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 2020.
First quarter of 2020:
- Total revenue amounted to EUR 92.1 million, up by 3.4 per cent over the revenue of EUR 89.1 million in Q1 2019.
- EBITDA, excluding non-recurring items, was EUR 33 million, an increase by 3.7 per cent over EBITDA, excluding non-recurring items, of EUR 31.8 million a year ago.
- Profit for the period was EUR 12.5 million, an increase by 6.5 per cent over profit of EUR 11.8 million a year ago.
- Free cash flow amounted to EUR 23.3 million and was 16.3 per cent higher than in Q1 2019 when it amounted to 20 million.
Management comment:
While in February we have celebrated the third anniversary of our combined mobile and broadband operations under one Telia brand that brought number of unique on the market converged offers and much better experience to our customers, in March we and the whole world have faced unprecedented challenge due to COVID-19 spread to the way we live, work and communicate. Almost over the night we had to adjust to a new reality and swiftly move forward as importance of our usual activities – keeping the people and business connected – increased dramatically.
It is a proof test to our network that we have been building for number of years allocating large amounts of investments. From the very first day of coronavirus-imposed quarantine in Lithuania volumes of calls in our network jumped by 70 per cent, international Internet traffic surged by more than 40 per cent and mobile data volumes increased by more than 15 per cent. We are proud that our combined mobile and broadband network is constructed in a way that it could withstand sudden increase in usage, malfunction of equipment, physical breach of infrastructure or cyber-attacks. In addition, according to the latest measurements of CRA mobile data speed in our network has reached 87.27 Mbps.
As our customer service outlets are closed all over the country from mid-March, all customers are continuously served online or by phone, and sale of equipment completely moved to our online shop. It goes without saying that we put our employees and customers’ health at a highest priority, therefore most of the Company’s employees work remotely, while engineering teams that are installing new services and involved in fault eliminating observe extreme safety requirements.
The country’s lockdown – staying and working from home – changed the way our customers use the services. We observe a great demand for connectivity speed increase, VPN and other IT solutions for remote work, mobile signature as well as premium TV content and video-on-demand for entertainment. During the quarantine sales of PC and TV sets more than doubled while demand for mobile handsets and tablets declined. To ensure remote learning from home, we will supply 10 thousand tablets to National Education Agency and provide 20 thousand of unlimited data usage SIM cards to pupils for a symbolic one-euro fee per card for the first two months.
Being a devoted member of our society, we contributed to the purchase of vital protective equipment for medical specialists, donating EUR 50 thousand to the COVID-19 Relief Fund established by the Ministry of Finance, and to support socially disadvantage family that could not ensure remote learning for their kids, we donated almost 500 new tablets and SIM cards with 50 GB mobile data per month to the project “School at Home”. Also, we initiated social media campaign #SUSIJUNGIAM (Let’s connect) for sharing experience and advises how stay purposely connected at home.
It is still difficult to predict what impact on the Company’s financial results will have the current situation. The Bank of Lithuania has prepared three economic development scenarios which entail: 1) a sudden recession followed by a longer recovery period (GDP to contract by 11.4 per cent in 2020), 2) a protracted recession and recovery (GDP to decrease by 20.8 per cent) and 3) an abrupt recession followed by a rapid recovery (GDP to decline by 3.4 per cent). The Ministry of Finance calculates that unemployment might reached 8.1 per cent, inflation would amount to 2 per cent, growth rate of household spending should decline from 3.2 per cent in 2019 to 1 per cent in 2020.
In the long run, restrictions on people’s movement between the countries will have a negative impact on roaming service, closure of retail outlets will impact equipment sales, delayed payments by customers and potential increase of bad debt is expected. We have already taken necessary actions to mitigate those risk and are closely monitoring the situation development. The Company generates strong free cash flows and has enough liquidity reserves and support from its main shareholder, Telia Company AB, to successfully continue operations and to ensure uninterrupted functioning of critical for the country telecommunications infrastructure and to fulfil all contractual obligations towards the customers, employees, suppliers and other stakeholders.
At the beginning of 2020, together with Telia teams in Estonia, Denmark and Norway we have embraced the New Operating Model, which will provide companies of Telia Company Group with more synergy and efficiency. Also, we have established a new Digitalization and Analytics Unit to put business insights and digital marketing to a higher level.
Good results of the first quarter of 2020 show that we are successfully improving our operations. We have growth in both revenue and profitability, while equipment sales are already affected by coronavirus-imposed quarantine from mid of March 2020. Capital investments during the first three months of 2020, compared with the same period a year ago, contracted by almost one third and amounted to EUR 10.3 million.
Intake of new customers continued during the first quarter of 2020 and over the last 12 months:
- number of mobile service subscriptions increase by 5.6 per cent up to 1,349,
- number of IPTV users grew by 5.1 per cent up to 246 thousand,
- number of FTTH Internet customers was up by 3.2 per cent up to 290 thousand,
- number converged offer “Telia One” users reached 62 thousand.
Compared with the first quarter of 2019:
- revenue from billed mobile services increased by 3.4 per cent
- revenue from TV services grew by 19.6 per cent,
- revenue from IT services surged by 20.5 per cent.
In the beginning of 2020, we were the first in Lithuania to introduce the narrowband Internet of Things (NB IoT) technology that will allow businesses and the public sector to develop next-generation services and improve the existing ones without making any significant investment.
In January 2020, Telia Lietuva was awarded as the Friendliest Workplace among the large corporates of Lithuania during the National Responsible Business Awards. Besides distance working possibility and flexible working hours, our employees depending on working experience are granted up to 5 extra vacation days to have a healthy work and rest balance.
In January, a new Collective Bargaining Agreement between the Company, as the employer, and united representation of Trade Unions was signed. Following the requirements of a new Labour Code in order to be valid for all employees of the Company (not only for members of Trade Union), 77 per cent of employees participated in voting and by 98 per cent majority approved the validity of a new Collective Bargaining Agreement to all employees of the Company from 1 February 2020.
In March, shareholders of loss generating associated entity, UAB Mobilieji Mokėjimai, (the Company hold 33.3 per cent of shares) decided to terminate provision of instant payment services from 18 May 2020.
Successful Company’s performance in 2019 led to the Board’s proposal to the Annual General Meeting of Shareholders to decide on payment of dividend of EUR 0.09 per share for the year 2019 (for the year 2018 was EUR 0.08).
ENCL.:
- Telia Lietuva, AB Consolidated Interim Financial Statements for the three months’ period ended 31 March 2020.
- Presentation of Telia Lietuva Group results for 3 months of 2020
Darius Džiaugys,
Head of Investor Relations,
tel. +370 5 236 7878,
e-mail: darius.dziaugys@telia.lt
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