Mobile operators optimistic about growth

Kalev Aasmäe
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Recovered from last year’s turnover and profit drop, mobile operators have hopes for stable growth on wings of data communication and new services.

Results relatively good have been posted by Elisa Eesti with first half year turnover up at €46.2m, from €44.9m last year. Year-on-year, their earnings before interest, taxes, depreciation and amortization (EBITDA) stayed flat at €12m. During a year, business has stabilised – at the same time last year, Elisa’s turnover had shrunk by a whopping 14 percent, and profits by more than 16 percent.

«Because of various regulations, all operators had a noticeable fall of profits; this year, we are more stable,» commented Elisa Eesti CEO Sami Seppänen and added that they are hoping for short term growth above the market average.

In 12 months, Elisa’s customer base has grown by 7,000 to 647,453 clients. According to Mr Seppänen, new clients were gained by developing the 4G network, as well as luring folks over from competitors. «When it comes to clients coming over with their telephone numbers from networks of other operators, Elisa has been the favourite destination. Over the past four and a half years, Elisa has maintained its leadership position in number mobility,» underlined Mr Seppänen when commenting the financial results.

For market leader EMT, the year-on-year client volume has basically stayed the same i.e. at 872,600 at end of June.  As pointed out by Valdo Kalm, CEO of both EMT and Elion under parent company Telia Sonera since spring, data communication is gaining ground among the clients. Further growth, he believes, should come on account of these.

«Already, over 30 percent of data communication traffic happens in 4G which is excellent as there’s more space there. Naturally, we are trying to direct our clients there as well, because the speeds are on another level and the quality is better,» said Mr Kalm.

As, since 2nd quarter, EMT and Elion’s parent company Telia Sonera switched to country-based management, financial results of EMT and Elion are no longer differentiated in reports. Over the half year, Telia Sonera earned SEK1.274bn (€138m at current rate) of sales revenue, year-on-year growth being one percent. In 12 months, EBITDA increased to SEK425m (€46m), from last year’s SEK417m.

«The tiny growth came quite proportionally from EMT and Elion,» commented Mr Kalm. A year ago, things were a lot worse: back then, the mobile operator’s turnover dropped 14 percent as compared to first half of 2012.

«From the hole, so to speak, where all operators fell last year due to cuts to roaming services and domestic interconnection charges, we have now climbed out and are able to show results more stable,» said Mr Kalm. «A positive is that the end customer service revenue i.e. how much we receive from end customers on home market has stabilised,» he added.

The same was echoed by Tele2 Eesti chief Argo Virkebau. «At the moment, we don’t know how much the roaming fee drop from July 1st will be affecting us; even so, income per client in Estonia has not sunk any further over these past months,» he said.

For Tele2 Eesti, six month sales revenue fell six percent year-on-year, €37.6m to €35.5m; EBITDA dropped to €8.6m, from €9.5m.  Based on the second quarter results, Mr Virkebau is optimistic though. Even as the quarterly turnover shrunk seven percent to €17.7m year-on-year, EBITDA stayed the same at €4.2m.

«Data communication sales are going up and bringing us additional income. Our mobile internet market share has been on the rise for five quarters running,» said Mr Virkebau.

In the first half year, Tele2 customer base fell to 496,000 people. This, thinks Mr Virkebau relates to the shrinking calling card market and to the peculiarity that, as opposed to competitors, they do not count m2m – machine to machine – SIM cards among customers. The Tele2 chief hopes to gain momentum by mobile data communication and new services.

«By redistribution of the market, no-one will earn extra money; rather, an operator’s key words are new services. All across the world, operators are investing in music and video services; we are intending to expand, via the subsidiary Televõrk, in optics business,» said Mr Virkebau.

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