Release Date: July 16, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 2% and EBITDA was up by 4%, indicating solid financial performance.
- Mobile service revenue grew by 4.7%, aligning with mid single-digit growth expectations.
- International digital services (IDS) saw a revenue increase of 21%, boosted by small bolt-on M&A activities.
- Postpaid subscriptions grew by approximately 42,000, with significant contributions from M2M and IoT subscriptions.
- Elisa Oyj (ELMUY, Financial) achieved a high customer satisfaction score, with a marked difference in favor of 5G customers.
Negative Points
- Business disposals of Videra and the discontinuation of Viaplay cooperation negatively impacted revenue.
- Service number regulation changes and lower equipment sales affected revenue negatively.
- Economic environment remains sluggish, with consumers and corporates prolonging the interval of changing their phones.
- EBITDA percentage on B2B decreased to 26%, driven by some large, lower-margin deals.
- Higher interest expenses due to refinancing at higher rates impacted net financial expenses.
Q & A Highlights
Q: Starting from the corporate segment, do you have visibility on further improvement entering the second half of the year? Or should we remain cautious as you benefited from this large deal in Estonia during the second quarter?
A: We are starting to see some early signals of improvement in the economy. In our B2B segment, projects are picking up speed, and order intake is improving. Large companies are starting to convert their subscriptions to 5G, and there is an improving outlook in IT services, AI, and cybersecurity. Overall, there is a gradually improving activity level. β Topi Manner, CEO
Q: How good is the visibility on IDS for the second half? Is it mostly about delivery execution, or do you need more orders to reach the double-digit organic growth target for the full year?
A: We have good visibility for the revenue for the remainder of the year, with much of the sales already in the pocket. There is always some timing risk in project execution, but we reiterate our target of double-digit organic growth for IDS during the full year. β Topi Manner, CEO
Q: Can you comment on the rationale behind acquiring several fiber assets during the past year? Are you planning further acquisitions?
A: Our strategy is to maintain our long-term market share in fiber without over-investing. We are ramping up organic investments and topping them off with small acquisitions in regions where we see potential. We are comfortable with our current market position and focus on cross-sales to improve customer stickiness. β Topi Manner, CEO
A: We are not disclosing specific numbers for competition reasons, but these acquisitions are comparable to doing the investments ourselves. β Jari Kinnunen, CFO
Q: Why wasn't mobile service revenue growth better this quarter? What do you expect for the rest of the year?
A: During Q1, we had a tail effect of earlier price increases, which was not the case in Q2. We conducted some price changes in Estonia that will be visible for the rest of the year. We maintain our view of mid-single-digit growth in MSR, driven by 5G upselling and some price changes. β Topi Manner, CEO
Q: Can you elaborate on the EBITDA contribution from equipment sales and the large B2B deal in Estonia?
A: Equipment sales have a low EBITDA margin, below 10%. The large B2B deal in Estonia, around EUR7 million, also had a low margin, impacting the overall gross margin negatively. β Topi Manner, CEO
Q: Will you fully pass on the VAT charge to existing and new customers starting in September?
A: Yes, we will pass the VAT increase in full to our prices from September 1 onwards. β Jari Kinnunen, CFO
Q: Can you confirm that IDS will be a positive contributor to earnings and operational leverage for the second half of the year?
A: Yes, IDS is expected to contribute positively to earnings and operational leverage in the second half of the year, with better EBITDA compared to the first half. β Jari Kinnunen, CFO
Q: What is the impact of the restructuring done in Q1 on Q2 and future quarters' EBITDA?
A: The restructuring impact is in the range of EUR1 million to EUR2 million improvement per quarter. β Jari Kinnunen, CFO
Q: How do you see the competitive landscape in 4G and the potential impact on market dynamics?
A: The competitive landscape has largely stayed the same. We see some 4G campaigning, but no material shift. We maintain our view of mid-single-digit growth in MSR going forward. β Topi Manner, CEO
Q: What is needed for a 5G stand-alone subscription in terms of devices?
A: Currently, only a few Android devices support 5G stand-alone. iPhones do not have this functionality yet. We expect device capability to improve, enhancing the commercial feasibility of 5G stand-alone. β Topi Manner, CEO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
