Fjarskipti hf. - Financial Statement Release

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."


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Attachments:

Fjarskipti hf. Press release Q3 2017.pdf