Pēd. atjaunots: 23.07.2024 13:11 (GMT+3)
Eesti Telekom FINANCIAL RESULTS 04/25/2002
Q1 2002 RESULTS, EEK
25 April 2002
THE FINANCIAL RESULTS OF THE FIRST THREE MONTHS OF 2002
Eesti Telekom, the leading provider of telecommunication
services in Estonia, today announces its results for the
three months period ending 31 March 2002.
Financial highlights
3 months 3 months Change, %
2002 2001
Total revenues, mEEK 1,051 1,004 5
EBITDA, mEEK 507 537 -6
EBITDA margin, % 48 53
EBIT, mEEK 250 276 -9
EBIT margin, % 24 28
Profits before taxes, 251 276 -9
mEEK
Net profits for the 251 275 -9
period
EPS, EEK 1.82 2.00 -9
No. of A- shares 137,383,178 137,383,178
Investments, mEEK 84 195 -57
Net gearing, % -16 -9
ROA, % 23 24
ROE, % 27 30
Commenting on these financial results, Chairman, Jaan
Männik, stressed:
“The first quarter of 2002 indicated increased stability in
our traditional fields of activity. At the same time,
several new, important for the future of the Group, projects
were started.ö
For further information, please contact:
Krister Björkqvist +372 6272 465
CFO
Hille Võrk +372 6272 460
Financial Manager
CHAIRMAN’S STATEMENT
Beginning of year 2002 gave reason for satisfaction.
Companies of the Eesti Telekom Group have adjusted to the
changes in Estonian telecommunications environment that took
place in 2001, and with instability of the World economy.
Outcome of the first quarter of 2002 confirms continuity of
the improvement trend of the economic results. Revenue and
profit have grown from quarter to quarter. Cash flow is
strongly positive. Net gearing has reached –16%. Investors
have also evaluated developments in Eesti Telekom to be
positive – the share of the company has had a growth-trend
since Autumn 2001.
Several new initiatives of the Group’s companies are also
gratifying. Estonian market is small, quality of
telecommunication services is high and the Group has felt
limits of its growth opportunities for some time already.
During first months of the current year, both operators of
the Group made their first steps in entering the
neighbouring markets.
Revenues, expenses, and profit
In the first three months of 2002, consolidated revenues of
the Eesti Telekom Group amounted to 1,051 mln EEK, showing a
rise of 5%, compared to the first quarter of 2001. Operating
expenses were 545 mln EEK, up by 17%. The growth mainly
results from release of the OÜ Albufent reserve through
operating expenses in the first quarter of 2001 (look at
financial results of Eesti Telefon Group). EBITDA of the
Group was 507 mln EEK, down by 7% compared to the same
period in 2001. EBITDA margin was 48%. Net profit of the
Eesti Telekom Group in the first quarter was 251 mln EEK or
1.82 EEK per share, showing a fall of 9%.
Outcome of the first three months of 2002, compared to the
same period of 2001, indicates some relapse. However,
comparison of the outcome with the results of the second,
the third and the forth quarter of 2001 confirms, once
again, that difficulties, resulting from opening the market
in the beginning of 2001, have been overcome. Loss of market
shares and revenues has stopped. Quarterly revenue and
profit figures are growing and margins are rising again.
The market for AS Eesti Telefon is much more stable now than
it was a year ago. Much more modest activities have relieved
the aggressive entry to the fixed communications market by
competitors a year ago. Amendments into the
Telecommunications Act that became effective in the
beginning of 2001 and established some limits on
interconnection charges of Eesti Telefon as an operator with
significant market power, became invalid from January 1,
2002.
At the end of March 2002, AS Eesti Telefon estimated its
market shares of total call minutes, domestic call minutes,
fixed to mobile minutes and international call minutes to be
90%, 89%, 74% and 70% respectively. Eesti Telefon estimated
its market share of dial-up minutes to be 73%.
Among the main revenue categories of AS Eesti Telefon,
revenues from data communications and Internet grew by 100%
and main line revenues by 22%, compared to the first quarter
of 2001. Revenues from domestic calls fell by 16%, revenues
from mobile communications by 23%, dial-up revenues by 37%
and revenues from international calls by 21%. In the
beginning of 2002, new price-packages were introduced by AS
Eesti Telefon, which allow customers with different
communication needs to choose between different combinations
of monthly fee and minute tariffs, thus optimising their
expenditures on communications. Several new products were
launched and promotional campaigns were run to foster use of
Internet by customers.
The consolidated revenues of the Eesti Telefon Group in the
first quarter of 2002 amounted to 616 mln EEK, down by 14%,
compared to the first quarter of 2001. Operating expenses of
the Group were down by 13%, to 368 mln EEK. Operating
expenses of the Group in the first quarter of 2001 were
affected by releasing reserve related to OÜ Albufent. An
insolvent company, OÜ Albufent, had filed a lawsuit against
AS Eesti Telefon in the amount of 55 mln EEK. In February
2001, OÜ Albufent submitted an application to the Tallinn
City Court to unconditionally drop the claim against AS
Eesti Telefon. But over the years, AS Eesti Telefon had
built up a monetary reserve, amounting to 46 mln EEK, to
deal with this claim. Since the case was dismissed, the
company was now able to release this sum through the profit
and loss account by reducing expenses. Excluding the
Albufent reserve, operating expenses were down by 21%. Both
revenues and operating expenses of Eesti Telefon in the
first quarter of 2002 were affected by directing a large
part of mobile calls directly from the network of one
operator to the network of another operator. Smaller mobile
transit reduced both revenues and expenses of the Group by
85 mln EEK. EBITDA of the Group was 248 mln EEK with the
margin 40%. The net profit amounted to 70 mln EEK, down by
26%, but excluding the Albufent reserve, there were growth
in the net profit by 45%.
In case of Eesti Telefon I would like to stress once more on
improvement of the financial results compared to the three
previous quarters. Profit numbers are significantly higher
and margins are improved.
The net growth in the number of customers of AS EMT during
the first three months of 2002 was 8.3 thousand. Total
number of customers reached 391 thousand, of which 261
thousand were post-paid customers (growth by 5.5 thousand)
and 130 thousand were prepaid customers (growth by 3
thousand). The company estimates its market share to be 54%.
Monthly ARPU in March 2002 was 420 EEK, lower than in March
2001 (466 EEK) or in December 2001 (439 EEK). During 2001,
tariffs of several call-packages were lowered and
promotional campaigns took place. As a result, number of
customers grew, more calls were made and use of other
services improved. EMT’s revenues from all main categories
were up during the first three months of 2002, compared to
the same period in 2001. Growth of SMS-revenue was the
largest among all categories, 23% over QI’01.
The EMT Group continues good performance. The total revenues
of the EMT Group amounted to 539 mln EEK, up by 7%. The
operating expenses of the Group were 276 mln EEK, up by 8%.
EBITDA of the EMT Group was 264 mln EEK with the margin 49%.
The net profit of the Group was 179 mln EEK, down by 2%,
compared to the same period in 2001. Net profit margin of
the Group was 33% and (annualised) ROA 42%.
Balance sheet and cash flow
At the end of March 2002, the total assets of the Eesti
Telekom Group amounted to 4,405 mln EEK (December 2001:
4,236 mln EEK). There has been a reduction in interest
bearing liabilities of the Group. At the same time, cash and
bank balances have increased. At the end of the first
quarter, the net gearing of the Group was –16%.
The net cash flow of the Group was strongly positive. Cash
and cash equivalents grew by 294 mln EEK during the first
three months of 2002 (72 mln EEK during 3 months of 2001).
The net operating cash flow was 380 mln EEK (2001 3 months:
288 mln EEK).
During the first three months of 2002, investments amounted
to 84 mln EEK, which is much less than the 195 mln EEK
invested during the same period in 2001.
The Eesti Telefon Group invested 35 mln EEK (2001 3 months:
129 mln EEK). Improving efficiency has been a priority for
the Group and return on investments is under strong control.
During the first three months of 2002, investments were made
into improving the network quality in several districts of
Estonia. By the end of March, digitalisation rate had risen
to 73.1% (December 2001: 71.8%). ADSL connections were
installed for 2.6 thousand clients. Total number of ADSL
lines in use rose to 19.5 thousand (1.4 lines per 100
inhabitant). The number of main lines in use at the end of
March was 485 thousand or 35.7 lines per 100 inhabitants.
The number of lines per employee was 322.
In January 2001, AS Connecto, a 100%-owned subsidiary of AS
Eesti Telefon, started its operations. The main field of
activities of AS Connecto is design, installation,
construction and maintenance services for telecommunications
systems. The company ended its first year of activities with
212 mln EEK revenues and 8 mln EEK net profit. In February
2002, AS Eesti Telefon announced its intention to sell
minority interest in AS Connecto to a strategic partner. The
aim of the sell would be acceleration of the expansion of AS
Connecto into other Baltic states. AS Connecto itself
acquired, on February 11, 2002, 100 per cent of network
construction company SIA Link, which operates in Latvia
(look “Widening abroadö).
The EMT Group invested 45 mln EEK during the three months of
2001 (2001 3 months: 65 mln EEK). The majority of
investments made by EMT went into base stations and
exchanges.
Introduction of GPRS and UMTS has been a priority for
research and investment projects of EMT for some time
already. In February, Sonera, the Finnish mobile operator,
and EMT successfully demonstrated MMS roaming and
interconnection between their respective commercial GPRS
networks. The demonstration was performed end-to-end using
multimedia messaging service centres (MMSCs) from Nokia, as
well as latest generation GPRS handsets from Nokia and other
manufacturers. The successful implementation shows that
mobile subscribers can send multimedia messages and
experience seamless, uninterrupted multimedia messaging
service when roaming to a visited network. Moreover, Sonera
and EMT demonstrated, also for the first time anywhere, how
multimedia messages can be sent between the subscribers of
different operators. This breakthrough underscores that MMS
is ready for business and will be widely available across
networks, greatly expanding the accessible market for such
services.
In practical terms, thanks to new interconnection
technologies like Sonera GRX, MMS services can now be sent
between different GPRS and UMTS networks as easily as SMS
messages are routed in GSM. Moreover, for the end-users,
multimedia messaging with the latest model MMS handsets is
no more complex than SMS.
Widening abroad
Estonian market is limited. Companies of the Eesti Telekom
Group have planned widening abroad with some focused
services. In the beginning of 2002, both operators of the
Group started to execute these plans.
On February 11, 2002, AS Connecto acquired 100 per cent of
network construction company SIA Link, which operates in
Latvia. In accordance with the purchase and sale agreement,
AS Connecto purchased 100 percent of the shares of SIA Link
from SIA Fortech, which belongs to the MicroLink Group. By
mutual agreement, the parties have not disclosed the price
of the purchase and sale transaction. With the purchase of
SIA Link, AS Connecto intends to expand its strategic
activities, i.e. the construction of fixed-line networks,
radio networks and internal networks, to the other
Baltic States.
SIA Link was founded on 28 September 2000, and its main
business areas are the construction of indoor networks and
wireless exterior connections. SIA Link has 20 employees
and the company's annual sales total roughly 10 million
kroons.
On July 1, 2000, AS EMT launched its mobile parking service
in Estonia. The service has become very popular: more than
42% of all parking-payments in Tallinn are made via mobile.
On April 10, 2002, mobile Payment Systems AS (mPay), a
jointly founded company by AS EMT and Norwegian mobile
communication applications developer Scangit AS, launched a
pilot mobile parking service project in Oslo, Norway. mPay
has scheduled the nationwide launch of the service for the
summer of this year. The system of mobile parking allows the
users of VISA debit and credit cards pay for their parking
by using their mobile telephones. This service will be
introduced in joint effort with VISA Norge AS and Sparbank1.
EMT has provided mPay with special technology, which has
been integrated with the information systems of the
parties needed for the provision of the mobile parking
service. mPay will pay EMT an agreed percentage of
the net turnover of mPay and additionally EMT has
reserved the call option of the mPay stock for securing
its dominant influence in this company. The mPay partners
in this pilot project are the City Government of Oslo and
parking service operators Nordisk Parkering and Parkerings-
Compagniet.
EMT, with its foreign partners, is developing its mobile
parking solutions in, addition to Estonian and Norwegian
markets, also for other European markets.
Trading with AS Eesti Telekom shares
In April 2001, HEX acquired 62% of the shares of Tallinn
Stock Exchange (TSE) becoming the strategic owner of TSE. On
February 25, 2002, TSE successfully implemented HEX's
trading system, creating a common trading environment for
Estonian and Finnish securities. The move represented the
introduction of HEX Tallinn, the group for HEX's activities
in Estonia consisting of TSE and Estonian CSD. Estonian
stock exchange became the first one among emerging European
markets which has direct connections with the Western-
European markets. Trading in Estonian securities now takes
place in euros on HEX's trading platform in a harmonised
regulative environment. Payments can also be made in
Estonian kroons.
The aim of the changes was enhancing the liquidity and
visibility of Estonian equities. In addition to the Estonian
brokers, the TSE listed securities are now accessible to HEX
members.
The London listed GDRs of AS Eesti Telekom have been traded
on the International Order Book (IOB) since 18 March. The
criterion for being traded on IOB is volume related. The IOB
is a fully electronic trading system covering almost 100
most traded GDRs. The IOB offers an investor an open and
flexible platform for trading with the GDRs of emerging
markets. The main benefits of IOB from a market perspective
are the increased transparency of trading and efficiency of
execution that results from order driven trading. More
information about this service is available on website
<a href='http://www.londonstockexchange.com/dr.' target='_blank'>http://www.londonstockexchange.com/dr.</a>
Potential change in ownership structure
On March 26, 2002, Sonera of Finland and Telia of Sweden,
the major shareholders of Eesti Telekom, announced that they
are planning to merge. Telia will make a purchase offer to
the shareholders of Sonera, offering 1.51440 Telia shares
for one Sonera share. The merger of the two companies will
create the leading telecommunications group in Scandinavia
and the Baltic States. The plan for the merger of Sonera and
Telia will be presented to the European Union for approval.
EU will in turn make its decision within a few months.
The merged company would have the number one position on the
Swedish, Finnish, Estonian, Latvian and Lithuanian mobile
markets. It would also be among the largest on Norwegian and
Danish markets. The company would have ownership in all
leading fixed communication operators of Baltic states.
After the merger, the combined group would possess a 49%
shareholding in Eesti Telekom.
Information to shareholders
The Annual General Meeting of Eesti Telekom shall be held on
May 17, 2002, at 2.00 p.m. at National Library of Estonia
(Tõnismägi 2, Tallinn). The 2001 Annual Report and
resolution projects are available for all shareholders on
Internet page <a href='http://www.telekom.ee' target='_blank'>http://www.telekom.ee</a> and in the office of AS
Eesti Telekom at Roosikrantsi 2, Tallinn since April 25,
2002 on working days from 10.00 a.m. to 2.00 p.m. Any
questions in regard of the General Meeting can be asked by
phone +372 6 311 212 or mailed to mailbox@telekom.ee.
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
INCOME STATEMENT
In thousands of Estonian kroons (EEK)
3 mths to 3 mths to 2001
31 March 31 March
02 01
Restated
Revenue
Net sales 1,042,106 991,406 4,154,438
Change in work-in- 939 1,844 529
progress
Capitalized self- 1,757 2,603 87,112
constructed assets
Other revenue 6,650 8,163 42,461
Total revenue 1,051,452 1,004,016 4,284,540
Operating expenses
Materials, 311,716 254,617 1,290,730
consumables,
supplies and
services
Other operating 101,485 70,740 494,962
expenses
Personnel expenses 122,760 134,582 534,754
Other expenses 8,673 7,349 33,118
Total expenses 544,634 467,288 2,353,564
Profit from 506,818 536,728 1,930,976
operations before
depreciation
Depreciation and 256,480 260,534 1,135,661
amortisation
Profit from 250,338 276,194 795,315
operations
Income (+) / -2,214 -392 26,828
expenses (-) from
subsidiaries and
associates
Other net financing 2,471 -134 -11,719
items
Profit before tax 250,595 275,668 810,424
Income tax expense 0 0 30,932
on dividends
Profit after tax 250,595 275,668 779,492
Minority interest 0 354 557
Net profit from 250,595 275,314 778,935
ordinary activities
Extraordinary item 0 0 0
Net profit for the 250,595 275,314 778,935
period
Earnings per share
Basic earnings per 1.82 2.00 5.67
share (in kroons)
Diluted earnings per 1.82 2.00 5.67
share (in kroons)
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
BALANCE SHEET
In thousands of Estonian kroons (EEK)
31 March 31 Dec 31 March
2002 2001 2001
Restated
ASSETS
Current assets
Cash and cash 619,070 403,633 681,430
equivalents
Short-term 138,682 60,584 0
investments
Trade receivables, 441,448 403,324 417,409
net
Other receivables 16,674 10,715 8,398
Accrued income 114,524 99,242 81,288
Prepaid expenses 22,308 28,159 54,148
Inventories 113,116 104,013 196,740
Total current assets 1,465,822 1,109,670 1,439,413
Non-current assets
Long term financial 24,257 26,464 35,237
assets
Tangible assets, net 2,868,804 3,043,869 3,152,975
Intangible assets, 46,061 56,139 62,357
net
Total non-current 2,939,122 3,126,472 3,250,569
assets
TOTAL ASSETS 4,404,944 4,236,142 4,689,982
EQUITY AND
LIABILITIES
Current liabilities
Interest bearing 87,264 88,166 154,443
loans and borrowings
Customer prepayments 7,121 9,237 6,763
Accounts payable to 165,033 260,932 218,247
suppliers
Other payables 0 168 11
Tax liabilities 58,022 32,697 44,598
Accrued expenses 168,433 152,644 150,684
Provisions 12,929 17,482 13,104
Prepaid revenue 2,423 10,350 44,969
Total current 501,225 571,676 632,819
liabilities
Non-current
liabilities
Interest bearing 37,773 49,115 182,845
loans and borrowings
Other long-term 0 0 0
payables
Total non-current 37,773 49,115 182,845
liabilities
Minority interest 0 0 6,971
Equity
Issued capital 1,373,833 1,373,833 1,373,833
Share premium 309,964 309,964 309,964
Statutory legal 137,384 137,384 124,963
reserve
Retained earnings 1,794,170 1,015,235 1,783,273
Net profit for the 250,595 778,935 275,314
period
Total equity 3,865,946 3,615,351 3,867,347
TOTAL EQUITY AND 4,404,944 4,236,142 4,689,982
LIABILITIES
AS EESTI TELEKOM AND SUBSIDIARY COMPANIES
CASH FLOW STATEMENT
In thousands of Estonian kroons (EEK)
3 mths to 3 mths to
31 March 31 March 01
02 Restated
Cash flow from operating
activities
Profit before tax and minority 250,595 275,668
interest
Adjustments for:
Depreciation 256,480 260,534
Profit/loss from sales and 2,477 -271
write-off of fixed assets
Income/ expense from 2,214 392
subsidiaries and associates
Interests income/ expense, -2,232 -1,624
net
Other non-cash adjustments 881 446
Operating profit before working 510,415 535,145
capital changes
Change in current receivables -50,370 -28,041
Change in inventories -8,012 -47,517
Change in current liabilities -73,661 -167,362
(except loans)
Adjusted cash generated from 378,372 292,225
operations
Interest paid -1,478 -6,260
Net cash flow from operating 376,894 285,965
activities
Cash flow from investing
activities
Purchase of tangible assets -79,808 -169,706
Purchase of licenses -662 -4,026
Purchase of shares, investments 0 -20,861
and other
Proceeds from sales of tangible 7,709 2,405
assets
Loans granted -50 -106
Cash receipts from repayment of 19 16
loans
Interest received 2,195 3,478
Net cash flow from investing -70,597 -188,800
activities
Cash flow from financing
activities
Proceeds from convertible long- 30 438
term debt
Repayment of convertible long- 0 -8
term debt
Proceeds from nonconvertible 621 0
long-term debt
Repayment of nonconvertible -1,777 -1,692
long-term debt
Proceeds from long-term 0 0
borrowings
Repayment of long-term -11,636 -15,940
borrowings
Payment of finance lease 0 -8,276
liabilities
Net cash flow from financing -12,762 -25,478
activities
Net increase / - decrease in 293,535 71,687
cash and cash equivalents
Cash and cash equivalents at 464,217 609,743
beginning of year
Cash and cash equivalents at 757,752 681,430
end of period
Hille Võrk
Financial Manager
6 272 460
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