Fjarskipti hf.: Roam like Home Regulation affects Q3 earnings

The Board of Directors and CEO approved the Q3 2017 financial statement of Fjarskipti hf. at a Board meeting on October 31st 2017.

• Consolidated revenues amounted to ISK 3,437 m and remained similar to Q3 2016
• Gross profit amounted to ISK 1,550 m, a decrease of 6% compared to Q3 2016
• EBITDA amounted to ISK 853 m, a decrease of 8% compared to Q3 2016
• EBITDA margin was 24.8% and EBIT margin 13.3%
• Profits in the quarter amounted to ISK 290 m
• Equity ratio of 50.4% at quarter end

Stefán Sigurðsson, CEO:

"Operations during Q3 2017 were marked by effects of Roam like Home regulation changes. The changes had considerable negative effects on the company's revenues from mobile operations compared to Q3 2016. The total negative effects of the roam like home regulation were more than the entire EBITDA decrease between Q3 2017 and Q3 2016. These regulatory changes have most effect on the third quarter due to seasonality in mobile revenues because of customers' travels and will have relatively lower effect in other quarters, as well as countervailing measures will start to have an effect in Q4 and 2018. TV services continued with 6% growth between quarters, following a steady growth trend during the past few years.  

Operating costs in the third quarter remained at the same level from previous year despite of contractual increases in employee salaries. Reduction of labour- and staff cost has slowed down compared to 2016, which portrayed effects of Q1 and Q2 2016 cost reduction actions. The company continues to benefit from housing costs which reduced between years.

An important milestone in the acquisition of assets from 365 was reached during the quarter when an agreement was made with the Icelandic Competition Authority regarding the conditions for the acquisition. Amongst the conditions are actions to ensure competitiveness in the telecommunications and media market and support diversity in media market operators. The finalization of the acquisition is well under way, involving among other things going through traditional conditions precedent. The goal is to complete the acquisition by December 1st 2017. The management stands by its previous plans, in relation to the merger, of an EBITDA increase and synergies of ISK 1,750 m, which will add to the operations of Vodafone in 12-18 months. The full annual effects of the merger will be seen in 2019/2020, with clear objective of an EBITDA higher than ISK 5 bn."