Elisa’s Financial Statements Release 2018 ELISA FINANCIAL

ELISA FINANCIAL STATEMENT RELEASE 31 JANUARY 2019 AT 8:30 AM

Fourth quarter 2018

• Revenue amounted to EUR 471m (473)
• EBITDA was EUR 158m (151, comparable 154) and EBIT EUR 98m (93, comparable 95)
• Earnings per share were EUR 0.49 (0.45) and comparable EPS EUR 0.47 (0.46)
• Comparable cash flow after investments was EUR 58m (48)
• Mobile post-paid voice ARPU was EUR 20.5 (20.4 in previous quarter)
• Mobile post-paid voice churn was 18.7 per cent (17.2 in previous quarter)
• Mobile service revenue increased by 1.5 per cent to EUR 205m (202)
• The number of post-paid mobile subscriptions decreased by 4,700 and prepaid subscriptions by 14,300 during the quarter
• The number of fixed broadband subscriptions increased by 4,300 during the quarter

Year 2018

• Revenue was EUR 1,832m (1,787)
• EBITDA was EUR 640m (608) and EBIT EUR 404m (378)
• Comparable EBITDA and EBIT were EUR 639m (613) and 403m (384), respectively
• Earnings per share were EUR 1.98 (2.11) and comparable EPS EUR 1.95 (1.86)
• Cash flow after investments was EUR 272m (300), and comparable cash flow after investments was EUR 282m (246)
• Net debt / EBITDA was 1.7 (1.8) and gearing 95 per cent (103)

Key indicators

¹⁾ Comparable: 10-12/2018 EBIT EUR 98m (95), profit before tax EUR 93m (89) and EPS EUR 0.47 (0.46); 1-12/2018 EBIT EUR 403m (384), profit before tax EUR 380m (364) and EPS EUR 1.95 (1.86). ²⁾ 10-12/2018 and 1-12/2018 CAPEX includes EUR 26m licence investment.

Financial position and cash flow

¹⁾ (Interest-bearing debt – financial assets) / (four previous quarters’ comparable EBITDA) ²⁾ Comparable cash flow 1-12/2018 EUR 282m and 1-12/2017 EUR 246m. See page 5.

The Board of Directors proposes to the Annual General Meeting a dividend of EUR 1.75 per share. The Board of Directors also decided to propose an authorisation to acquire a maximum of 5 million treasury shares, which corresponds to 3 per cent of the total shares.

CEO Veli-Matti Mattila: Elisa achieves strong earnings by investing in quality

Elisa’s competitiveness has strengthened thanks to the continuous improvement of customer experience and quality. Both revenue and earnings grew in 2018, reaching all-time highs. Earnings grew due to improved productivity in Elisa’s operational activities and growth in the revenue from digital and mobile services.

The post-paid mobile subscription base fell by 4,700 subscriptions and the prepaid subscription base by 14,300 subscriptions during the quarter. The fixed-network broadband subscription base grew by 4,300 subscriptions. Elisa set up the world’s first 5G networks in Tampere and Tallinn, and 5G networks were built in a total of five cities in 2018: Turku, Jyväskylä and Helsinki, as well as Tampere and Tallinn. We also built 5G-ready networks, in Seinäjoki, for instance.  Elisa will continue to build 5G networks further in 2019.

With 5G, Elisa enables Finns to remain at the spearhead of the development of mobile services. Different 5G applications are being built in cooperation with different partners. This collaboration is focusing on improving the quality of air in big cities, making everyday life easier for city dwellers, as well as developing manufacturing processes and mobile gaming culture.  

Elisa is investing in high-quality content, and customers have welcomed this content with interest. Two original international series – Bullets and Arctic Circle – premiered on Elisa Viihde during the autumn. In 2018, we released a total of five international hit series in the service. Further, the original series Nyrkki , the filming of which began in September, was shortlisted in the competition category of the most important film festival in the Nordic countries. Elisa Kirja is Finland’s largest retailer of e-books, and audiobooks are experiencing particularly strong growth. During the year, the selection of books was increased even further with interesting new audiobooks and e-books, including The Unknown Kimi Räikkönen and the latest work from popular thriller author Ilkka Remes, Perikato .

Integrated IT and data communication solutions provide customers with clear added value. We solidified our pioneering role through the acquisition of Fenix Solutions Oy, for example. Elisa has also strengthened partnerships in expanding its cybersecurity services. The Elisa AI Co-Creation Challenge, intended for world-class AI teams, developed business operations by taking advantage of Elisa’s data. The winning team was Lifemoto, which developed a system for predicting disturbances in residential Wi-Fi connections.

For the second time, Elisa’s employees chose Elisa for Finland’s Great Place to Work list. The personnel mentioned the working culture based on trust as one of Elisa’s strengths. ShedHelsinki, the foundation established by Elisa, gave more than 130 talented young people a chance to perform onstage in a musical.

The continuous improvement of customer experience and quality are integral parts of our corporate culture, and we will continue to keep a strong focus on them. Increasing productivity, internationalising our digital services, creating value with data, and our strong investment capability will continue to create a solid foundation for the creation of competitive value in the future.

Outlook and guidance for 2019

The positive development of the macroeconomic environment is decelerating in Finland. Competition in the Finnish telecommunications market remains keen.

Full-year revenue is estimated to be at the same level or slightly higher than in 2018. Mobile data and digital services are expected to increase revenue. Full-year comparable EBITDA is anticipated to be at the same level or slightly higher than in 2018. The first-quarter EBITDA is expected to be at last year’s level. Capital expenditure is expected to be a maximum of 12 per cent of revenue.

Elisa is continuing its productivity improvement development, for example by increasing automation and data analytics in different processes, such as customer interactions, 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.

Profit distribution

According to Elisa’s distribution policy, profit distribution is 80–100 per cent of the previous fiscal year’s net profit. In addition, any excess capital can be distributed to shareholders. When making the distribution proposal or decision, the Board of Directors will take into consideration the company's financial position, future financial needs and financial targets. Profit distribution includes dividend payment, capital repayment and purchase of treasury shares.

The Board of Directors proposes to the Annual General Meeting a dividend of EUR 1.75 per share. The dividend payment corresponds to 90 per cent of the financial period’s comparable net profit.

Shareholders who are listed in the company’s register of shareholders maintained by Euroclear Finland Ltd on 5 April 2019 are entitled to funds distributed by the General Meeting. The Board of Directors proposes that the payment date be 16 April 2019. The profit for the period will be added to retained earnings.

The Board of Directors also decided to propose to the General Meeting that the Board of Directors be authorised to acquire a maximum of 5 million treasury shares, which corresponds to 3 per cent of the total shares.

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 Financial Statements Release 2018 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. Jari Kinnunen, CFO, tel. +358 10 262 9510 Mr. Vesa Sahivirta, IR Director, tel. +358 10 262 3036

Distribution: Nasdaq Helsinki Principal media www.elisa.com

Attachment

• FINANCIAL RESULTS 2018