher than 1.5 and pay-out of dividends should not exceed 80 per cent of free cash flow, the Board proposed to the Annual General Meeting, which will be held on 25 April 2018, to more than double dividend pay-out and to pay EUR 0.07 dividend per share for the year 2017, while for the year 2016 the dividend per share amounted to EUR 0.03. This one of the highest dividends pay-out in the Company’s history and is as result of combined operations’ synergy.

For ongoing investment into the progress of telecommunication industry, creation of the value to all stakeholders and contribution to the country’s development Telia Lietuva in April 2018 was granted the award of Company of the Centenary by Investors’ Forum, that unites foreign investors in Lithuania.

* Note. Starting from 1 January 2018, the Company adopted International Financial Reporting Standard 15 "Revenue from Contracts with Customers” (IFRS 15) and in order to compare financial results for the year 2018 with financial results a year ago the Company restated financial data for the year 2017. An effect of restatement of financial data for the first quarter of 2017 was as follows: total revenue was reduced by EUR 404 thousand, while total operating expenses were increased by EUR 256, having a total negative effect of EUR 660 thousand on EBITDA and EBIT.

ENCL.:
- Telia Lietuva, AB Consolidated Interim Financial Statements for the three months’ period ended 31 March 2018.
- Presentation of Telia Lietuva, AB Group results for 3 months of 2018

Darius Džiaugys,
Head of Investor Relations,
tel. +370 5 236 7878,
e-mail: darius.dziaugys@telia.lt.

Attachments

• 2018_3_months_financial_statements
• 2018_3_months_results