GuruFocus -
- Revenue: Decreased by 2%, impacted by acquisitions, disposals, and lower equipment sales.
- EBITDA: Increased by 4%, with a margin improvement to 38.4%.
- Mobile Service Revenue: Increased by 4.8%.
- International Digital Services Revenue: Increased by 25%, with organic growth of 7% year-on-year.
- Churn Rate in Finland: Increased to 16.8%.
- Fixed Broadband Subscriptions: Increased by 8,000.
- ARPU: Increased by 5%, with a EUR3 increase in 5G upgrades.
- Consumer Segment EBITDA: Increased by 4%, with a margin of 43%.
- Corporate Segment EBITDA: Increased by 3%, with a margin improvement from 26% to 31%.
- 5G Population Coverage: Reached 95%.
- CapEx: EUR93 million reported, with a year-to-date CapEx in line with guidance.
- Cash Flow: Comparable cash flow growth of 4% to EUR111 million.
- Net Debt to EBITDA: 1.7 times.
- Dividend: Total dividend of EUR2.25, with a payout ratio of 95%.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Elisa Oyj (ELMUY) reported a 4% increase in EBITDA, driven by high-margin services revenue growth and efficiency measures.
- Mobile service revenue grew by 4.8%, indicating strong performance in this segment.
- International digital services revenue increased by 25%, supported by acquisitions, with organic growth at 7% year-on-year.
- The company upgraded its EBITDA outlook for the year, reflecting confidence in continued financial performance.
- Elisa Oyj (ELMUY) successfully acquired sedApta Group, enhancing its international software business and growth prospects in Europe.
- Overall revenue decreased by 2%, impacted by acquisitions, disposals, and lower equipment sales.
- Churn rates increased in Finland to 16.8%, indicating potential customer retention challenges.
- The macroeconomic environment remained subdued, affecting demand in consumer and corporate services.
- Corporate customers are rationalizing IT and connectivity spending, impacting revenue in this segment.
- Depreciation expenses increased by 4%, partly due to acquisitions of regional fixed line assets.
A: The recovery, especially in industries, may be bumpier than expected. However, our B2B segment's EBITDA continues to grow, indicating high-quality earnings. Larger IT projects and equipment sales are fluctuating, reflecting companies' scrutiny of their annual spend.
Q: Can you explain the high churn rates in the domestic mobile business and whether this has improved in Q4?
A: The 5G category remains stable with ongoing upsells. However, in the 4G space, there was sporadic irrational behavior in July and August. The situation has stabilized, and we remain committed to maintaining our market share.
Q: What is causing the increase in depreciation this year?
A: The increase is primarily due to acquisitions of regional fixed-line and fiber assets.
Q: How did customers respond to the mobile price hikes in Finland, and did this affect churn?
A: There was no significant churn impact from the price hikes. The increases were applied to front book prices and will gradually reflect in future quarters.
Q: Can you elaborate on the financial expenses increase and its impact?
A: The increase is mainly due to refinancing activities from September last year and the amount of debt outstanding.
Q: How do you view the underlying corporate trends in Q4 compared to Q3, and what is the outlook for IDS growth?
A: We have good visibility into our order book, supporting our expectation of double-digit organic growth in IDS. The B2B segment shows positive EBITDA development, but companies are scrutinizing their IT and connectivity spend.
Q: What are the benefits of the newly introduced loyalty program, and how does it aim to reduce churn?
A: The program incentivizes customers based on the duration of their relationship and encourages them to consolidate their business with us. Benefits include direct customer service access and exclusive offers, aiming to increase loyalty and reduce churn.
Q: How do you define mid-single-digit growth in mobile service revenue, and is it sustainable?
A: Mid-single-digit growth is around 5%, driven by 5G upsells and complemented by recent price increases. This growth is expected to continue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.