DNA PLC STOCK EXCHANGE RELEASE 22 OCTOBER 2019, 8:30 AM EEST

DNA arranges two news conferences today. News conference for media and analysts in Finnish is held at 10:00 am Finnish time. Conference call for analysts and institutional investors in English is at 1:00 pm Finnish time. Details of the events can be found at the end of this release.

This is a summary DNA’s Interim Report January-September 2019. The complete report is attached to this release and also available at www.dna.fi/investors.

Summary

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). Figures are unaudited. The impact of IFRS 16 on the statement of financial position and income statement is presented in Note 12.

July–September 2019

• Net sales increased 5.0% and amounted to EUR 238.8 million (227.5).
• Mobile service revenue grew 8.1% and was EUR 124.0 million (114.7).
• EBITDA increased 4.0% and was EUR 79.3 million (76.3), or 33.2% (33.5) of net sales.
• Comparable EBITDA increased 9.6% and was EUR 83.6 million (76.3).
• Operating result decreased 5.4% and was EUR 37.1 million (39.3). Operating result as a percentage of net sales was 15.5% (17.3).
• Comparable operating result increased 5.5% and came to EUR 41.4 million (39.3).
• In the review period, the comparability of EBITDA and operating result were affected by non-recurring expense items of EUR 4.3 million in relation to business restructuring.
• IFRS 16 had a positive effect on EBITDA in the review period and an insignificant impact on operating result (Note 12).
• Earnings per share was EUR 0.21 (0.22).
• Revenue per user (ARPU) for mobile communications increased 0.6% and was EUR 18.9 (18.8).
• The mobile communication subscription turnover rate (CHURN) increased and was 16.4% (15.8). 

January–September 2019

• Net sales increased 3.7% and amounted to EUR 699.7 million (674.8).
• Mobile service revenue grew 7.2% and was EUR 362.8 million (338.4).
• EBITDA increased 6.2% and was EUR 233.2 million (219.5), or 33.3% (32.5) of net sales.
• Comparable EBITDA increased 8.2% and came to EUR 237.5 million (219.5).
• Operating result decreased 2.6% and was EUR 107.6 million (110.5). Operating result as a percentage of net sales was 15.4% (16.4).
• Comparable operating result increased 1.3% and came to EUR 111.9 million (110.5).
• In the review period, the comparability of EBITDA and operating result were affected by non-recurring expense items of EUR 4.3 million in relation to business restructuring.
• IFRS 16 had a positive effect on EBITDA in the review period and an insignificant impact on operating result (Note 12).
• Operating free cash flow increased 21.4% and was EUR 169.2 million (139.4).
• Earnings per share was EUR 0.60 (0.61).
• The mobile communication subscription base shrank 1.2%, totalling 2,820,000 (2,855,000).
• Revenue per user (ARPU) for mobile communications decreased slightly and was EUR 18.6 (18.7).
• The mobile communication subscription turnover rate (CHURN) decreased and was 15.8% (16.7).
• The fixed-network subscription base (voice, broadband and cable television) grew 6.7% to 1,225,000 subscriptions (1,148,000).

DNA upgraded its guidance for 2019 on 15 October 2019

DNA’s net sales in 2019 are expected to increase somewhat, and EBITDA in 2019 is expected to increase substantially from 2018. DNA’s financial position and liquidity are expected to remain at a healthy level.

DNA’s previous guidance for 2019 (published on 1 February 2019): DNA’s net sales in 2019 are expected to remain at the same level as in 2018, and EBITDA in 2019 is expected to increase substantially from 2018. DNA’s financial position and liquidity are expected to remain at a healthy level.

DNA’s guidance for 2019 is disclosed with consideration to the impact of the adoption of IFRS 16. The adoption of IFRS 16 from the beginning of 2019 is estimated to have a positive impact of approximately EUR 17 million in EBITDA in 2019.

Key figures

Figures are unaudited.

The impact of IFRS 16 on the statement of financial position and income statement is presented in note 12.

CEO’s review

Once again, DNA has fared well despite a challenging market situation. Our net sales increased 3.7% in the January-September period and came to EUR 699.7 million. The positive development was fuelled in particular by our mobile service revenue, which grew 7.2%, and by mobile device sales, which were up 13.5%. In the first nine months of the year, comparable EBITDA developed strongly for both segments, growing 8.2% from the reference period to EUR 237.5 million, or 33.9% of net sales.

Both growth and profitability showed a positive trend in the third quarter of 2019. Our net sales increased 5.0% year-on-year and came to EUR 238.8 million. This increase was fuelled in particular by our strong mobile service revenue as well as robust mobile device sales. Mobile service revenue grew 8.1% year-on-year, mostly due to the positive development of our postpaid subscription base. Mobile device sales were up 10.5%. Comparable EBITDA improved 9.6% in the third quarter and was EUR 83.6 million, or 35.0% of net sales.

Our mobile communication subscription base decreased by 35,000 in the review period, due to a decrease in prepaid subscriptions. Our postpaid subscription base increased by 59,000 from the reference period. Revenue per user (ARPU) for mobile communications increased in the July to September period and was EUR 18.9. Our customer CHURN rate was 16.4%. Our fixed-network subscription base grew by 77,000, boosted by new broadband connections.

In September, we launched a new service that can help housing companies save up to 30% on the energy used in heating. Wattinen is a natural service for us to offer, as we are already providing digital services to housing companies and their residents. We believe this type of service will be in demand as climate awareness increases. The service is based on self-learning artificial intelligence. Wattinen decides how to adjust the heating in each room in order to optimise residents’ comfort and the property’s heating energy consumption.

According to the report* released by international telecom analysis provider Tefficient in September, DNA’s customers have the highest mobile data usage in the world. In the first half of 2019, DNA’s mobile data traffic usage per subscription was 23.5 gigabytes per month, in comparison to 19.8 gigabytes in the first half of 2018. 5G technology and improved network services will accelerate the use of mobile data further. Thanks to our advanced network technologies, our relative electricity consumption reduced despite the continuous increase in the use of data. We place great emphasis on the energy efficiency of our networks, and all of our directly procured electricity is renewable.

We will begin the sale of our fixed 5G service based on 5G technology in December. The service will enable a fast and consistent broadband connection for households. To begin with, the service will become available for homes in the residential areas of the major cities, but the availability will be quickly extended to new areas.

In August, Norwegian telecommunications Group Telenor acquired a 54% stake in DNA and became the main shareholder after the completion of transactions with the two then largest owners of DNA, Finda and PHP. Completion of the transaction required Telenor to launch a mandatory public tender offer for all the remaining outstanding shares in DNA. Offer period ended on 10 October and together with the DNA shares acquired by Telenor before the tender offer, Telenor held 97.87% of all shares in DNA. As a result, Telenor was obliged to make a redemption proceedings for the remaining shares.

We will continue the long-term development of our business, focusing on customer experience, personnel satisfaction and the resulting profitable growth. We have upgraded our guidance for DNA’s net sales in 2019, expecting net sales to increase somewhat. Our guidance for DNA’s EBITDA in 2019, with consideration to the impact of IFRS 16, is expected to increase substantially from 2018. DNA’s financial position and liquidity are expected to remain at a healthy level.

Jukka Leinonen
CEO

*Tefficient’s report: https://tefficient.com/mobile-data-operators-1h-2019/

News conferences

DNA will arrange a news conference for media and analysts in Finnish at 10:00 am EEST. The event will take place at DNA House, Läkkisepäntie 21, Helsinki. Registration for the event is requested by email to communications@dna.fi. The news conference can also be participated through a live webcast on: https://dna.videosync.fi/2019-q3-osavuosikatsaus.

News conference for analysts and investors at 1:00 pm EEST / 12:00 pm CEST / 11:00 pm BST
The audience is welcome to participate and ask questions through a conference call by dialing in a couple of minutes before the scheduled time;

• Finland: +358 981 710 310
• United Kingdom: +44 333 300 0804
• United States: +1 855 857 0686
• Participant passcode: 7774 0568# 

Conference call can also be participated and questions asked by live audiocast from: https://dna.videosync.fi/2019-q3-interimreport.

The presentation materials will be available on DNA’s website before the event: www.dna.fi/investors. Recordings of both news conferences and the transcript of the conference call will be available on the same webpage on the following workday.

Additional information:

Jukka Leinonen, CEO, DNA Plc, +358 44 044 1000, jukka.leinonen@dna.fi
Timo Karppinen, CFO, DNA Plc, +358 44 044 5007, timo.karppinen@dna.fi
Marja Mäkinen, Head of IR, DNA Plc, +358 44 044 1262, marja.makinen@dna.fi
DNA Corporate Communications, +358 44 044 8000, viestinta@dna.fi

DNA is one of the leading telecommunications companies in Finland. We want to make our customers' daily lives less complicated. We offer connections, services and devices for homes and workplaces, contributing to the digitalisation of society. DNA’s mobile communication network customers have the highest mobile data usage per subscription in the world. We are also Finland's largest cable TV operator and the leading pay-TV provider. DNA has more than 4 million subscriptions in its fixed and mobile communications networks. The company was ranked the best employer in Finland in the large companies category of the 2019 Great Place to Work survey. In 2018, our net sales were EUR 912 million and we employ about 1,600 people around Finland. DNA shares are listed on Nasdaq Helsinki Ltd. More information: www.dna.fi, Twitter @DNA_fi and Facebook.

Attachment

• DNA_Q3_2019_interimreport