Last update: 20.07.2024 05:03 (GMT+3)
AS EESTI TELEKOM FINANCIAL RESULTS 04.02.2005
PRELIMINARY RESULTS FOR 2004, EUR
Eesti Telekom, the leading provider of telecommunications services in Estonia,
hereby announces its preliminary results for the financial year ending 31
December 2004.
Financial highlights
Q4 Q4 Change 12 12 Change
2004 2003 , months months ,
% 2004 %
2003
Total revenues, 83.9 81.2 3.3 328.7 307.3 7.0
million EUR
EBITDA, million EUR 31.1 28.7 8.4 135.6 135.3 0.2
EBITDA margin, % 37.1 35.3 41.3 44.0
EBIT, million EUR 18.2 14.9 22.4 83.5 79.0 5.6
EBIT margin, % 21.7 18.3 25.4 25.7
Profit before taxes 21.5 15.3 40.0 88.3 84.7 4.2
and minority, million
EUR
Net profit for 21.4 15.3 39.6 63.5 66.2 -4.0
period, million EUR
EPS, EUR 0.15 0.11 39.1 0.46 0.48 -4.2
CAPEX, million EUR 14.1 16.4 -14.2 32.9 36.0 -8.6
Net gearing, % -36.1 -32.8 -36.1 -32.8
ROA, % 30.7 21.5 22.1 23.1
ROE, % 34.6 23.9 35.0 34.1
In commenting on the results of the Eesti Telekom Group, Jaan Männik, Chairman of
the Management Board, emphasised: "On the basis of Eesti Telekom's financial
results, we can say that 2004 was a good year."
For further information, please contact:
Jaan Männik, CEO +372 631 1212
Hille Võrk, CFO +372 627 2460
CHAIRMAN'S STATEMENT
Financial results
The fourth quarter of 2004 was a period of many significant changes for the Eesti
Telekom Group. For instance, changes took place in the operating environment of
mobile communications. Although mobile phone numbers only became portable from
one operator to another as of 1 January 2005, operators, including the Eesti
Telekom Group's mobile communications operator AS EMT, had already begun to make
preparations for this in 2004. Rates were adjusted and many discount packages
were offered to customers, with the aim to attract customer groups (families,
groups of friends, colleagues) to join EMT. In November the so-called discount
service provider Diil, which targets price-sensitive mobile phone users, entered
the market. Increased competition has inevitably had its influence on revenue
growth and profit margins in the area of mobile communications. At the same time,
the first weeks of 2005 have demonstrated that EMT has been able to retain its
position in the market. The first results since mobile telephone numbers became
portable show that the number of those wishing to subscribe to EMT is bigger than
those wishing to leave the operator.
In fixed telephone services, the growth of Internet and data communication in
Estonia, as elsewhere in Europe, has been overshadowed by the fall in the area of
voice communications. Customers increasingly use mobile phones for communication,
and are giving up their fixed-line phones. In November 2004 Elion joined the
global trend towards offering home users voice and Internet connections as an
integral package and for a single monthly fee that includes monthly free call
minutes. The first months have shown that this offer has met customers' approval.
As of January 2005, a similar service will also be available to business
customers.
In order to concentrate on its core activities, in December 2004 Elion Ettevõtted
AS sold its 51 percent stake in subsidiary Eltel Networks AS to the Finnish
network construction company ELTEL Networks Corporation, which already possessed
a 49 percent holding in the company.
As of 28 December 2004, AS Eesti Telekom has a majority shareholder, Teliasonera
AB, which increased its holding in the company to 50.0004 percent. In the opinion
of the Supervisory Board of AS Eesti Telekom, the transaction has a positive long-
term economic rationale. As a member of the TeliaSonera Group, the Eesti Telekom
Group will be able to benefit from economies of scale and the purchasing power of
TeliaSonera, and the competitiveness of the Eesti Telekom Group will increase.
With the combined resources and TeliaSonera's large market, the group's operators
will be able to offer competitive prices for new customer services.
In numbers, the Eesti Telekom Group's revenues for the fourth quarter of 2004
reached 83.9 million euros, which represents an increase of 3% in comparison with
the fourth quarter of 2003. The source of this growth was the increasing
expansion of customer numbers in the area of mobile communications, data
communication and IT services. The Eesti Telekom Group's operating costs for the
fourth quarter of 2004 were at the same level as for the same period in 2003.
EBITDA increased 8% in comparison with the fourth quarter of 2003, and the EBITDA
margin improved. Depreciation and amortisation decreased 7%, most of that change
being the result of the Elion Group's lower amortisation costs. The Eesti Telekom
Group's profits from operations were 18.2 million euros in the third quarter, and
thus increased 22% over the year.
The Eesti Telekom Group's total revenues for the fourth quarter of 2004 include
2.7 million euros in profits from the sale of its majority holding in AS Eltel
Networks. The Eesti Telekom Group's net profits for the fourth quarter were 21.3
million euros or 0.15 euros per share.
The Eesti Telekom Group's total revenues for 2004 were 328.7 million euros, which
is an increase of 7% in comparison with 2003, i.e. an increase of 21.4 million
euros. The majority of the increase in revenue came from the area of mobile
communications. The Group's operating costs for 2004 increased 12%, reaching
193.1 million euros. EBITDA remained at the same level as for 2003. Depreciation
and amortisation decreased by 4.1 million euros during the year. The net
financial revenues fell by 0.8 million euros. Total revenues for 2003 included
the 3.7 million euros in profits earned from the sale of 49% of the shares of AS
Eltel Networks. The profits earned from the sale of 51% of the shares of AS Eltel
Networks in 2004 amounted to 2.7 million euros. The share-based price was the
same in the case of the sale of the minority and majority shareholdings.
17.7 million euros more in dividends were paid to shareholders in 2004 than was
the case in 2003, which led to an increase of 6.2 million euros in income tax on
the dividends in comparison with 2003. Eesti Telekom earned 63.5 million euros in
net profits in 2004, which is 2.7 million euros less than in 2003. The revenue
earned per share in 2004 was 0.46 euros.
As of the end of December 2004, the total assets of the Eesti Telekom Group
amounted to 289.2 million EEK (293.9 million euros in December 2003). During the
year, non-current assets fell 17.9 million euros, and current assets increased
13.2 million euros. The decrease in non-current assets resulted from the
relatively small volume of investments in recent years. The growth in current
assets was mainly the result of the increase in cash and cash equivalents (8.6
million euros). Trade receivables increased by 5.9 million euros, of which 4.5
million is the increase in the receivables of retail chains in connection with
the increase in the volume of sales by instalment.
The Eesti Telekom Group's equity decreased 5.1 million euros during the year, as
a result of the payment of 70.4 million euros in dividends. As of the end of
December 2004, the Group had 0.04 million euros in long-term debt and 1.2 million
euros in short-term debt (at the end of December 2003 these figures were 0.2
million and 0.5 million euros respectively). The Group's net debt at the end of
2004 was -93.5 million euros, and net gearing was -36%. The Group's other short-
term liabilities increased 0.8 million euros during 2004.
The Eesti Telekom Group's cash flow from operating activities was 105.1 million
euros in 2004 (109.1 million euros in 2003). The most significant factor leading
to the decrease in cash flow from operating activities was the increase in the
income tax paid on dividends. Cash flow into investing activities decreased in
comparison with 2003 - 27.6 million euros in 2003 (including the 4.3 million
euros earned from the sale of the minority share in AS Eltel Networks), 26.9
million in 2004 (including the 3.3 million euros earned from the sale of the
majority share in AS Eltel Networks). Cash flow into financing activities was
69.6 million euros in 2004, including 70.4 million euros paid out in dividends
(in 2003: 53.6 million euros, including 52.7 million euros paid as dividends).
Elion Group
Q4 Q4 Chang 12 12 Chan
2004 2003 e, months months ge,
% 2004 2003 %
Total revenues, 43.7 43.5 0.5 171.2 164.8 3.9
million EUR
EBITDA, million 13.0 11.8 10.6 55.0 55.3 -0.5
EUR
EBITDA margin, % 29.8 27.1 32.1 33.6
EBIT, million EUR 5.9 3.3 78.7 25.2 21.0 20.0
EBIT margin, % 13.5 7.6 14.7 12.7
Profit before 9.0 3.4 163.7 28.7 24.8 15.4
taxes and
minority, million
EUR
Net profit for the 8.9 3.3 163.7 21.9 20.3 7.5
period, million
EUR
CAPEX, million EUR 5.9 6.3 -6.9 15.5 14.3 8.6
ROA, % 25.8 9.7 15.9 14.4
ROE, % 30.3 11.5 24.5 22.4
The Elion Group's revenues in the fourth quarter of 2004 reached 43.7 million
euros, surpassing the indicator for the fourth quarter of 2003 by 0.2 million
euros. The Group's operating costs decreased by 1.1 million euros, reaching 30.6
million euros. The Group's EBITDA was 13.0 million euros, which is an increase of
1.3 million euros. The Elion Group's fourth quarter result was influenced by the
sale of the group's subsidiary that was involved with network construction, the
Eltel Group, as a result of which the Eltel Group's financial results are only
consolidated until the end of November 2004. The sale of the Eltel Group reduced
the Elion Group's fourth quarter revenues by 1.5 million euros in comparison with
the fourth quarter of 2003. Margins for construction activities have been modest
in comparison with the Elion Group's core activities. Thus the sale of this area
of activity with smaller margins can be expected to raise the Elion Group's
margins in 2005. In the fourth quarter of 2004, the Elion Group's EBITDA margin
was 29.8%, which is lower than the third quarter's 32.6% margin. At the same
time, low margins have always been characteristic for the fourth quarter. The
Elion Group's fourth quarter depreciation decreased 16% (1.3 million euros) in
comparison with the fourth quarter of 2003. The Group's fourth quarter EBIT
increased by 2.6 million euros, i.e. 79%, in comparison with the same period in
2003. Elion Ettevõtted earned 2.7 million euros in profits from the sale of the
Eltel Group, and this is accounted as the company's fourth quarter financial
income. The Elion Group's net profit for the quarter was 8.9 million euros.
Of the Elion Group's core activities, the most rapid increases in revenue were in
data communications and IT. The revenues of the said area increased 49% in
comparison with the same period in 2003. In 2004 as a whole, the Elion Group's
revenues from data communications and IT services increased 19%. The rapid
increase in revenues from data communications and IT services was caused by
consistent work for the strengthening of positions in the said areas.
During the fourth quarter of 2004, the Elion Group's revenues from the Internet
remained at the same level as in the fourth quarter of 2003. In 2004 as a whole,
the Group's revenues from the Internet grew 10%. The rapid increase in permanent
Internet connections has continued. During 2004, the number of permanent
connections provided by Elion grew by 26,000, reaching 76.8 thousand by the end
of December. The price of services, however, has fallen. Thus monthly fees for
Business Internet fell by up to 25% as of 1 December 2004. In order to remain in
step with global developments, i.e. offers where voice and Internet connections
are an integral package and for a single monthly fee, Elion launched new
Kodulahendus packages in October. Kodulahendus offers individuals the opportunity
to use a permanent Internet connection, a telephone connection and 20 hours of
free calls within the network for one monthly fee. Customers can choose the
package that best suits them from among the three Kodulahendus packages. The
monthly fee for Kodulahendus is less than the sum of the fees for the individual
services it comprises. By the end of 2004, over 22.3 thousand customers had
subscribed to the Kodulahendus packages. In January 2005 Elion began to offer
business customers Ärilahendus packages, which are similar to Kodulahendus.
On 30 December 2004 Elion Ettevõtted acquired Viru Net OÜ, a leading Internet
service provider in Ida-Viru County, in order to strengthen Elion's market
position in that county and consolidate the Estonian Internet market. In 2003 the
turnover of Viru Net was 0.2 million euros, and it earned profits of 0.03 million
euros. The company employs 17 people. As of January 2005, the results of Viru Net
will be included in the Elion Group's consolidated financial results.
The Elion Group's fourth quarter revenues from voice communications were 9% less
than the results for the fourth quarter of 2003. In 2004 as a whole, revenues
from voice communications fell 5%. At the end of December 2004, Elion had 426,112
main lines at its disposal. During the course of the year, the number of main
lines decreased by 18.5 thousand, the decrease in the fourth quarter was 2.1
thousand. The stabilisation of the number of main lines has been helped by the
launching of the above-mentioned Kodulahendus packages which promote the use of
fixed-line telephones in addition to offering data communications solutions, and
also by Elion's campaigns for free subscription of telephone connections. During
the latest of the campaigns of the kind, which lasted from July to December, 16
thousand customers were added to the Elion network.
The fall in mobile communications rates and the rapid increase in the number of
mobile phone users in 2004 led to a reduction in the number of local call minutes
made from fixed-line telephones. As a result, the fourth quarter revenue from
local calls was 18% lower than the corresponding figure for 2003. In 2004 as a
whole, revenues from local calls also decreased 18%. Revenues from international
calls fell 2% in the fourth quarter, whereas in 2004 as a whole, revenues from
the area in question grew by 1%. Revenues from calls made to the mobile telephone
network decreased 2% in the fourth quarter of 2004, and 4% over the whole year.
Elion Ettevõtted AS estimates its market share in the area of call minutes
initiated from the fixed-line network to be 86% (87% in December 2003). Market
share from local call minutes was 87% in December 2004 (87% in December 2003),
75% of calls to mobile phones (76% in December 2003), 69% of international call
minutes (67% in December 2003), and 95% of Internet dial-up minutes (95% in
December 2003).
Revenues from network services increased 15% in the fourth quarter and 18% during
the whole of 2004. This growth is the result of increased international traffic
and income from the leased lines.
A significant contribution to the growth of the Elion Group's total revenues was
made by AS Elion Esindus, which is involved with the retail sale of telephones
and computing equipment. The company's revenues increased 27% in comparison with
the fourth quarter of 2003, and 33% over the whole of 2004. In December 2004
another computer sales record was set - over 1500 computers sold in a one month
period. During 2004, nearly three times more computers were sold at Elion
Esindused than in 2003. About 60 percent of computers are paid for by instalment.
Computers are generally purchased with the ADSL start-up package, and a permanent
Internet connection is also usually ordered.
The Elion Group's operating costs were 3% or 1.1 million euros less than the
result for the fourth quarter of 2003. The increase in the revenues of AS Elion
Esindus coincided with an extensive increase in operating costs. The company's
fourth quarter operating costs exceeded the corresponding figure for 2003 by 30%.
The operating costs of the Group's parent company, Elion Ettevõtted, fell 3% in
the fourth quarter. The bulk of the decrease in operating costs arose from direct
sales costs. Marketing and subcontracting costs have also fallen. The increase in
the number of call minutes made to the networks of foreign operators has led to a
certain increase in interconnection charges.
In the fourth quarter of 2004, the Elion Group invested 5.9 million euros. A
total of 15.5 million euros was invested during the whole of 2004. The majority
of investments were targeted to the satisfaction of customers' needs and the
development of the network.
The Elion Group's total revenues for 2004 were 171.2 million euros, which is an
increase of 4% in comparison with 2003 or an absolute increase of 6.5 million
euros. The majority of the increase came from retail sales. The revenue of the
Group's parent company grew 0.5% in comparison with the previous year, i.e. 0.8
million euros. The Group's operating costs grew 6%, reaching 116.2 million euros.
The majority of the increase in operating costs also comes from the expansion of
the operations of Elion Esindus. The operating costs of the Group's parent
company grew by 0.8%. The main cause of the growth was the increase in
interconnection fees associated with the increased number of call minutes to
foreign operators' networks. The Elion Group's EBITDA was 0.5% or 0.3 million
euros less than the result for 2003. The Elion Group's net profit for 2004 was
21.9 million euros, which is 1.5 million euros less than in 2003. The result for
2003 includes the 3.7 million euros in profit earned from the sale of the
minority shareholding in AS Eltel Networks. The result for 2004, however,
includes the 2.7 million euros in profit earned from the sale of the majority
shareholding in AS Eltel Networks. In addition to this, Elion Ettevõtted AS paid
AS Eesti Telekom 6.4 million euros more in dividends in 2004 than it did in 2003,
which led to increased income tax on dividends of 2.2 million euros in comparison
with 2003.
EMT Group
Q4 Q4 Chang 12 12 Chan
2004 2003 e, months months ge,
% 2004 2003 %
Total revenues, 49.0 47.0 4.3 191.9 174.5 9.9
million EUR
EBITDA, million 18.4 17.5 5.3 82.3 81.8 0.6
EUR
EBITDA margin, % 37.5 37.2 42.9 46.9
EBIT, million EUR 12.6 12.1 4.2 60.6 59.8 0.2
EBIT margin, % 25.8 25.8 31.3 34.3
Profit before 12.7 12.3 3.2 60.5 60.6 -0.2
taxes, million
EUR
Net profit for 12.7 12.3 3.2 42.5 47.1 -9.7
the period,
million EUR
CAPEX, million 8.2 10.1 -18.7 17.4 21.7 -19.8
EUR
ROA, % 45.3 43.4 36.2 41.8
ROE, % 55.1 48.7 62.7 68.9
The EMT Group's total revenues for the fourth quarter of 2004 were 49.0 million
euros, which is an increase of 4% in comparison with the fourth quarter of 2003.
The EMT Group's fourth quarter operating costs were 30.6 million euros, which is
also an increase of 4% in comparison with the fourth quarter of 2003. The fourth
quarter has traditionally been characterised by low margins in the mobile
communications sector. The EBITDA margin for the fourth quarter of 2004 was
37.5%. EBITDA was 18.4 million euros, having risen 5% in comparison with the
result for the same period in 2003. The extensive investments made by the EMT
Group in the second half of 2003 have led to a certain increase in depreciation
costs. Depreciation for the fourth quarter of 2004 exceeded the indicator for the
same period of 2003 by 8%. The Group's total revenues reached 198 million euros,
being 4% higher than the result for the fourth quarter of 2003.
The EMT Group's results, especially the results for the second half-year, were
influenced by intensified competition and mobile phone operators' preparations
for the mobile number portability effective from 1 January 2005. The trend
towards falling rates has continued. Subscribers to new operators are offered
waivers of monthly fees, free call minutes and telephones at discount prices. In
November 2004 the first virtual operator entered the Estonian mobile telephone
market. A couple of weeks later, AS EMT launched the so-called discount service
provider, Diil. Diil is an independent unit within the structure of EMT that
operates with a small workforce and low fixed costs, in order to offer the most
price-sensitive customers simple and inexpensive services.
The EMT Group has been able to maintain its market positions successfully in
conditions of tough competition. As of the end of December 2004, the operator had
595.4 thousand customers (491.4 thousand in December 2003). During the year 2004,
the company's customer base has increased by 104 thousand customers. The growth
in the customer base was greatest in the fourth quarter of 2004, when the total
number of customers increased by 38.1 thousand. The numbers of both contractual
customers and users of pre-paid cards have increased. At the end of December, AS
EMT had 363.4 thousand contractual customers (306.6 thousand in December 2003).
During fourth quarter, the number of pre-paid cards in use increased by 24.3
thousand. The increase in the number of pre-paid cards is partly the result of
changes in the terms and conditions of use of the Simpel pre-paid call card,
which came into effect from 21 September 2004. Up to September 2004, call card
users were able to use their call time to make calls within a maximum of five
months from the last loading, which was supplemented with the possibility of
receiving calls for 1 more month. As of September, loaded calling time can be
used to make calls for up to six months, and calls can be received for up to one
month, as before. The purpose of this change was to harmonise the conditions of
use of AS EMT's call cards with those of call cards offered by other operators.
The discount operator Diil had attracted 7,100 customers by the end of 2004.
The growth in the number of customers has led to an increase in call minutes, the
number of messages sent and data volume. At the same time, the lower rates have
reduced revenue earned per unit. The reduced rates have had the strongest
influence on the revenues earned by AS EMT from SMSs. At the end of the third
quarter, the Tudengipakett (Student Package), which has low charges for sending
SMSs, was launched on the market. Users of personal short numbers and the EMT
self-service office can also send SMSs at the discount rate. The low rates have
increased the volume of SMSs sent, although AS EMT's fourth quarter revenues from
SMSs increased only 1% in comparison with the fourth quarter of 2003. In 2004 as
a whole, the revenues of this category increased 11%.
AS EMT's revenues from voice communication increased 12% during the fourth
quarter of 2004, and 11% during the whole of 2004. The cause of the increase in
revenue from voice communication is both the growth in customer base, the
increase in the number of call minutes per customer and increased revenue from
roaming.
The other revenues of AS EMT grew 2% during the fourth quarter, and 5% during the
whole of 2004. This growth is mainly the result of the increase in the number of
call minutes made to EMT customers from other networks.
In December 2004 AS EMT earned ARPU of 22.75 euros (24.16 euros in September
2004; 26.20 euros in December 2003).
In the fourth quarter of 2004 the operating costs of the EMT Group's parent
company increased 9% in comparison with the fourth quarter of 2003, reaching 373
million euros. Most of this increase in expenses came from the expansion of
customer base - the interconnection fees paid for calls to numbers not within the
EMT network and roaming expenses increased. The competition that has become
especially intense in the past half year has led to a modest increase in
marketing expenses. The expansion of customer base was accompanied by an increase
in expenses related to SIM-cards and pre-paid cards. In comparison with the
fourth quarter of 2003, AS EMT's personnel expenses decreased 8%.
The fourth quarter revenues of AS EMT Esindused, which is the subsidiary in the
EMT Group that is involved with retail operations, decreased 11% in comparison
with the fourth quarter of 2003. The fourth quarter revenues of the company in
the EMT Group that is involved with the wholesale of telecommunications
equipment, AS MWS, were 18% lower than for the corresponding period in 2003. The
end of the year 2003 and the ends of preceding years were characterised by
special Christmas offers in the area of retail sales of mobile phones, which led
to dramatic increases in fourth quarter revenues. At the end of 2003, the company
began to offer customers the possibility of paying for mobile phones by
instalment, and as a result indicators pertaining to the retail sale (and also
the related wholesale) of telephones remained high through all four quarters in
2004. In the fourth quarter, both retail and wholesale revenues remained at the
level of the previous quarter, and previous years' dramatic increase in
connection with Christmas sales was not repeated. In 2004 as a whole, the
revenues of AS EMT Esindused increased 30%, and those of AS MWS increased 17%.
In the fourth quarter of 2004, operating costs of the trade area also fell in
comparison with the fourth quarter of 2003. The operating costs of AS EMT
Esindused fell 11%, and those of AS MWS fell 20%. In 2004 as a whole, the growth
of operating costs was somewhat slower than that of revenues, reaching 29% in the
case of AS EMT Esindused and 16% in the case of AS MWS. The profit margins of
both retail and wholesale operations increased.
In the fourth quarter of 2004, the EMT Group invested 8.2 million euros, and 17.4
million euros in the whole of 2004. The majority of investments have been made in
order to guarantee the quality of the technological infrastructure. EMT continued
to expand the coverage area of EDGE, which permits rapid data communications, and
the capacity of EMT's Go mobile Internet environment was also increased.
The total revenues of the EMT Group in 2004 amounted to 191.9 million euros,
having increased 10%, or 17.4 million euros, in comparison with 2003. The
majority of the growth in total revenues came from the operations of the parent
company. The Group's operating costs increased 18%, reaching 109.6 million euros.
The majority of the growth in operating costs comes from the expansion of
customer base and the direct costs connected with the increase in the number of
call minutes. The EMT Group's EBITDA was 82.3 million euros, which represents an
increase of 1% over the year. The Group earned net profits of 42.5 million euros,
which is 4.6 million euros less than in 2003. Whereas in 2003 AS EMT paid AS
Eesti Telekom 38.3 million euros in dividends, in 2004 dividends amounted to 51.1
million euros. As a result of the larger volume of dividends, AS EMT's income tax
expenditure from the dividends also increased 4.5 million euros in comparison
with 2003.
Relations with regulator
The "Electronic Communications Act" entered into effect as of 1 January 2005
This Act prescribes the requirements for public communications networks, the
provision of services using such networks, the operation of radio communications
and the management of radio frequencies and numeration. The purpose of the Act is
to bring the regulation concerning this area into compliance with the changes
that have taken place in Estonian law.
Elion EnterprisesAS is declared SMP
The Estonian National Communications Board (ENCB) declared Elion EnterprisesAS to
be an operator with significant market power (SMP) in the telephone services
market, the leased line services market and the interconnection services market.
Based on the analysis of the financial results for 2003, Elion EnterprisesAS
possessed a market share of 82.68% in the telephone services market, 76.20% in
the leased line services market and 34.02% in the interconnection services
market.
Elion EnterprisesAS was declared an operator with significant market power for
the years 2001, 2002, 2003 and 2004. The company was not surprised by the ENCB's
intention to declare Elion Enterprisesan SMP in the three above-mentioned markets
in 2005 also.
EMT is declared SMP
The ENCB declared AS EMT to be an SMP in the mobile telephone services market for
2005. EMT was an SMP in 2002, 2003 and 2004. Based on the analysis of the
financial results for 2003, AS EMT possessed a market share of 59.39% in the
mobile telephone services market.
AS EMT submitted a complaint to the Tallinn Administrative Court concerning the
decision made by the ENCB. The first hearing in the matter is set to take place
on 19 April 2005.
Change in ownership structure
On 23 December 2004, TeliaSonera , through its subsidiary Baltic Tele AB, carried
out transactions for the acquisition of 100 Eesti Telekom shares from the market,
as a result of which TeliaSonera's holding in Eesti Telekom rose to 50.00004
percent. After the increase in TeliaSonera's holding, the ownership structure of
AS Eesti Telekom is as follows:
Baltic Tele AB 68,977,314 shares 50.00%
Republic of Estonia 37,485,100 shares 27.17%
Public investors 31,492,114 shares 22.83%
Since TeliaSonera's holding exceeds the 50 percent limit, Eesti Telekom will be
consolidated into the TeliaSonera Group.
When the holding surpassed 50 percent, TeliaSonera made a mandatory bid for all
of the shares of Eesti Telekom, as required by Estonia's Securities Market Act.
The value of the bid is 7.02 euros per share. The deadline for acceptance of the
bid begun on 13 January 2005 and ends on 23 February 2005.
[pic]
Definitions
Net debt - long term and short term debt, less cash and cash equivalents, and
short term investments
ROA - Net profit for the period, expressed as a percentage of average total
assets
ROE - Pre-tax profit for the period, expressed as a percentage of average equity
All trends, margins and growth rates are calculated on the basis of the Estonian
kroon, and using data that is rounded to the nearest kroon.
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
4th QUARTER INCOME STATEMENT
Financial statements are prepared in thousands of euros (EUR)
Q4 2004 Q4 2003
Revenues
Net sales 83,492 80,747
Other revenues 394 494
Total revenues 83,886 81,241
Operating expenses
Materials, consumables, supplies and (33,169) (32,903)
services
Other operating expenses (9,625) (8,407)
Personnel expenses (9,501) (9,839)
Other expenses (490) (1,405)
Total operating expenses (52,785) (52,554)
Profit from operations before 31,101 28,687
depreciation
Depreciation and amortisation (12,900) (13,820)
Profit from operations 18,201 14,867
Net financial income / (expenses) from 2,947 (67)
associates
Other net financing items 332 547
Profit before minority interest 21,480 15,347
Minority interest (112) (36)
Net profit for the period 21,368 15,311
Earnings per share
Basic earnings per share (in euros) 0.15 0.11
Diluted earnings per share (in euros) 0.15 0.11
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
INCOME STATEMENT
Financial statements are prepared in thousands of euros (EUR)
2004 2003
Revenues
Net sales 326,985 305,360
Other revenues 1,712 1,942
Total revenues 328,697 307,302
Operating expenses
Materials, consumables, supplies and (121,230) (106,226)
services
Other operating expenses (33,253) (29,224)
Personnel expenses (37,025) (34,010)
Other expenses (1,545) (2,503)
Total operating expenses (193,053) (171,963)
Profit from operations before 135,644 135,339
depreciation
Depreciation and amortisation (52,178) (56,302)
Profit from operations 83,466 79,037
Net financial income / (expenses) from 2,893 3,545
associates
Other net financing items 1,938 2,140
Profit before tax 88,297 84,722
Income tax on dividends (24,473) (18,280)
Profit after tax 63,824 66,442
Minority interest (313) (259)
Net profit for the period 63,511 66,183
Earnings per share
Basic earnings per share (in euros) 0.46 0.48
Diluted earnings per share (in euros) 0.46 0.48
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
BALANCE SHEET
Financial statements are prepared in thousands of euros (EUR)
2004 2003
ASSETS
Non-current assets
Property, plant and equipment 128,810 145,454
Goodwill - 657
Licenses, patents and trademarks 5,828 7,274
Investments in subsidiaries and 1,206 1,063
associates
Other investments - 172
Other non-current assets 1,279 439
Total non-current assets 137,123 155,059
Current assets
Inventories 7,947 6,226
Trade receivables 36,955 31,063
Other receivables 12,340 14,053
Investments held for trading 1,818 3,113
Cash and cash equivalents 92,992 84,414
Total current assets 152,052 138,869
TOTAL ASSETS 289,175 293,928
EQUITY AND LIABILITIES
Equity
Share capital 88,169 87,971
Reserves 31,551 29,937
Translation reserve - (1)
Retained earnings 75,976 80,187
Net profit for the period 63,511 66,183
Total equity 259,207 264,277
Minority interest - 865
Non-current liabilities
Interest-bearing loans and borrowings 38 236
- due after one year
Retirement benefit obligation 512 561
Total non-current liabilities 550 797
Current liabilities
Trade payables 16,924 14,447
Other current liabilities 8,816 10,343
Tax liabilities 2,181 2,281
Interest-bearing loans and borrowings 1,212 533
- due within one year
Provisions 285 385
Total current liabilities 29,418 27,989
TOTAL EQUITY AND LIABILITIES 289,175 293,928
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
CASH FLOW STATEMENT
Financial statements are prepared in thousands of euros (EUR)
2004 2003
Operating activities
Profit from operations 83,466 79,037
Adjustments for:
Depreciation and amortisation 52,178 56,302
Profit from sales and write-off of fixed (686) (399)
assets
Increase in retirement benefit - 145
provisions
Operating cash flow before movements in 134,958 135,085
working capital
Change in current receivables (6,347) (2,762)
Change in inventories (2,194) (192)
Change in current liabilities 3,202 (4,506)
Cash generated by operations 129,619 127,625
Interest paid (58) (119)
Income tax on dividends paid (24,473) (18,280)
Net cash from operating activities 105,088 109,226
Investing activities
Purchases of property, plant and (32,116) (30,241)
equipment
Purchases of licenses (793) (5,769)
Proceeds from sales of property, plant 1,175 1,959
and equipment
Acquisition of subsidiaries (247) (1,573)
Proceeds from sales subsidiaries 3,341 4,355
Purchases of trading investments (2,384) (3,113)
Proceeds on disposal of trading 3,678 5,054
investments
Loans granted (2,317) (144)
Cash receipt from repayment of loans 245 4
Dividends received - 1
Interest received 2,540 1,850
Net cash used in investing activities (26,878) (27,617)
Financing activities
Repayment of long-term convertible debt (3) (14)
Proceeds from nonconvertible long-term 86 23
debt
Repayment of nonconvertible long-term (471) (852)
debt
Repayment of long-term borrowings - (1,487)
Repayment of obligations under finance (579) (68)
lease
Repayment of short-term borrowings (11) (52)
Shares issuance (Rights Offering) 1,776 1,496
Dividends paid (70,377) (52,683)
Net cash used in financing activities (69,579) (53,637)
Net increase / (decrease) in cash and 8,631 27,972
cash equivalents
Cash and cash equivalents at beginning 84,414 56,497
of year
Effect of foreign exchange rate changes (53) (55)
Cash and cash equivalents at end of 92,992 84,414
period
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