Elisa’s Interim Report January–September 2017

ELISA CORPORATION INTERIM REPORT RELEASE 18 OCTOBER 2017 AT 8:30 AM

Third quarter 2017

• Revenue amounted to EUR 454 million (419)
• EBITDA was EUR 165 million (154, comparable 155) and EBIT was EUR 109 million (98, comparable 100)
• Profit before tax was EUR 104 million (93, comparable 94)
• Earnings per share were EUR 0.53 (0.47, comparable 0.48)
• Cash flow after investments was EUR 113 million (47)

• Mobile ARPU grew to EUR 17.8 (17.7 in previous quarter)
• Mobile churn increased to 23.4 per cent (18.2 in previous quarter)
• Mobile service revenue increased by 6.3 per cent to EUR 204 million (192)
• The number of Elisa’s mobile subscriptions increased by 9,600 during the quarter
• Fixed broadband base was at the previous quarter’s level
• Net debt / EBITDA was 1.9 (2.0 end 2016) and gearing 116 per cent (116 end 2016)

January–September 2017

• Revenue was EUR 1,315 million (1,202)
• EBITDA was EUR 457 million (424) and EBIT EUR 285 million (263)
• Comparable EBITDA was EUR 460 million (425) and EBIT EUR 289 million (265)
• Profit before tax: EUR 317 million (246), comparable EUR 275 million (247)
• Earnings per share grew to EUR 1.66 (1.24) and comparable EPS to EUR 1.40 (1.25)
• Cash flow after investments was EUR 252 million (180)

Key indicators

¹⁾ Comparable 7-9/2017: EBIT EUR 109m, profit before tax EUR 104m and EPS EUR 0.53. Comparable 1-9/2017: EBIT EUR 289m, profit before tax EUR 275m and EPS EUR 1.40. Comparable 7-9/2016: EBIT EUR 100m, profit before tax 94m and EPS EUR 0.48. Comparable 1-9/2016: EBIT EUR 265m, profit before tax EUR 247m and EPS EUR 1.25.

Financial position and cash flow

¹⁾ (interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA) ²⁾ Excluding investments in shares and loan repayment 7-9/2017 EUR 71m (72). Excluding investments in shares, sale of shares and loan repayment 1-9/2017 EUR 202m (228). See details on page 5.

Additional key performance Indicators at elisa.com/investors (Elisa Operational Data.xlsx)

CEO Veli-Matti Mattila: Excellent demand for Elisa’s Premium subscriptions with unlimited data use in the Nordic and Baltic* countries

Revenue and earnings grew again in the third quarter of the year. The earnings growth was due to an increase in mobile revenue, an improvement in the productivity of Elisa’s operations, and recent acquisitions. The continuous improvement of quality and operations strengthened Elisa’s competitiveness.

Smartphones and fast mobile data connections are an important part of the day-to-day life of consumers, corporate customers and organisations, and their popularity continues to grow. Elisa’s network carries the most mobile data in Finland and the fourth most mobile data in Europe. Demand for the unique Premium subscriptions has been strong, and they have brought a new source of revenue growth to mobile services. The mobile subscription base increased by 9,600 subscriptions during the quarter, while the level of the fixed network broadband subscription base remained unchanged.

We updated the Elisa Turvapaketti aimed at consumers. Among other features, the service improves the ways in which parents can monitor their children’s internet use. It also locates lost phones. We have increased our entertainment selection for consumers. Elisa Viihde will soon include three new original series: the international Bullets and the domestic Kolmistaan and Jättekiva . In addition, the original series Konttori went into its second season.  

We started cooperation with VTT Technical Research Centre of Finland with the aim of helping small and medium-sized companies digitalise their operations and take advantage of the solutions offered by the Internet of Things. The goal is to develop the production processes, products and new business operations of manufacturing industry, in particular. The third Elisa Innovation Challenge has progressed to its final phase. This competition searches for successful innovations in the fields of IoT, industrial solutions and smart homes. The winner will be announced at the next Slush event.

We will be the first operator to introduce 5G readiness to the mobile network in Finland. The network’s construction has begun in Tampere, which is the first city in which the new network will be implemented on such a large scale. Once complete, the new network will provide the area with faster and more reliable internet connections.

We are encouraging an increase in interaction between parents and teenagers with our “Pidetään yhtä” ("Stay Together") project. As part of the project, Elisa employees will participate in voluntary work by being present in the everyday lives of young people. Our digital schools have already attracted more than a thousand children, and we will continue to implement them in ten primary schools across Finland.

We will continue our determined work to improve both customer satisfaction and our efficiency. Improving our productivity, developing new services for our customers, and maintaining our strong investment capability will create a solid foundation for competitive operations in the future as well.

*Finland, Sweden, Denmark, Norway, Estonia, Latvia and Lithuania

Outlook and guidance for 2017

The macroeconomic environment in Finland has improved, but long-term structural challenges still remain. Competition in the Finnish telecommunications market remains challenging.

Revenue is estimated to be higher than in 2016. Recent acquisitions, mobile data and digital services are expected to increase revenue. Comparable EBITDA is anticipated to be higher than in 2016. Capital expenditure is expected to be a maximum of 13 per cent of revenue, while the mid-term target of a maximum of 12 per cent is still valid. Elisa’s financial position and liquidity are good.

Elisa is continuing its productivity improvement development, for example by increasing automation in different processes, such as network operations and delivery. Additionally, Elisa’s continuous quality improvement measures will increase customer satisfaction and efficiency, and reduce costs.

Elisa's transformation into a provider of exciting, new and relevant services for its customers is continuing. Long-term growth and profitability improvement will derive from the growth in the mobile data market, as well as digital online and ICT services.

Disclosure procedure

Elisa is adopting the disclosure procedure enabled by the Standard 5.2b published by the Finnish Financial Supervision Authority. This is a summary of Elisa’s Q3 2017 Interim Report and the complete report is attached as a pdf-file to this release and is also available on our website at www.elisa.com/investors .

ELISA CORPORATION

Additional information:

Mr. Veli-Matti Mattila, CEO, tel. +358 10 262 2635 Mr. Vesa Sahivirta, IR Director, tel. +358 10 262 3036

Distribution: Nasdaq Helsinki Principal media www.elisa.com