DNA Ltd Group - Interim Report January–September 2009 

Q3 indicated extremely positive development in DNA's net sales and profitability

Mobile communication subscriptions saw strong growth

Summary of Q3
• DNA's net sales for July–September amounted to EUR 167 million (7–9/2008: EUR 159 million).
• EBITDA improved to EUR 47 million (7–9/2008: EUR 41 million).
• EBITDA adjusted for nonrecurring items came to EUR 49 million, accounting for 29.5 per cent of net sales (7–9/2008: EUR 42 million, 26.4 per cent).
• EBIT amounted to EUR 15 million (7–9/2008: EUR 16 million).
• EBIT adjusted for nonrecurring items came to EUR 17 million, accounting for 10.3 per cent of net sales (7–9/2008: EUR 17 million, 10.5 per cent).
• Profit before taxes was EUR 19 million (7–9/2008: EUR 15 million).
• Profit before taxes adjusted for nonrecurring items came to EUR 16 million (7–9/2008: EUR 16 million).

• Consumer business net sales amounted to EUR 119 million (7–9/2008: EUR 113 million) and EBITDA to EUR 32 million (7–9/2008: EUR 26 million).
• Corporate business net sales amounted to EUR 47 million (7–9/2008: EUR 46 million) and EBITDA to EUR 16 million (7–9/2008: EUR 15 million).

• DNA's mobile communications (including mobile broadband) grew by 74,000 subscriptions during Q3 to 1,891,000 subscriptions (9/2008: 1,585,000; 6/2009: 1,817,000).
• Average revenue per user (ARPU) for mobile communication amounted to EUR 22.3 (7–9/2008: 24.1; 4–6/2009: 22.4).
• Subscription turnover rate (churn) decreased from the previous quarter to 14.5 per cent (7–9/2008: 15.6; 4–6/2009: 18.9).
• At the end of September, the number of fixed network broadband subscriptions amounted to 186,000 (9/2008: 191,000; 6/2009: 187,000).
• The number of traditional telephone subscriptions was 209,000 (9/2008: 236,000; 6/2009: 215,000).
• The number of customers in DNA's cable TV distribution networks was 267,000 (9/2008: 259,000; 6/2009: 267,000).

Summary of January–September
• DNA's net sales for January–September amounted to EUR 487 million (1–9/2008: EUR 477 million), a 2.1 per cent increase year-on-year.
• EBITDA amounted to EUR 118 million (1–9/2008: EUR 128 million).
• EBITDA excluding nonrecurring items came to EUR 135 million, accounting for 27.7 per cent of net sales (1–9/2008: EUR 128 million, 26.8 per cent), a year-on-year improvement of 5.5 per cent.
• EBIT amounted to EUR 32 million (1–9/2008: EUR 54 million).
• EBIT excluding nonrecurring items came to EUR 48 million, accounting for 9.9 per cent of net sales (1–9/2008: EUR 54 million, 11.2 per cent).
• Profit before taxes was EUR 34 million (1–9/2008: EUR 54 million).
• Profit before taxes adjusted for nonrecurring items came to EUR 48 million (1–9/2008: EUR 57 million).
• Nonrecurring items largely covered the expense provision for cooperation negotiations.

• Consumer business net sales amounted to EUR 351 million (1–9/2008: EUR 332 million) and EBITDA to EUR 79 million (7–9/2008: EUR 82 million).
• Corporate business net sales amounted to EUR 136 million (1–9/2008: EUR 144 million) and EBITDA to EUR 39 million (7–9/2008: EUR 47 million).

Figures are unaudited.

Key figures 
 

Riitta Tiuraniemi, President and CEO:

"Solid growth continues in DNA's mobile communications subscriptions; net sales have improved since last year."

Our net sales saw extremely favourable development in Q3 2009, with a clear year-on-year improvement. In the consumer business, strong growth has continued in the number of mobile communications and mobile broadband subscriptions, supporting the increase in net sales. Compared to last year, this year the number of mobile communication subscriptions increased by 306,000. In July–September the number of mobile communication subscriptions grew by 74,000. Any negative development in net sales was a result of lower termination charges and the decrease in the use of conventional telephone network services.

We continue to invest strongly in the development of the 3G network. In the past six months, the geographical coverage of DNA's 3G network has doubled. In the next few months, we will be the first operator in Finland to introduce 21 Mbps speeds in our 3G network. With DNA's latest products and services, user speeds can already reach up to 10 Mbps. The average speed for end users is 3–5 Mbps. Gradually, users in rural areas can also benefit from actual speeds exceeding 5 Mbps. In DNA's view, wireless technology is the most efficient way of achieving the government’s objective of extending broadband services to rural areas in Finland.

In addition to developing the 3G network, ensuring network quality is important to us. The new JoikuMetrix quality optimisation system will help us ensure the high quality of our network and maintain excellent user experience of 3G services. Over 4.6 million people in Finland currently live within the reach of DNA's 3G network.

According to the latest EPSI Rating survey (26 October 2009), DNA's mobile communication services have the most satisfied consumer and corporate customers in Finland. DNA was also ranked among the industry leaders in terms of customer loyalty. We intend to retain this by maintaining an outstanding level of service in all customer contacts. The customer's first contact with the company is often through telesales: we have established new call centres in Tampere and Jyväskylä. The call centres focus on sales and provide approximately 120 new jobs instantly, with more in the pipeline. Earlier in the year, DNA launched call centres in Oulu and Kuopio, where vacancies remain.

As part of our latest business venture, we provide businesses with mobile marketing services, offering them the opportunity to market their new products and services by mobile phone. Mobile media is still a relatively untapped marketing resource in Finland. Mobile phone use funded by advertising is opening up new business opportunities for operators and providing new tools for the marketing of companies and organisations.

Year-end outlook
DNA's year-end outlook has improved since the end of the previous quarter. We have succeeded in deploying our new operating model and will see the streamlining measures begin to take effect. On the other hand, the prolonged economic downturn is intensifying competitive tendering for corporate subscriptions, while giving rise to a preference for lower-priced terminals and showing in a slight increase in bad debt. All of this will increase the pressure on both net sales and profit.

The 4G licences for general telecommunications over the 2,500–2,690 MHz frequency in Finland will be auctioned in November 2009 by the Finnish Communications Regulatory Authority (FICORA). DNA will take part in the auction. The licences will be granted for a maximum of 20 years.

Market situation
Intense competition has continued in the telecommunications market, in the fixed network voice traffic and due to the voice and broadband campaigns waged on the mobile communication market. Mobile communication customer churn has slightly decreased year-on-year. In the consumer business, mobile broadband continues to replace fixed broadband, as seen in the decreasing numbers of fixed broadband subscriptions and increased sales of high-speed mobile broadband. In the corporate business, competition is intense, in particular in the mobile communication market, while business use of mobile broadband is showing a positive rising trend.

INTERIM REPORT JANUARY–SEPTEMBER 2009 >>

More information:
Riitta Tiuraniemi, President and CEO, tel. +358 290 996 201, riitta.tiuraniemi(a)dna.fi
Simo Mustila, Vice President, Corporate Finance & Administration, tel. +358 44 220 3300, simo.mustila(a)dna.fi
Vilhelmiina Wahlbeck, Vice President, Corporate Communications, tel. +358 44 040 1671, vilhelmiina.wahlbeck(a)dna.fi