Business

CEO’s review

Developing Elisa, renewing Elisa employees

2016 was a very successful year for Elisa in many respects. We yet again achieved the best result in our history. Over the course of the year, we improved our competitiveness and the profitability of our operations despite the challenging economic situation.

Our customers valued the services and faster connections we offered them this year, which was reflected in improved customer satisfaction.

As before, Elisa’s revenue growth and result were better than those of European telecoms operators on average. Our revenue grew by 4 per cent, comparable earnings per share by 7 per cent and cash flow by 6 per cent. The revenue growth was due to an increase in mobile revenue and digital services as well as the acquisition of Anvia’s telecommunications, IT and entertainment business, in particular. Also the revenue of Elisa Estonia grew from the previous year.

Elisa’s profitability and financial position are strong, and we can continue to distribute competitive profit to our owners. Elisa’s Board of Directors will propose dividends of EUR 1.50 per share to the Annual General Meeting in the spring.

Finland leads the world in the use of mobile data

The unlimited data pricing model, increasing use of video services and investments in the expansion of the 4G network have taken Finland to the top of the world in the use of mobile data. Our customers used on average more than 13 GB of mobile data per user.

Our customers value fast connections and the worry-free nature of unlimited data subscriptions. According to our studies, 4G users are among our most satisfied customers.Over 80 per cent of all the data traffic in Elisa’s mobile network is transmitted over the 4G network. The milestone of a million users was exceeded in April.

We continued our investments in the expansion of our extremely fast 4G network. According to an independent study by ECE Ltd that was published at the end of the year, Elisa’s 4G network is the fastest in Finland and covers 99 per cent of the population. Development of the Estonian mobile network also continued to be strong. The network in Estonia covers around 98 per cent of the population.

In an auction that was arranged at the end of the year, Elisa won the new 700 MHz frequencies that it wanted to further supplement the Finnish 4G network. For our customers, this means continuously increasing coverage and faster connections with fewer disruptions.

The Finnish frequency policy has been very successful. The prices paid by consumers are the lowest in the world, and the data use of the customers using the mobile networks is among the highest in the world. The first detailed decisions based on the EU Roam like at Home regulation were made in 2016. A final decision on wholesale prices will not be made until February 2017, but we are already anticipating changes for end users due to the roaming reform. Assessing their impact on the current situation at this point is difficult, however.

We are continuously aiming for an even better customer experience and testing new technologies. In August, we broke the world speed record in the 4G network by achieving a speed of 1.9 Gbit/s. We were the first company in Finland to realise a 5G pilot project and the maximum speed of 450 Mbit/s in our commercial mobile network, as well as the first company in the Nordic countries to pilot the 700 MHz frequency. In addition, we were the first Finnish operator to introduce Wi-Fi calls, which improve indoor coverage, and VoLTE calls, where the voice goes through the 4G network.

Demand for fast, high-quality broadband subscriptions continues to be strong. Elisa is Finland’s leading company in the fixed network business. We continued our investments in improving the customer experience. Over the course of the year, we improved broadband connections to single-family dwellings, terraced houses and blocks of flats all around Finland. The improvements allowed a faster connection for almost 75,000 households to enable fluent teleworking and the use of entertainment services at home. As our latest innovation, we tested the G.fast technology, which enables speeds of up to 1 Gbit/s in the current fixed broadband network. We have signed an operator commitment for the Ministry of Transport and Communications where the operators undertake to build a fast fixed broadband network that covers almost all homes in Finland by 2023.

Successful strategy guarantees a broad selection of new services and content for customers

We continued the determined realisation of our strategy. We generate added value for our customers and owners by continuously investing in our network, new services, customer satisfaction, high quality and cost efficiency.

This year, we introduced several value-adding services and types of content to our consumer customers. More than 300,000 households use Elisa Viihde, Finland’s largest entertainment service. Plenty of Finnish and foreign content was added to Elisa Viihde, such as the second series of the most popular show in the history of the service, the Finnish dramaseries Downshiftaajat, and the new Finnish version of The Office, Konttori, which will premiere in 2017. The popular sports entertainment service Fanseat can be viewed in Finland as part of Elisa Viihde.

We are strongly involved in the development and digitalisation of Finnish society and Finnish services. For example, we implemented an indoor positioning system for the Helsinki and Uusimaa Hospital District to permit real-time monitoring of the location of its medical devices. Elisa’s open development and service platform Elisa IoT was recognised internationally as the year’s best IoT solution at LiveWorx 2016. In Finland, the S Group is one of the companies taking advantage of the IoT by using it to place all their active network devices under remote monitoring in a secure manner.

Elisa operates in a sector where future services are created through unconventional testing of new opportunities and cooperation between innovation networks. We promote international top research and renew ourselves through startup partnerships. The Elisa Innovation Challenge, which is part of Elisa IoT, was expanded into an international competition. Almost 100 ideas from 16 countries were entered into the competition. The winners were revealed at Slush 2016. Elisa was again the main cooperation partner of the event. The winner of the IoT series was an energy self-sufficient positioning solution by EmergENCE Oy and the winner of the smart home series was a smart lock adapter by Lukoton Experience Oy.   

The integration of Anvia, a group of companies that Elisa acquired, with Elisa’s operations started in July and has proceeded well. Combined with Elisa’s investments and development power, Anvia’s expertise guarantees excellent services for customers in the Anvia operating area of Ostrobothnia and a solid foundation for the development of shareholder value.

We realised our strategy of improving our home market position also by acquiring the Estonian business of cable TV operator Starman. The new business is that of an integrated operator, which allows us to offer services for a larger clientele in Estonia and to sell services to customers of both Elisa and Starman.

Internationally, Elisa Videra’s videoconferencing solutions have been delivered to 97 countries so far. A new agreement with Vodafone allows us to continue our globalisation by expanding to several new markets.

Active social operator

We are committed to continuously decreasing the environmental impact of our operations and to promoting environmentally friendly business. All the electricity we purchase in Finland and Estonia comes from renewable sources. Our low-emission solutions continued to increase the carbon footprint of Elisa and its customers by 14 per cent compared to 2015. The climate reporting produced by Elisa for investors and the global market was assessed to be at the top level among telecoms operators in the CDP index.

We are committed to the principles of the UN Global Compact, and we have determined the most important sustainability goals for Elisa and its stakeholders. Almost all of Elisa’s employees participated in training on the Elisa Code of Conduct over the course of the year.

In 2016, Elisa was accepted to the international FTSE4Good responsible investment index. The index is designed to measure the performance of companies that meet the globally acknowledged corporate standards of responsibility in terms of environmental, social and governance (ESG) practices.

Elisa’s operating environment is continuously changing. Digitalisation is affecting our business, the content of our work, our way of working, our management, our tools and our working environment. Continuous learning is a prerequisite for Elisa’s success. Elisa’s Ideal Work concept encompasses smart working methods in the physical, virtual and social working environment.

In 2016, Elisa employees worked on average 77 days at a location other than an Elisa office, which helped us to decrease our carbon footprint. Personnel satisfaction continued to increase. The same message was also given by the Trust Index questionnaire of the Great Place to Work Finland survey. We use the results in the continuous improvement of our operations. We obtain new perspectives from summer employees and our cooperation with educational establishments and startups. Due to its enthusiastic employees, Elisa is a continuously developing workplace.

The social changes enabled by digitalisation are fast. Assisting people of all ages in Finland in the management of the digitalising world is important to us. Our popular digital schools continued at 25 schools and Elisa Talks brought senior citizens together to discuss digitalisation. The youth theatre project ShedHelsinki, established based on an initiative from Elisa, crowned its year by staging the adventure musical Peter Pan in December.

I would like to thank our customers and shareholders for their trust in Elisa and our continuously developing personnel for enabling our success. We will continue our determined work to improve customer satisfaction and the productivity of our operations.

Veli-Matti Mattila
CEO

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