DNA’s EBITDA, operating result and mobile total revenues improved – significant capital expenditures in 5G network construction – Financial Statements Bulletin 2020

DNA PLC STOCK EXCHANGE RELEASE 2 FEBRUARY 2021, 8:30 AM EET

This is a summary DNA’s Financial Statements Bulletin 2020. The complete report is attached to this release and also available at www.dna.fi/investors.

Summary

Unless otherwise stated, the comparison figures in brackets refer to the corresponding period in the previous year (reference period). Figures are unaudited.

Due to delisting of DNA’s share from Nasdaq Helsinki on 3 February 2020, DNA is not subject to reporting obligations as an issuer of shares as set out in the Finnish Securities Markets Act. DNA is still subject to reporting obligations as an issuer of senior unsecured fixed rate notes due 2025 (ISIN: FI4000312095) listed in Nasdaq Helsinki stock exchange.

July–December 2020

• Mobile revenue increased 1% and amounted to EUR 276 million (272).

• Total revenues decreased 2% and amounted to EUR 476 million (483).

• EBITDA increased 13% and was EUR 171 million (152).

• Comparable EBITDA¹⁾ increased 10% and came to EUR 171 million (156).

• Operating result increased 20% and was EUR 76 million (63).

• Comparable operating result²⁾ increased 7% and was EUR 76 million (71).

• Revenue per user (ARPU) for mobile communications increased 2% and was EUR 16.7 (16.5).

January–December 2020

• Mobile revenue increased 3% and amounted to EUR 552 million (536).

• Total revenues decreased 1% and amounted to EUR 934 million (946).

• EBITDA increased 9% and was EUR 333 million (306).

• Comparable EBITDA¹⁾ increased 7% and amounted to EUR 333 million (310).

• Operating result increased 13% and was EUR 151 million (134).

• Comparable operating result²⁾ increased 7% and was EUR 151 million (141).

• Revenue per user (ARPU) for mobile communications increased 3% and was EUR 16.8 (16.3).

• The number of mobile subscriptions³⁾ decreased and was 2,694,000 (2,696,000). The number of postpaid subscriptions grew by 9,000 and the number of prepaid subscriptions decreased by 16,000.

• The number of fixed subscriptions⁴⁾ decreased to 900,000 (909,000). Broadband subscription base increased by 41 000.

Key figures

The calculation method of the key figures presented in this table differs from that of DNA’s previous key figures. The figures in this table are presented the same way as the key figures published by DNA’s parent company Telenor ASA except for the figures for total revenues and EBITDA. The difference in total revenues and EBITDA is due to differences in the classification of certain items. The comparability of figures and terminology are explained in a press release published on 28 April 2020. The release is available on the DNA website⁵⁾.

EUR million	7–12/2020	7–12/2019	Change, %	1–12/2020	1–12/2019	Change, %
Total revenues6)	476	483	–2	934	946	–1
EBITDA6) 7)	171	152	13	333	306	9
% of total revenues	36	31		36	32
Comparable EBITDA1)	171	156	10	333	310	7
% of total revenues	36	32		36	33
Depreciation and amortisation	96	88		181	172
Operating result	76	63	20	151	134	13
% of total revenues	16	13		16	14
Comparable operating result2)	76	71	7	151	141	7
% of total revenues	16	15		16	15
Net result before tax	59	59	–1	130	125	5
Net result for the period	48	47	2	104	99	6
Return on investment (ROI), %	12	12		12	12
Return on equity (ROE), %	17	17		17	17
Capex8)	257	101	154	324	159	104
Cashflow after investing activities	80	52	54	99	61	64
Net debt	597	559	7	597	559	7
Net debt/EBITDA	1.8	1.8		1.8	1.8
Net gearing, %	91	101		91	101
Equity ratio, %	41	39		41	39
Basic and diluted earnings per share, EUR	0.37	0.36		0.79	0.75
Personnel at the end of period	1,609	1,624	–1	1,609	1,624	–1

CEO’s review

DNA's business operations developed steadily throughout 2020. Although total revenues decreased by 1% year-on-year to EUR 934 million (946), our mobile revenue increased by 3% to EUR 552 million (536). The decrease in total revenue was mainly due to the sale of the terrestrial network pay-TV at the turn of the year and a decrease in sales of devices throughout the year due to government measures against the COVID-19 pandemic. DNA’s comparable EBITDA developed strongly in 2020, reflecting growth from both business segments. Comparable EBITDA grew by 7% year-on-year to EUR 333 million (310) and amounted to 36% of total revenues.

The total number of mobile subscriptions fell by 2,000 year-on-year due exclusively to a decrease in the number of prepaid subscriptions. Our postpaid subscription base increased by 9,000. At the same time, revenue per user (ARPU) increased by 3% year-on-year to EUR 16.8 (16.3).

During the pandemic year, DNA’s role in enabling fast and secure connections has been more essential than ever. Due to the need for social distancing, the use of video-based services increased significantly. This was reflected in the enormous increase in data volumes and a greater need for high-speed connections. A report⁹⁾ released last September by international research company Tefficient shows that, once again, DNA’s customers use the most mobile data per subscription in the entire world. In addition, in a recent report¹⁰⁾ by Omnitele Oy, a DNA subscription achieved the highest average data transfer speed in the direction of incoming traffic. The measurements were carried out in November and December in the ten largest cities in Finland.

The increased need for high-quality digital communications was also reflected in DNA’s sales of devices this year. Sales of 5G phones grew significantly and already accounted for nearly 50% of all sold phones in December. Sales of smartwatches doubled, and sales of both laptops and desktop computers increased from 2019. Installations of DNA’s 5G Fixed Wireless Access service have also continued, and feedback from customers has been positive.

DNA’s operative capital expenditure increased by 22% in January–December and amounted to EUR 171 million (140). The most significant individual capital expenditures consisted of radio network capacity expansion and development, the development of 5G readiness and fibre optic networks and transmission systems. Construction of the 5G network has progressed on schedule and by the end of the year, the network covered 1.8 million people, nearly one in every three people in Finland. Construction of the network is ongoing with dozens of base stations opened every week across Finland. As of early 2021, construction is proceeding by expanding coverage in large cities and by bringing 5G services to a large number of new cities and towns. Construction will also be focused on different parts of Finland based on current mobile data traffic capacity needs.

In October, it was also announced that Finnish Shared Network Ltd, a company jointly owned by DNA Plc and Telia Finland Oyj, will begin building a new 5G network in northern and eastern Finland in cooperation with Nokia. The three-year construction project will be launched in early 2021.

At the end 2020, more than 95% of DNA’s personnel continued to work from home. Our regular personnel surveys found that employees were able to work effectively from home throughout the year.

Jukka Leinonen
CEO

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1) In 2019, the comparability of EBITDA was affected by a non-recurring expense item of EUR 4 million in relation to the use of expert services in connection to business restructuring, as well as the termination of share-based reward systems. There were no items affecting comparability in 2020.
2) The comparability of the operating result for 2019 was affected by non-recurring items of EUR 7 million, of which EUR 4 million were in relation to the use of expert services in connection to business restructuring, as well as the termination of share-based reward systems and EUR 3 million in relation to the sale of DNA’s VHF frequency-based terrestrial network business. There were no items affecting comparability in 2020.
3) Mobile subscriptions include postpaid, prepaid, mobile home phone (“Luuri”) and mobile broadband subscriptions.
4) The figure for the number of fixed subscriptions includes voice, broadband and cable pay-TV subscriptions.
5) DNA press release on 28 April 2020: https://corporate.dna.fi/press-releases?type=stt1&id=69879917&scrollTo=UJpEOgFgPw1f
6) DNA’s figures are reported as part of the Telenor Group. The difference in total revenues and EBITDA published by DNA and Telenor is due to some differences in the classification.
7) DNA reassessed the duration of short-term leases based on the new owner and new long-term forecast. The effect of the reassessment on EBITDA was EUR 2 million.
8) DNA reassessed the duration of short-term leases based on the new owner and new long-term forecast. The effect of the reassessment on the balance sheet was EUR 121 million.
9)Tefficient report H1/2020. Tefficient is an international analysis, benchmarking and consultancy company in the telecommunications sector, with reports available for download at https://tefficient.com/mobile-data-operators–1h–2020/
10) Omnitele’s study on data transfer speeds in mobile networks, 11/2020. The study was carried out in the ten largest cities in Finland. The results are based on the average data transfer speeds of incoming traffic (from the base station to the terminal device) in the measurements. The study results and ranking of the operators varied between the cities and locations. The different cities had rather significant variations in the average download speeds, and the extent of the 5G coverage varied relatively much from city to city. The study was carried out with the operators’ fastest 5G consumer subscriptions and smartphones with 5G. Available in Finnish at https://www.dna.fi/documents/753910/1424803/Omnitele_5G_Benchmark_2020_Loppuraportti.pdf

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Additional information:

Jukka Leinonen, CEO, DNA Plc, +358 44 044 1000, jukka.leinonen@dna.fi
Maria Strömberg, CFO, DNA Plc, tel. +358 44 044 3270, maria.stromberg@dna.fi
DNA Corporate Communications, +358 44 044 8000, communications@dna.fi

DNA is one of the leading telecommunications companies in Finland. We want to make our customers' daily lives less complicated. We offer connections, services and devices for homes and workplaces, contributing to the digitalisation of society. DNA's customers are continuously among the world mobile data usage leaders. DNA has more than 4 million subscriptions in its fixed and mobile communications networks. The company has been awarded numerous times as an excellent employer and family-friendly workplace. In 2020, our total revenue was EUR 934 million and we employ about 1,600 people around Finland. DNA is a part of Telenor Group, a leading telecommunications company across the Nordics. More information: www.dna.fi, Twitter @DNA_fi, Facebook @DNA.fi and LinkedIn @DNA-Oyj.

Attachment

• DNA_Financial_Statement_Bulletin_2020