DNA Ltd interim report for January−September 2011 

Press release 27 October 2011

DNA’S NET SALES AND EBITDA CONTINUED TO DEVELOP AS EXPECTED

SUMMARY

July–September

• Net sales increased by 3.7 per cent year-on-year to EUR 187.6 million (180.8 million).
• EBITDA decreased by 2.3 per cent and totalled EUR 46.9 million (48.0 million), or 25.0 per cent of net sales. The decline was due to higher material, sales and marketing costs resulting from positive sales development, and measures necessitated by intensifying competition. Due to an increase in depreciation, operating profit fell by 24.1 per cent to EUR 13.3 million (17.6 million), or 7.1 per cent of net sales (9.7).
• Pay-TV services were launched in the terrestrial network on 15 August 2011.

• The mobile communication subscription base grew by 7.5 per cent year-on-year to 2,234,000 in total.
- Revenue per user (ARPU) for mobile communications amounted to EUR 21.4 (21.4).
-  Mobile communication subscription turnover rate (CHURN) was 15.7 per cent (16.3 per cent).
• Due to the fall in the number of telephone subscriptions, the fixed-line subscription base fell by 2.3 per cent year-on-year to 1,035,000 subscriptions (telephone, broadband and cable television).

January–September

• Net sales increased by 7.0 per cent year-on-year to EUR 544.1 million (508.5 million). From 1 July 2010 onwards, net sales growth was particularly fuelled by incorporation of the Welho business.
• EBITDA improved by 4.6 per cent and totalled EUR 148.7 million (142.2 million), or 27.3 per cent of net sales. Due to an increase in depreciation, operating profit fell by 23.2 per cent and came to EUR 44.3 million (57.7 million), or 8.2 per cent of net sales.

Key figures
Figures are unaudited.

* 12-month average
** includes business combinations and financial lease agreements

 
CEO’s review

“Tests show that DNA has the fastest 3G network.”

During the January–September period, DNA’s net sales and EBITDA developed according to expectations. As anticipated, operating profit was weakened by the increase in depreciation. Our financial position remained good.

During the January–September period, DNA’s net sales and EBITDA developed according to expectations. As anticipated, operating profit was weakened by the increase in depreciation. Financial position remained good.

Net sales growth continued in the third quarter of the year: they grew by 3.7 per cent year-on-year to EUR 187.6 million (180.8 million). EBITDA for the period amounted to EUR 46.9 million (48.0 million), or 25.0 per cent of net sales (26.6 per cent). The decrease in EBITDA was caused by the increase in material, sales and marketing costs due to positive sales development and measures necessitated by intensifying competition. The customer churn rate was lower than in the comparable period in 2010 and the first half of 2011.

In the July–September period, operating profit decreased to EUR 13.3 million (17.6 million), or 7.1 per cent of net sales (9.7 per cent), particularly owing to the increase in depreciation. Gearing increased due to bigger investments and company acquisitions, and our net debt/EBITDA ratio was 0.76 (0.54).

Among the key events this year was the launch of pay-TV services in the terrestrial network, with the introduction of DNA Welho TV channel package, on 15 August 2011. We have the capacity to broadcast in excess of 20 TV channels in the terrestrial network, half of which are high definition channels. We will expand our offering to nationwide coverage with the Welho Mix concept used in our cable network, thus providing consumers with added choice. We aim to achieve over 80 per cent population coverage with our terrestrial network by the end of 2011.

At the end of the period under review, we streamlined our cable network channel offering and launched the DNA Welho TV card product. The card provides access to the largest channel offering in Finland, including over 20 high definition channels alongside the standard definition channels. We consider the quick introduction of a single nationwide pay-TV card, as requested by the authorities, to be of vital importance, since it will enable consumers to order new channels without having to change cards.

In September, DNA won two awards at the IBC Awards Ceremony, the premier annual event for television and broadcasting professionals worldwide. We received the IBC Innovation Award for our unique terrestrial network and its spectral efficiency. It is being constructed using existing masts in our mobile communication network, and due to efficient frequency use, we can broadcast even more channels. We also received the Judges’ Prize for the speedy launch of our terrestrial TV business.

These awards are recognition of DNA’s ground-breaking concept on an international scale as well as our strong investments in the TV business. The industry offers significant opportunities for innovation, new products and technological development.

We also continued to develop our mobile communication network. We opened the 4G network for test users in mid-August in the cities of Helsinki and Hämeenlinna, obtaining valuable feedback on the high speeds achieved and services used. The speeds available in 4G make this a compelling alternative to fixed-network connections. Commercial 4G services will be launched towards the end of the year.

We further developed and expanded our 3G network, which already reaches over five million Finns. Launched in Hämeenlinna in late September, DNA’s software-based implementation of MultiStandard Radio mixed mode technology is the first of its kind in the world. This solution improves connection speeds further and improves coverage without introducing new base stations. The technology also provides added investment, operational and energy efficiency.

Overall, we have modernised our network systematically by introducing the most advanced technologies. After the review period, a network data transfer comparison test proved that DNA’s 3G network is the fastest in Finland. Fast connections provide sound user experiences in mobile broadband services; we intend to continue meeting the growing service demand in the future.

DNA’s outlook for 2011 has been revised. The Group’s financial position is expected to remain good in 2011, and net sales are expected to grow by 5 to 6 per cent. EBITDA is expected to improve on that of 2010. Due to an increase in depreciation, operating profit is estimated to be lower than in 2010.

Riitta Tiuraniemi

Additional information:
Riitta Tiuraniemi, President and CEO, tel. +358 44 044 1000, riitta.tiuraniemi@dna.fi
Ilkka Pitkänen, CFO, tel. +358 44 044 4001, ilkka.pitkanen@dna.fi
Minna Robertson, Financial Communications Manager, tel. +358 44 044 9877, minna.robertson@dna.fi

Distribution:
Key media
www.dna.fi

ATTACHMENT: DNA Interim Report for January–September 2011