CEO's review: DNA reports significant improvement in profitability
DNA delivered a strong performance in the third quarter of 2016, in terms of both net sales and profitability. This is particularly due to our continued drive to enhance customer experience, which is reflected in the high quality and speed of our networks as well as excellent customer service all the way from sales to service processes. As a whole, year 2016 so far has been one of the best years of DNA’s history both financially and in terms of customer satisfaction and customer base metrics. We reached another important milestone in the third quarter as the population coverage of our 4G network exceeded 99 per cent.
Our net sales for the January-September period increased and came to EUR 633.7 million. Our profitability developed favourably as our operating result grew to EUR 76.7 million, or 12.1 per cent of net sales. Net sales were fuelled by the strong growth in service net sales (net sales less sales of goods and interconnection charges) as well as the positive development of mobile device sales. Our service net sales were boosted in particular by the increased sales of mobile subscriptions. The mobile data market continued to grow, boosted by increased smart phone adoption and the wider availability of 4G speeds. Our net sales were burdened by lower interconnection earnings as well as weaker demand for pay-TV services.
Our operating result was boosted significantly by the improved EBITDA, which was fuelled by growth in sales and improved operational efficiency, and lower level of depreciation in the review period. As our result improved, our net debt decreased and our equity ratio increased, which will allow systematic long-term development of our operations.
Our subscription base continued to grow, in particular in the mobile communication network. Our mobile communication subscription base grew by 151,000 subscriptions year-on-year, reaching 2,731,000 in total. Our fixed-network subscription base increased by 4,000 and came to 1,115,000 at the end of the third quarter. The growth of the number of fixed-network broadband and cable television subscriptions by 18,000 subscriptions in total compensated for the drop in the number of fixed-network voice subscriptions.
Finnish Shared Network Ltd (Suomen Yhteisverkko Oy) has been constructing a shared mobile communication network in Northern and Eastern Finland since the spring of 2015. Most of the investments in this significant initiative have already been made as the last large portion of the network was completed in Southern Karelia in early October. By the end of the third quarter, Finnish Shared Network has constructed some 1,700 base stations, providing better connections to more than 800,000 people in Northern and Eastern Finland. The joint arrangement has further improved the cost-efficiency of our mobile communication network and has also had a positive effect on our sales and customer satisfaction.
Boosted by our excellent results, we will continue our measures to further enhance our customer experience and customer service while also continuing to bolster and maintain our employee competence and satisfaction. We believe that by doing so, we contribute to the positive future development of our sales in both the consumer and corporate market.