- ISIN EE3100007220
Eesti Telekom
Consolidated Interim Report of AS Eesti Telekom III Quarter and the first nine months 2009, EEK
Eesti Telekom /
22.10.2009
Dissemination of a Corporate News, transmitted by
DGAP - a company of EquityStory AG.
The issuer / publisher is solely responsible for the content of this announcement.
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MANAGEMENT REPORT
GENERAL INFORMATION
The principal activity of Eesti Telekom Group, the parent company of which is AS
Eesti Telekom (registration number 10234957; address: Valge 16, 19095 Tallinn),
is the provision of telecommunications services.
Since 1999, the shares of AS Eesti Telekom have been listed on the Tallinn and
London securities markets (OMX: ETLAT / LSE: EETD).
Changes in the Eesti Telekom Group structure
On August 31, 2009, with merger entries of Äriregister (Estonian Business
Register) the merger came into effect, merging 100% subsidiaries EMT Esindused
AS and AS Mobile Wholesale with AS EMT, and 100% subsidiary AS Elion Esindus
with Elion Ettevõtted AS. The aim of mergers is to achieve greater efficiency in
business processes. The mergers will not cause any changes in information
disclosed to stock exchange as the results of EMT Group and Elion Group are
already consolidated.
Ownership structure of AS Eesti Telekom
As of the third quarter of 2009, the TeliaSonera Group owned 60.98% of the AS
Eesti Telekom shares. The percentage of freely traded shares is 11.85% of the
total number of shares. 1.07% of these have been converted into GDRs traded on
the London Stock Exchange.
As of 30 September 2009, the 10 largest AS Eesti Telekom shareholders were:
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| | 30 September 2009 |
--------------------------------------------------------------------------------
| | No of shares | Participation |
--------------------------------------------------------------------------------
| | Changes since |
| | 30 June 2009 |
--------------------------------------------------------------------------------
| TeliaSonera group | 84,119,23 | 60.98% | 1,182,940 |
| | 9 | | |
--------------------------------------------------------------------------------
| Ministry of Finance | 37,485,10 | 27.17% | 4,138,636 |
| | 0 | | |
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| SEB clients | 2,412,819 | 1.75% | 63,614 |
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| ING Luxembourg S.A. | 2,137,813 | 1.55% | 0 |
--------------------------------------------------------------------------------
| State Street Bank and Trust | 623,145 | 0.45% | 242,100 |
| Omnibus Account | | | |
--------------------------------------------------------------------------------
| Mellon Treaty Omnibus | 609,406 | 0.44% | 112,933 |
--------------------------------------------------------------------------------
| UniCredit Bank Austria AG | 494,398 | 0.36% | 54,480 |
--------------------------------------------------------------------------------
| Clearstream Banking Luxembourg | 472,201 | 0.34% | (150,957) |
| S.A. clients | | | |
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| Nordea Bank Finland PLC | 427,020 | 0.31% | 49,130 |
--------------------------------------------------------------------------------
| Evli Bank PLC customers | 381,303 | 0.28% | 310,686 |
--------------------------------------------------------------------------------
On August 24, 2009, TeliaSonera announced a cash offer for the shares of Eesti
Telekom. The acceptance period of the cash offer ended on October 9, 2009.
TeliaSonera was offering 93 EEK for each share of Eesti Telekom. Following the
acquisition of shares in the cash offer, Teliasonera will own, directly and
indirectly, a total of 134,614,949 shares, constituting 97.58% of all shares of
Eesti Telekom.
Taking into consideration the results of the cash offer, TeliaSonera's Group
Management has decided to initiate actions for the squeeze-out of remaining
minority shareholders in accordance with Article 182-1 of the Securities Market
Act of Estonia.
Shareholders' extraordinary general meeting
The extraordinary AS Eesti Telekom general shareholders' meeting took place on 1
October 2009. The general meeting approved a supplementary proposal for the
distribution of profits. The AS Eesti Telekom shareholders will be paid
supplementary dividends of 6.99 EEK per share or a total of 964 million EEK.
The dividends will be paid on 30 October 2009, based on the list of shareholders
that was fixed as of 15 October 2009 at 11.59 pm.
The general meeting confirmed a dividend policy for the financial years of 2009,
2010 and 2011 that conforms to current AS Eesti Telekom practices, whereby
dividends that are paid out in 2010, 2011, and 2012 according to the law, will
comprise 100 percent of the net profits accumulated by the end of the financial
year.
AS Eesti Telekom shares
In the third quarter of 2009, the price of AS Eesti Telekom shares increased by
42.24%. The share price at the beginning of the quarter was 69.63 EEK and 99.04
EEK at the end of the quarter. The highest and lowest share prices during the
reporting period were 100.14 EEK and 63.06 EEK respectively. The turnover for
the reporting period was 521 million EEK.
BUSINESS ACTIVITIES
Management commentary: The Group's sales revenues in the second quarter were
primarily impacted by regulations (European Union regulations applied on the
mobile sector) and the economic downturn (reduction of sales of goods and
changes in consumer behavior). Due to the efficiency plans in all subsidiaries
the decrease in EBITDA is smaller than in Sales and EBITDA margin has increased
year-to-year.
Significant financial indicators
Eesti Telekom Group
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| | Q3 | Q3 | Chang | 9 | 9 mos. | Change |
| | 2009 | 2008 | e, % | mos. | 2008 | , % |
| | | | | 2009 | | |
--------------------------------------------------------------------------------
| Total revenues, million | 1,342 | 1,566 | (14.3 | 4,027 | 4,617 | (12.8) |
| EEK | | | ) | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 542 | 628 | (13.7 | 1,595 | 1,818 | (12.3) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Margin, % | 40.4 | 40.1 | | 39.6 | 39.4 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 392 | 481 | (18.6 | 1,137 | 1,386 | (18.0) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Margin, % | 29.2 | 30.7 | | 28.2 | 30.0 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 392 | 485 | (19.3 | 1,173 | 1,424 | (17.6) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Profit for the period, | 392 | 485 | (19.3 | 774 | 1,039 | (25.5) |
| million EEK | | | ) | | | |
--------------------------------------------------------------------------------
| Basic earnings per share, | 2.84 | 3.51 | (19.1 | 5.61 | 7.51 | (25.3) |
| EEK | | | ) | | | |
--------------------------------------------------------------------------------
| Comprehensive income for | 392 | 485 | (19.3 | 774 | 1,039 | (25.5) |
| the period, | | | ) | | | |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 112 | 171 | (34.4 | 359 | 474 | (24.1) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Net gearing, % | (8.4) | (13.1 | | (8.4) | (13.1) | |
| | | ) | | | | |
--------------------------------------------------------------------------------
| ROA, % | 9.5 | 10.8 | | 17.1 | 21.8 | |
--------------------------------------------------------------------------------
| ROE, % | 11.5 | 13.3 | | 29.7 | 34.7 | |
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Mobile communications segment
--------------------------------------------------------------------------------
| | Q3 | Q3 | Chang | 9 | 9 mos. | Change |
| | 2009 | 2008 | e, % | mos. | 2008 | , % |
| | | | | 2009 | | |
--------------------------------------------------------------------------------
| Total revenues, million | 806 | 966 | (16.5 | 2,314 | 2,778 | (16.7) |
| EEK | | | ) | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 292 | 383 | (23.6 | 865 | 1,076 | (19.7) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Margin, % | 36.2 | 39.6 | | 37.4 | 38.7 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 227 | 316 | (28.3 | 664 | 881 | (24.6) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Margin, % | 28.1 | 32.7 | | 28.7 | 31.7 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 228 | 318 | (28.4 | 689 | 900 | (23.4) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| Profit for the period, | 228 | 318 | (28.4 | 454 | 678 | (33.0) |
| million EEK | | | ) | | | |
--------------------------------------------------------------------------------
| Comprehensive income for | 228 | 318 | (28.4 | 454 | 678 | (33.0) |
| the period, | | | ) | | | |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 27 | 70 | (61.9 | 160 | 198 | (19.2) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| ROA, % | 13.5 | 6.7 | | 23.6 | 33.2 | |
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| ROE, % | 18.9 | 9.2 | | 44.9 | 58.4 | |
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Broadband services segment
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| | Q3 | Q3 | Chang | 9 | 9 mos. | Change |
| | 2009 | 2008 | e, % | mos. | 2008 | , % |
| | | | | 2009 | | |
--------------------------------------------------------------------------------
| Total revenues, million | 781 | 886 | (11.9 | 2,245 | 2,454 | (8.5) |
| EEK | | | ) | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 240 | 247 | (2.8) | 722 | 740 | (2.5) |
--------------------------------------------------------------------------------
| Margin, % | 30.8 | 27.9 | | 32.1 | 30.1 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 162 | 173 | (6.5) | 490 | 523 | (6.3) |
--------------------------------------------------------------------------------
| Margin, % | 20.8 | 19.6 | | 21.8 | 21.3 | |
--------------------------------------------------------------------------------
| EBT, million EEK | 156 | 170 | (8.5) | 486 | 523 | (7.2) |
--------------------------------------------------------------------------------
| Profit for the period, | 156 | 170 | (8.5) | 321 | 390 | (17.8) |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive income for | 156 | 170 | (8.5) | 321 | 390 | (17.8) |
| the period, | | | | | | |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 85 | 97 | (13.1 | 194 | 262 | (26.1) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| ROA, % | 6.4 | 6.7 | | 12.4 | 14.6 | |
--------------------------------------------------------------------------------
| ROE, % | 9.3 | 9.2 | | 25.5 | 26.2 | |
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IT services segment
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| | Q3 | Q3 | Chang | 9 | 9 mos. | Change |
| | 2009 | 2008 | e, % | mos. | 2008 | , % |
| | | | | 2009 | | |
--------------------------------------------------------------------------------
| Total revenues, million | 56 | 73 | (22.7 | 188 | 239 | (21.6) |
| EEK | | | ) | | | |
--------------------------------------------------------------------------------
| EBITDA, million EEK | 12 | 2 | 534.7 | 17 | 13 | 29.6 |
--------------------------------------------------------------------------------
| Margin, % | 20.8 | 2.5 | | 8.8 | 5.3 | |
--------------------------------------------------------------------------------
| EBIT, million EEK | 6 | (4) | N/A | (8) | (5) | (44.6) |
--------------------------------------------------------------------------------
| Margin, % | 9.8 | (5.9) | | (4.2) | (2.3) | |
--------------------------------------------------------------------------------
| EBT, million EEK | 6 | (5) | N/A | (8) | (6) | (26.5) |
--------------------------------------------------------------------------------
| Profit for the period, | 6 | (5) | N/A | (8) | (6) | (26.5) |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| Comprehensive income for | 6 | (5) | N/A | (8) | (6) | (26.5) |
| the period, | | | | | | |
| million EEK | | | | | | |
--------------------------------------------------------------------------------
| CAPEX, million EEK | 1 | 4 | (76.9 | 6 | 14 | (57.2) |
| | | | ) | | | |
--------------------------------------------------------------------------------
| ROA, % | 3.6 | (3.2) | | (4.6) | (4.0) | |
--------------------------------------------------------------------------------
| ROE, % | 5.1 | (6.2) | | (7.0) | (6.4) | |
--------------------------------------------------------------------------------
Sales revenues, operating costs, and profit
The Group's sales revenues in the third quarter of 2009 reached 1,342 million
EEK (3rd quarter 2008:
1,566 million EEK). The decrease in sales revenues
resulted primarily from the reduction in the sales volumes of telecommunications
and IT merchandise and a drop in revenues from call services and international
interconnection services.
The mobile communications segment's consolidated turnover for the third quarter
was 806 million EEK, decreasing 16% compared to the third quarter of 2008 (3rd
quarter 2008: 966 million EEK). The reason for the decrease in total revenues
was basically a reduction in revenues from call services caused by a drop in
retail prices, which was partially compensated by the growth of volumes for
mobile data communications and subcontracting services. During the third
quarter, a decrease was also experienced in revenues received from the retailing
and wholesaling of telecommunications merchandise compared to a year ago, which
was caused by changes in consumer behavior. In addition, the call minutes
initiated by the customers and the number of call minutes entering the EMT
network decreased by 4% compared to the third quarter of 2008, which resulted
from the customers' wish to limit consumption.
By the end of the third quarter of 2009, the following applied to the EMT client
base: the number of contractual clients had not decreased and remained at 484
thousand; since the entire market had contracted, the number of pre-paid card
users decreased by 33 thousand, declining to 260 thousand. EMT assesses its
market share of active SIM cards to be 47%. The estimated penetration of active
cards in Estonia is 119%.
EMT successfully continued to offer its new MinuEMT (MyEMT) mobile and Internet
package, whereby customers can choose the volumes of the three basic mobile
communications - calls, text messages, and Internet - that he or she wishes to
use. The MinuEMT package includes very favorable prices and personalized
discounts based on the customers' history with EMT. The sale of MinuEMT services
has progressed well and a total of 45 thousand private and business clients have
subscribed.
Based on a 26 March 2009 decision by the Competition Board, as of 1 July 2009, a
maximum interconnection tariff of 1.36 EEK per minute, instead of 1.37 EEK per
minute, came into force for AS EMT, Elisa Eesti AS and Tele2 Eesti AS, as well
as ProGroup Holding OÜ. The maximum rate for interconnection fees to be
established for the periods 1 July 2010 to 30 June 2011 and 1 July 2011 to 30
June 2012 will be announced by the Competition Board at least 2 months before
the beginning of the corresponding period, but pursuant to the decision, the
decrease or increase in the interconnection fees to be applied shall not be more
than 10%.
As of 1 July 2009, the following price obligations, which apply to the
Community's internal roaming services (euro tariffs), came into force for mobile
communications operators in the European member states based on Regulation no.
544/2009 of the European Parliament and Council dated 18 June 2009 (which
amended
EU Regulation no. 717/2007 that deals with roaming in public mobile
phone networks within the borders of the Community): the call minute prices
decreased at both the wholesale (0.26 EUR per minute) and retail level
(outgoing calls 0.43 EUR per minute, incoming calls 0.19 EUR per minute);
maximum fees were implemented for SMS texting (wholesale 0.04 EUR and retail
0.11 EUR), as well as wholesale prices for data communications services (1
EUR/1MB). In addition, as of 1 July 2009, the fees for roaming calls will be
calculated by the second (except during the first 30 seconds of the call
initiation fee).
The broadband services segment's consolidated turnover reached 781 million EEK
in the third quarter. Compared to the same period of the previous year, the
decrease of revenues in the broadband services segment totaled 12%. The decrease
in turnover was related primarily to a reduction in the sales volumes of
telecommunications and IT goods as well as a reduction in minute volumes of call
services and international interconnections services. As a result of the drop in
volumes, retail sales revenues decreased by 36%, and the revenues earned from
end consumers for domestic call services decreased by 15%, due to the general
drop in minute volumes in the Estonian market. The turnover for international
call services decreased by 24%, which is primarily related to a reduction in the
minute volumes for international calls initiated from mobile networks. Due to
the drop in the minute volumes for international call transit, the turnover for
international interconnection services decreased in the third quarter by 24%
compared to the previous year. At the same time, the revenues earned from the
monthly fees for triple-play and data communications solutions increased by 8%
compared to the previous year.
As the result of successful marketing campaigns, the number of Elion IP and
cable-TV customers increased by 6,000 in the third quarter reaching 94.4
thousand as of 30 September (30 September 2008: 75.4 thousand). Elion assesses
that the company's market share in the cable broadcast market increased by 1% in
the third quarter to 30% at the end of September (30 September 2008: 26%).
As of 1 October, Elion digital TV's basic Estonian and Slavic packages were
supplemented by 20 channels, of which four are totally new channels (Discovery
Investigation, Nat Geo Music, Life TV, and RTV). The other 16 channels that were
added to the basic packages are popular channels transferred from theme
packages, which were previously available for an additional fee.
At the end of September, Elion introduced a hyper-fast Internet service, which
has quickly become popular among the customers. During the first week, more than
200 users subscribed to the service and 25,000 people checked on the
availability of the service in their homes. Elion's hyper-fast Internet, with a
monthly fee of
99 EEK, provides download speeds of up to 100 Mbit/s and upload
speeds of up to 20 Mbit/s. This additional
service is available to
Kodulahenduse customers, whose current Internet download speeds are up to 12
Mbit/s,
and in whose apartment buildings a fiber-optic network has been
installed. Currently, there are 100,000 households in apartment buildings with
the technical requirements for Elion's hyper-fast Internet in all of Estonia's
largest cities.
The total number of Elion's customers with permanent Internet connection
increased by 1,700 connections during the quarter, reaching 176.8 thousand by
the end of September (30 September 2008: 171.9 thousand). The company's
assessment is that Elion's market share of the permanent Internet connection
market in Estonia has not changed, and continues to be 54%.
By the end of the third quarter, the number of Elion's total means of
communication totaled 460 thousand
(30 September 2008: 471 thousand
interfaces). The reduction in the number of total means on communication
resulted from an expected reduction in the number of telephone connections in
the private and business segments, as well as a reduction in the number of pay
phones throughout Estonia.
Elion assesses its market share for call minutes initiated in the fixed network
to be 79% (September 2008: 80%). The market share for local call minutes is 81%
(September 2008: 82%), 68% for international calls (September) 2008: 67%) and
70% for call minutes made to mobile phones (September 2008: 71%).
In the telecommunications and IT goods market, Elion increased its market share
in the third quarter in the field of audio-video goods from 12.5% to 16.8%.
Despite very competitive prices, Elion was able to maintain its position as the
market leader in the field of IT goods (a market share along with AS EMT, its
affiliated company, of 29%).
In August, the Competition Board completed its proceeding regarding the fees
established for Elion's fixed line services and rental of copper pairs, by
acknowledging their legality.
The IT services segment's sales revenues in the third quarter of 2009 reached 56
million EEK (3rd quarter 2008: 73 million EEK). Compared to the same period in
the previous year, the sales revenues decreased by 23%, whereas the sales
revenues for IT merchandise decreased by 58%; the sales revenues for
project-based services increased by 48%; and the sales revenues for permanent
services decreased by 6%. The increase in revenues from project sales compared
to last year was affected by the IT Koolituskeskuse OÜ Group's data being
recognized in the consolidated sales revenues of the IT services segment in
2009, while on the other hand, project sales revenues decreased in connection
with the sale of the software development and financial software business to AS
Helmes at the end of June 2009. If we examine this field of activity separately,
the sales revenues for services in the field of document management and
archiving increased by 8% and the sales revenues for IT training and
consultation decreased by 21% compared to the third quarter of last year.
In the third quarter, the general downward trend continued in the IT market.
Numerous procurements have been postponed and the results of completed
procurements have been cancelled. A certain positive impact can be felt from the
activation of EU Structural Fund financing. At the same time, the wave of
company bankruptcies and liquidations is gathering speed. Yet, the volume of
doubtful receivables in the IT services segment has remained at the same level
compared to the end of the second quarter of this year.
The turnover of merchandise sales for infrastructure solutions was significantly
lower for the third quarter than for the same period of the previous year (11
million EEK vs. 28 million EEK). The reason is the general decline in the IT
market. Currently, all companies in the IT sector that deal with the sale of
merchandise are noticing the same downward trend. The summer period, which was
accompanied by a decrease in turnover (23%) compared to the second quarter, also
had an impact.
In the project business, several important contracts were signed in the third
quarter with the ITIL (Information Technology Infrastructure Library) and ISKE
(a three-level baseline protection system for information systems) fields of
activity, including projects to introduce IncidentMonitor software. Continuing
work on document management projects is progressing with several customers.
Several important service contracts were concluded in the field of document
management (ERGO Insurance, Border Guard Administration, etc.).
In the field of permanent services, the company has focused on export to Russia
in the third quarter, which resulted in several new contracts for permanent
services being signed. In the third quarter, an equipment
hosting contact was
also concluded with Telefonica Wholesale Services. In addition AS MicroLink
Eesti applied for export supports from Enterprise Estonia and received a
positive answer.
The operating costs of the Eesti Telekom Group decreased by 15% in the third
quarter of 2009 compared to the same period in 2008, reaching 803 million EEK
(3rd quarter 2008: 941 million EEK).
The operating costs in the mobile communications segment decreased by 12%
compared to the third quarter of 2008, reaching 516 million EEK (3rd quarter
2008: 586 million EEK). The greatest decrease was in operating costs related to
retailing and wholesaling, which corresponds to the drop in the turnover from
merchandise sales. A decrease was also experienced in interconnection costs
based on a slight drop in call volumes and a small price decrease and also in
operating costs resulted from the efficiency projects.
The operating costs in the broadband services segment decreased during the last
quarter by 15% compared to the same period in 2008, reaching 542 million EEK
(3rd quarter 2008: 639 million EEK). Most of the reduction in operating costs
resulted from a drop in direct sales costs, which was related to decreases in
retail sales volumes, international interconnection services, and call minute
volumes. A significant impact on the decrease in operating costs also resulted
from the efficiency projects initiated last year, which are related to
reductions in personnel costs, maintenance costs of buildings and network
resources, transport costs, office costs and marketing costs.
The operating costs in the IT services segment decreased in the third quarter by
37% reaching 45 million EEK (3rd quarter 2008: 72 million EEK). The operating
costs for the quarter were affected on the one hand by almost 4 million EEK of
increased costs that accompanied the consolidation of the IT Koolituskeskus
(Training Center), and on the other hand, by the fact that the costs related to
the software development and financial software business that was sold at the
end of June are not included in this year's third quarter. Also, the lower sales
turnovers were accompanied by significantly lower purchasing costs for
merchandise and both of the Group's companies have succeeded in reducing other
operating costs (including a reduction of 37% in the other operating costs of
MicroLink Eesti as an independent company and 61% by the IT Koolituskeskus).
The Eesti Telekom Group EBITDA decreased in the third quarter of 2009 by 14%
compared to the same period in the previous year, reaching 542 million EEK (3rd
quarter 2008: 628 million EEK). The EBITDA in the mobile communications services
segment decreased by 24% in the third quarter compared to the same period of
last year. In the third quarter, the EBITDA for the broadband segment has
decreased by 3% compared to the same period of last year, reaching 240 million
EEK (3rd quarter 2008: 247 million EEK). The EBITDA for the IT services segment
in the third quarter of 2009 was 12 million EEK (3rd quarter 2008: 2 million
EEK). The Group's EBITDA margin in the third quarter of 2009 was 40.4%, which
was slightly higher from the corresponding margin for the same period of the
previous year.
The Group's depreciation costs reached 150 million EEK in the third quarter of
2008, increasing 2% compared to the same period in 2008 (3rd quarter 2008: 147
million EEK).
In the third quarter, the Eesti Telekom Group earned EBIT of 392 million EEK,
which was a decrease of 19% compared to the same period in the previous year
(3rd quarter 2008: 481 million EEK) and pre-tax profits of
392 million EEK (3rd
quarter 2008: 485 million EEK).
The profit for the Eesti Telekom Group for the third quarter of 2009 totaled 392
million EEK
(3rd quarter 2008: 485 million EEK). The earnings per share were
2.84 EEK (3rd quarter 2008: 3.51 EEK).
The comprehensive income of the Group
for the third quarter of 2009 was 392 million EEK (3rd quarter 2008: 485 million
EEK).
Statement of financial position and cash flows
As of 30 September 2009, the Eesti Telekom Group balance sheet totaled 4,062
million EEK (31 December 2008: 4,999 million EEK). Compared to the beginning of
the year, the non-current assets have decreased by 121 million EEK, the balance
of which reached 2,804 million EEK by the end of the quarter. The Group's
current assets decreased by 816 million EEK during the first nine months,
reaching 1,259 million EEK by the
end of September (31 December 2008: 2,075
million EEK). Cash and cash equivalents, as well as the balance of short-term
financial investments, decreased by 553 million EEK in connection with the
dividends paid out in June and the income tax paid in July.
As of 30 September 2009, the Eesti Telekom Group equity was 3,615 million EEK,
which is 681 million EEK less than at the end of 2008 (31 December 2008: 4,295
million EEK). The reduction in equity is related to the payment of dividends.
As of the end of September non-current liabilities totaled 30 million EEK (31
December 2008: 33 million EEK) and current liabilities totaled 417 million EEK
(31 December 2008: 671 million EEK).
The net debt of the Eesti Telekom Group at the end of the third quarter was -303
million EEK and the net gearing ratio was -8% (31 December 2008: -853 million
EEK and -20%).
The Eesti Telekom Group cash flow from operating activities during the first
nine months of 2009 was
1,192 million EEK (9 months of 2008: 1,338 million
EEK). The Group's cash flow from investing activities was 211 million EEK (9
months of 2008: -67 million EEK). The cash flow into the acquisition of tangible
and intangible fixed assets during the first nine months was 359 million EEK (9
months of 2008: 474 million EEK). During the first nine months of 2009, the
mobile communications segment invested 160 million EEK (9 months of 2008: 198
million EEK). In mobile communications, in addition to the constant development
of the GSM network, a developmental priority was the implementation of
technologies to support high-speed mobile data communications. The majority of
data communications usage by EMT customers occurs in the 3G network, which
enables the use of high-quality and rapid Internet connections at speeds
approaching those of ADSL at conveniently manageable prices. Since EMT is the
only operator in Estonia that provides EDGE data communications throughout its
GSM coverage area, then investments in new base stations is primarily directed
at expanding external and internal 3G coverage in cities and towns. At the same
time, the constant improvement of the GSM network continued. Investments into
fixed assets in the broadband services segment totaled 194 million EEK (9 months
of 2008: 262 million EEK). The principal part of the capital investments was
related to the development of network resources (core and fiber-optic cable
networks), the improvement and expansion of the availability of the
triple-service packages, and the fulfillment of regulation-based requirements.
In the first nine months of 2009, the IT services segment invested 6 million EEK
into fixed assets (9 months of 2008: 14 million EEK).
Under the leadership of the Estonian Association of Information Technology and
Telecommunications Companies (ITL), the Ministry of Economic Affairs and
Communication and the telecommunications companies have agreed to develop a 100
Mbit/s capacity Internet network by 2015. The name of the project for the
development of a new generation Internet network is EstWin. During the first
stage of the EstWin project, a basic communications network comprising 6,640
kilometers of fiber-optic cable and 1,400 network connection locations will be
installed. In the second stage of the project, the operators will connect an
access network for consumers to the basic network. The estimated cost of the
entire project is up to 6 billion EEK, with the government planning to use 1.5
billion EEK from various European structural funds to cover the government's
obligations for the development of the basic network. In order to realize the
EstWin project, the largest companies in the information technology and
telecommunications sector founded the Estonian Broadband Development Foundation
or ELA Foundation in the third quarter, for the purpose of developing the basic
infrastructure required for the installation of a new generation broadband
network in Estonia's rural areas by end of 2015. The founders of the ELA
Foundation include Elion, EMT, Elisa, Tele2, Televõrk, Levira, Eltel, and
Ericsson. Kalev Reiljan, Elion's Technology Director, was elected Chairman of
the ELA Foundation Supervisory Board.
The Eesti Telekom Group cash flow used in financing activities totaled 1,457
million EEK in the first nine months, of which 1,449 million EEK was used to pay
dividends to the AS Eesti Telekom shareholders
(9 months of 2008: 1,450 million
EEK and 1,449 million EEK respectively) and 6 million EEK was paid to minority
shareholders (Serenda Invest OÜ minority shareholders) (9 months of 2008: 8
million EEK).
Definitions
EBITDA margin = EBITDA / Net sales x 100%
EBIT margin = EBIT / Net sales x 100%
Net debt = Interest bearing liabilities - cash and cash equivalents - short term
investments
Net gearing = Net debt / Owner's equity x 100%
ROA = Profit for the period / Average total assets x 100%
ROE = Profit before tax / Average equity x 100%
Basic earnings per share = Profit for the period / Average number of shares
III QUARTER CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
| | Notes | III Quarter | III Quarter |
| | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Net sales | 2.1 (a) | 1,341,620 | 1,566,042 |
--------------------------------------------------------------------------------
| Cost of production | 2.1 (a) | (768,235) | (876,653) |
--------------------------------------------------------------------------------
| Gross profit | 2.1 (a) | 573,385 | 689,389 |
--------------------------------------------------------------------------------
| Sales, administrative, and | 2.1 (a) | (185,416) | (211,328) |
| research & development expenses | | | |
--------------------------------------------------------------------------------
| Other operating revenues | 2.1 (a) | 4,186 | 5,389 |
--------------------------------------------------------------------------------
| Other operating expenses | 2.1 (a) | (467) | (2,084) |
--------------------------------------------------------------------------------
| Operating profit | 2.1 (a) | 391,688 | 481,366 |
--------------------------------------------------------------------------------
| Finance income | | 2,090 | 4,435 |
--------------------------------------------------------------------------------
| Finance costs | | (2,449) | (384) |
--------------------------------------------------------------------------------
| Finance income, net | 2.1 (a) | (359) | 4,051 |
--------------------------------------------------------------------------------
| Net income / (expenses) from | 2.1 (a) | 321 | (273) |
| associated companies | | | |
--------------------------------------------------------------------------------
| Profit before tax | 2.1 (a) | 391,650 | 485,144 |
--------------------------------------------------------------------------------
| Income tax on dividends | 2.1 (a) | - | (1) |
--------------------------------------------------------------------------------
| Profit for the period | 2.1 (a) | 391,650 | 485,143 |
--------------------------------------------------------------------------------
| Other comprehensive income | | | |
--------------------------------------------------------------------------------
| Exchange differences on | 2.1 (a) | (18) | - |
| translating foreign subsidiaries | | | |
--------------------------------------------------------------------------------
| Other comprehensive income for | 2.1 (a) | (18) | - |
| the period | | | |
--------------------------------------------------------------------------------
| Total comprehensive income | 2.1 (a) | 391,632 | 485,143 |
--------------------------------------------------------------------------------
| Profit attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 2.1 (a) | 391,518 | 483,791 | |
--------------------------------------------------------------------------------
| Minority interest | 2.1 (a) | 132 | 1,352 | |
--------------------------------------------------------------------------------
| | | 391,650 | 485,143 | |
--------------------------------------------------------------------------------
| Comprehensive income | | | | |
| attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 2.1 (a) | 391,503 | 483,791 | |
--------------------------------------------------------------------------------
| Minority interest | 2.1 (a) | 129 | 1,352 | |
--------------------------------------------------------------------------------
| | | 391,632 | 485,143 | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share for profit | 7 (f) | | | |
| attributable to the equity | | | | |
| holders of the parent during the | | | | |
| reporting period (expressed in | | | | |
| EEK) | | | | |
--------------------------------------------------------------------------------
| Basic earnings per share | | 2.84 | 3.51 | |
--------------------------------------------------------------------------------
| Diluted earnings per share | | 2.84 | 3.51 | |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| EBITDA | 2.1 (a) | 541,903 | 628,225 | |
--------------------------------------------------------------------------------
| Depreciation, amortization and | 2.1 (a) | (150,215) | (146,859) | |
| write-downs | | | | |
--------------------------------------------------------------------------------
THE FIRST NINE MONTHS CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
--------------------------------------------------------------------------------
| | Notes | 9 months | 9 months | 2008 |
| | | to | to | |
| | | 30 | 30 | |
| | | September | September | |
| | | 2009 | 2008 | |
--------------------------------------------------------------------------------
| Net sales | 2.1 | 4,027,259 | 4,616,931 | 6,189,597 |
| | (b), | | | |
| | 2.3 | | | |
--------------------------------------------------------------------------------
| Cost of production | 2.1 (b) | (2,275,061 | (2,588,390 | (3,532,64 |
| | | ) | ) | 8) |
--------------------------------------------------------------------------------
| Gross profit | 2.1 (b) | 1,752,198 | 2,028,541 | 2,656,949 |
--------------------------------------------------------------------------------
| Sales, administrative, and | 2.1 (b) | (630,936) | (657,575) | (907,058) |
| research & development | | | | |
| expenses | | | | |
--------------------------------------------------------------------------------
| Other operating revenues | 2.1 (b) | 18,988 | 19,674 | 31,317 |
--------------------------------------------------------------------------------
| Other operating expenses | 2.1 (b) | (3,731) | (4,905) | (8,498) |
--------------------------------------------------------------------------------
| Operating profit | 2.1 (b) | 1,136,519 | 1,385,735 | 1,772,710 |
--------------------------------------------------------------------------------
| Finance income | | 39,089 | 42,813 | 55,185 |
--------------------------------------------------------------------------------
| Finance costs | | (3,096) | (1,556) | (871) |
--------------------------------------------------------------------------------
| Finance income, net | 2.1 (b) | 35,993 | 41,257 | 54,314 |
--------------------------------------------------------------------------------
| Net income / (expenses) from | 2.1 (b) | 947 | (2,753) | (2,847) |
| associated companies | | | | |
--------------------------------------------------------------------------------
| Profit before tax | 2.1 (b) | 1,173,459 | 1,424,239 | 1,824,177 |
--------------------------------------------------------------------------------
| Income tax on dividends | 2.1 (b) | (399,746) | (385,722) | (385,912) |
--------------------------------------------------------------------------------
| Profit for the period | 2.1 (b) | 773,713 | 1,038,517 | 1,438,265 |
--------------------------------------------------------------------------------
| Other comprehensive income | | | | |
--------------------------------------------------------------------------------
| Exchange differences on | 2.1 (b) | 7 | - | 17 |
| translating foreign | | | | |
| subsidiaries | | | | |
--------------------------------------------------------------------------------
| Other comprehensive income | 2.1 (b) | 7 | - | 17 |
| for the period | | | | |
--------------------------------------------------------------------------------
| Total comprehensive income | 2.1 (b) | 773,720 | 1,038,517 | 1,438,282 |
--------------------------------------------------------------------------------
| Profit attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 2.1 (b) | 774,093 | 1,035,757 | 1,434,835 |
--------------------------------------------------------------------------------
| Minority interest | 2.1 (b) | (380) | 2,760 | 3,430 |
--------------------------------------------------------------------------------
| | | 773,713 | 1,038,517 | 1,438,265 |
--------------------------------------------------------------------------------
| Comprehensive income | | | | |
| attributable to: | | | | |
--------------------------------------------------------------------------------
| Equity holders of the parent | 2.1 (b) | 774,099 | 1,035,757 | 1,434,849 |
--------------------------------------------------------------------------------
| Minority interest | 2.1 (b) | (379) | 2,760 | 3,433 |
--------------------------------------------------------------------------------
| | | 773,720 | 1,038,517 | 1,438,282 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| Earnings per share for | 7 (f) | | | |
| profit attributable to the | | | | |
| equity holders of the parent | | | | |
| during the reporting period | | | | |
| (expressed in EEK) | | | | |
--------------------------------------------------------------------------------
| Basic earnings per share | | 5.61 | 7.51 | 10.40 |
--------------------------------------------------------------------------------
| Diluted earnings per share | | 5.61 | 7.51 | 10.40 |
--------------------------------------------------------------------------------
| | | | | |
--------------------------------------------------------------------------------
| EBITDA | 2.1 (b) | 1,594,664 | 1,817,655 | 2,348,360 |
--------------------------------------------------------------------------------
| Depreciation, amortization | 2.1 | (458.145) | (431,920) | (575,650) |
| and write-downs | (b), 3 | | | |
--------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
--------------------------------------------------------------------------------
| | Notes | 30 | 31 December | 30 |
| | | September | 2008 | September |
| | | 2009 | | 2008 |
--------------------------------------------------------------------------------
| ASSETS | | | | |
--------------------------------------------------------------------------------
| Non-current assets | | | | |
--------------------------------------------------------------------------------
| Property, plant and | 3 | 2,516,026 | 2,590,170 | 2,464,966 |
| equipment | | | | |
--------------------------------------------------------------------------------
| Intangible fixed assets | 3 | 201,971 | 228,312 | 196,671 |
--------------------------------------------------------------------------------
| Investments in associates | 2.2, 5 | 11,522 | 10,575 | 10,669 |
--------------------------------------------------------------------------------
| Other financial fixed | | 74,166 | 95,680 | 95,834 |
| assets | | | | |
--------------------------------------------------------------------------------
| Total non-current assets | 2.2 | 2,803,685 | 2,924,737 | 2,768,140 |
--------------------------------------------------------------------------------
| Current assets | | | | |
--------------------------------------------------------------------------------
| Inventories | 6 | 146,383 | 169,943 | 195,986 |
--------------------------------------------------------------------------------
| Trade and other | | 802,579 | 1,041,685 | 1,025,389 |
| receivables | | | | |
--------------------------------------------------------------------------------
| Short-term investments | | - | 500,000 | 300,000 |
--------------------------------------------------------------------------------
| Cash and cash equivalents | | 309,708 | 363,099 | 210,533 |
--------------------------------------------------------------------------------
| Total current assets | 2.2 | 1,258,670 | 2,074,727 | 1,731,908 |
--------------------------------------------------------------------------------
| TOTAL ASSETS | 2.2 | 4,062,355 | 4,999,464 | 4,500,048 |
--------------------------------------------------------------------------------
| EQUITY AND LIABILITIES | | | | |
--------------------------------------------------------------------------------
| Equity | | | | |
--------------------------------------------------------------------------------
| Capital and reserves | 7 | | | |
| attributable to equity | | | | |
| holders of the parent | | | | |
--------------------------------------------------------------------------------
| Share capital | | 1,379,545 | 1,379,545 | 1,379,545 |
--------------------------------------------------------------------------------
| Share premium | | 356,018 | 356,018 | 356,018 |
--------------------------------------------------------------------------------
| Statutory legal reserve | | 137,955 | 137,955 | 137,955 |
--------------------------------------------------------------------------------
| Translation reserve | | 20 | 14 | - |
--------------------------------------------------------------------------------
| Retained earnings | | 1,739,413 | 2,413,843 | 2,016,595 |
--------------------------------------------------------------------------------
| Total capital and reserves | | 3,612,951 | 4,287,375 | 3,890,113 |
| attributable to equity | | | | |
| holders of the parent | | | | |
--------------------------------------------------------------------------------
| Minority interest | 2.2, 7 | 1,949 | 8,035 | 6,709 |
--------------------------------------------------------------------------------
| Total equity | | 3,614,900 | 4,295,410 | 3,896,822 |
--------------------------------------------------------------------------------
| Non-current liabilities | | | | |
--------------------------------------------------------------------------------
| Interest bearing loans and | 8 | 4,020 | 5,872 | 37 |
| borrowings | | | | |
--------------------------------------------------------------------------------
| Retirement benefit | 9 | 1,386 | 2,158 | 2,445 |
| obligations | | | | |
--------------------------------------------------------------------------------
| Provisions | 10 | 22,571 | 22,571 | 22,472 |
--------------------------------------------------------------------------------
| Non-interest bearing | | 2,283 | 1,989 | 1,921 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Total non-current | 2.2 | 30,260 | 32,590 | 26,875 |
| liabilities | | | | |
--------------------------------------------------------------------------------
| Current liabilities | | | | |
--------------------------------------------------------------------------------
| Trade and other payables | | 413,021 | 663,396 | 568,732 |
--------------------------------------------------------------------------------
| Interest bearing loans and | 8 | 3,098 | 4,061 | 1,828 |
| borrowings | | | | |
--------------------------------------------------------------------------------
| Retirement benefit | 9 | 1,032 | 1,032 | 1,001 |
| obligations | | | | |
--------------------------------------------------------------------------------
| Provisions | 10 | 44 | 2,975 | 4,790 |
--------------------------------------------------------------------------------
| Total current liabilities | 2.2 | 417,195 | 671,464 | 576,351 |
--------------------------------------------------------------------------------
| Total liabilities | | 447,455 | 704,054 | 603,226 |
--------------------------------------------------------------------------------
| TOTAL EQUITY AND | 2.2 | 4,062,355 | 4,999,464 | 4,500,048 |
| LIABILITIES | | | | |
--------------------------------------------------------------------------------
CONSOLIDATED CASH FLOW STATEMENT
--------------------------------------------------------------------------------
| | Notes | 9 months to | 9 months to |
| | | 30 September | 30 September |
| | | 2009 | 2008 |
--------------------------------------------------------------------------------
| Operating activities | | | |
--------------------------------------------------------------------------------
| Profit for the period | | 773,713 | 1,038,517 |
--------------------------------------------------------------------------------
| Adjustments for: | | | |
--------------------------------------------------------------------------------
| Depreciation, amortisation and | 2.1, 3 | 458,145 | 431,920 |
| impairment of fixed and intangible | | | |
| assets | | | |
--------------------------------------------------------------------------------
| (Profit) / loss from sales and | | (4,166) | (6,107) |
| discards of fixed assets | | | |
--------------------------------------------------------------------------------
| Net (income) / expenses from | | (947) | 2,753 |
| associated companies | | | |
--------------------------------------------------------------------------------
| Provisions | | (2,924) | (2,511) |
--------------------------------------------------------------------------------
| Financial items | | (38,958) | (38,182) |
--------------------------------------------------------------------------------
| Miscellaneous non-cash items | | 1,413 | (289) |
--------------------------------------------------------------------------------
| Cash flow before change in working | | 1,186,276 | 1,426,101 |
| capital | | | |
--------------------------------------------------------------------------------
| Change in current receivables | | 186,179 | (21,265) |
--------------------------------------------------------------------------------
| Change in inventories | | 23,561 | (15,291) |
--------------------------------------------------------------------------------
| Change in current liabilities | | (247,799) | (100,650) |
--------------------------------------------------------------------------------
| Change in working capital | | (38,059) | (137,206) |
--------------------------------------------------------------------------------
| Cash flow after changes in working | | 1,148,217 | 1,288,895 |
| capital | | | |
--------------------------------------------------------------------------------
| Interest received | | 47,007 | 52,764 |
--------------------------------------------------------------------------------
| Interest paid | | (2,758) | (3,845) |
--------------------------------------------------------------------------------
| Cash flow from operating activities | 2.2 | 1,192,466 | 1,337,814 |
--------------------------------------------------------------------------------
| Investing activities | | | |
--------------------------------------------------------------------------------
| Intangible and tangible fixed assets | 2.2, 3 | (358,592) | (473,740) |
| acquired | | | |
--------------------------------------------------------------------------------
| Intangible and tangible fixed assets | | 6,492 | 9,612 |
| divested | | | |
--------------------------------------------------------------------------------
| Other financial investments acquired | | (1,600) | - |
--------------------------------------------------------------------------------
| Net change in interest-receivables | | 500,000 | 394,040 |
| short maturities | | | |
--------------------------------------------------------------------------------
| Net cash changes of other long-term | | 64,651 | 3,189 |
| receivables | | | |
--------------------------------------------------------------------------------
| Cash flow from investing activities | 2.2 | 210,951 | (66,899) |
--------------------------------------------------------------------------------
| Cash flow before financing | | 1,403,417 | 1,270,915 |
| activities | | | |
--------------------------------------------------------------------------------
| Financing activities | | | |
--------------------------------------------------------------------------------
| Dividends paid | 7 (e) | (1,454,230) | (1,456,054) |
--------------------------------------------------------------------------------
| Proceeds from finance lease | 8 | 751 | - |
--------------------------------------------------------------------------------
| Repayment of finance lease | 8 | (3,285) | (1,325) |
| liabilities | | | |
--------------------------------------------------------------------------------
| Cash flow used in financing | 2.2 | (1,456,764) | (1,457,379) |
| activities | | | |
--------------------------------------------------------------------------------
| Cash flow for the year | 2.2 | (53,347) | (186,464) |
--------------------------------------------------------------------------------
| | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at | 2.2 | 363,099 | 396,778 |
| beginning of year | | | |
--------------------------------------------------------------------------------
| Cash flow for the year | 2.2 | (53,347) | (186,464) |
--------------------------------------------------------------------------------
| Effect of foreign exchange rate | 2.2 | (44) | 219 |
| changes | | | |
--------------------------------------------------------------------------------
| Cash and cash equivalents at end of | 2.2 | 309,708 | 210,533 |
| period | | | |
--------------------------------------------------------------------------------
News Source: NASDAQ OMX
22.10.2009 Financial News transmitted by DGAP
---------------------------------------------------------------------------
Language: English
Company: Eesti Telekom
Estonia
Phone:
Fax:
E-mail:
Internet:
ISIN: EE3100007220
WKN:
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