DNA as an investment

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CEO's review 

CEO´s review has been published in DNA's Half-Year Financial Report January-June 2020 on 16 July 2020

As the first half of 2020 closed, the circumstances in Finland improved. It looks like we have passed the peak of the first wave of the coronavirus, and the government has eased restrictions significantly. While the situation seems under control in Finland, the pandemic is worsening worldwide. Under such exceptional circumstances, itis difficult to foresee the outlook for DNA’s operating environment and market. The pandemic may slow down the economic growth in Finland too, which can have a negative impact on the demand for DNA’s services.

The effect of the crisis was apparent at DNA since March in areas such as higher volume of customer service, a slowdown in mobile device sales at DNA stores and asignificant increase of data volumes in DNA’s network. Communication networks gain importance under exceptional circumstances. DNA’s network capacity was perfectly capable of managing the increase in data volumes, and we have maintained and built our 5G and 4G network infrastructure continuously. To safeguard operational reliability, our network management is decentralized, and we will continue this approach. At the end of the second quarter, more than 95% of DNA’s personnel continued to work remotely. We continue to follow the development of the pandemic closely and will make decisions on appropriate action based on current situation. According to our personnel survey, remote working has gone smoothly.

Despite the challenging market situation and the exceptional circumstances, DNA mostly fared well in the first half of 2020. Total revenues for the January–June period fell slightly from the reporting period and amounted to EUR 459 million (463). The decrease was mainly due to the sale of the terrestrial pay-TV business and a slowdown in mobile device sales. Nevertheless, DNA’s EBITDA developed positively in the first half of the year, growing 5% to EUR 162 million (154). Operating result also increased 8% in January–June and was EUR 76 million (71). The favourable development was due to increased mobile revenue and improved operational efficiency.

Our mobile communication subscription base decreased by 22,000 in the January–June period from the reference period. This was due to a decrease in prepaid subscriptions as our postpaid subscription base increased by 7,000. Revenue per user (ARPU) for mobile communications increased 5% year-on-year and was EUR 16.8 (16.0). Our fixed-network subscription base shrank by 13,000, but the number of broadband subscriptions grew by 33,000.

The active construction of DNA’s 5G network has continued around Finland. During the first half of 2020, DNA’s 5G services have been made available in more than 20 residential areas. We will continue to improve the capacity of our 4G network parallel to the 5G investments. In June, DNA won the 26 GHz range it was pursuing in the 5G spectrum auction. The new frequency band enables the transfer of higher volumes of data with low latency.

The sales of 5G subscriptions are off to a promising start and mobile device manufacturers have launched several new 5G models during the second quarter. More models are expected to be introduced to lower price points as the year progresses, and demand for subscriptions is expected to pick up once these are available. Installations of DNA’s 5G Fixed Wireless Access service have also started, and feedback from customers has been positive. The benefits of 5G and its positive impact on customer experience will become more evident as our customers use increasingly rich content, higher resolution videos, and services such as online gaming, where low latency is critical. 

Jukka Leinonen