Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q3 2004 Earnings Presentation
18 slides from Telia Company AB's earnings presentation, Oct 28, 2004
Slide 1: Kim Ignatius, CFO – Investor Presentation, London
Kim Ignatius Executive Vice President and Chief Financial Officer October 28, 2004 Investor Presentation, London
Slide 2: TeliaSonera Key figures July–September 2004
TeliaSonera Key figures July–September 2004 • Net sales increased 3% • High EBITDA margin maintained • Continued improvement in associated companies • Improved Operating Income excl. non-recurring items and GWA SEK million Jul–Sep 2004 Jul–Sep 2003 Net sales 20,649 20,094 EBITDA excl. non-recurring
Slide 3: Net sales +3% in the quarter
Net sales +3% in the quarter • Acquisitions/divestitures positive effect of 1% • Sales volume: +8% • Prices: -6% • Price erosion • Reduced scope Improved usage and customer base -87 SEK million 403 -46 50 20,649 157 -14 20,094 -254 218 128 • Positive mobile development Strong customer Divested busin
Slide 4: Increased Operating income excl. non-recurring items and GWA
Increased Operating income excl. non-recurring items and GWA SEK million • Goodwill amortization discontinued, assets annually tested for impairment • Lower depreciation in Sweden, improved income from associates Sales growth and streamlining 124 5,898 44 -255 319 compensating for price pressure 218
Slide 5: Non core assets
Non core assets • Total earnings improved significantly – Most operations developed positively – Unprofitable operations have been divested • Non-recurring items – Zed divested for EUR 30 million, yielding capital gain of SEK 107 million – Release of reserve related to holding in Telefos, SEK 745 mi
Slide 6: Further initiatives keep synergies ahead of schedule
Further initiatives keep synergies ahead of schedule • Decided synergies yearly run rate by the end of 2005 – OPEX SEK 2,061 million – CAPEX SEK 574 million • Achieved synergies yearly run-rate by the end of Q3 2004 – OPEX SEK 1,529 million – CAPEX SEK 541 million Committed to merger target • Total
Slide 7: Improved Net income
Improved Net income • Net income over SEK 4 billion • Goodwill amortization in comparative quarter was SEK 1,012 million SEK million Jul–Sep 2004 Jul-Sep 2003 Income after financial items 5,985 3,353 Income taxes -1,246 -1,339 Minority interests -419 -222 Net income 4,320 1,792 Earnings/ per share (
Slide 8: Income taxes
Income taxes • Effective tax rate in Q3 was low at 21%, explained by high income from associated companies – Withholding tax recorded on income from associates, if any, is lower than corporate tax rate • Accumulated effective tax rate for the nine months was 28% – Includes the one-off negative effec
Slide 9: Sweden: CAPEX development Q3 2003 – Q3 2004
Sweden: CAPEX development Q3 2003 – Q3 2004 CAPEX (SEK million) CAPEX as % of sales 1,400 30% 1,200 • Mobile capacity SEK +100 million • Broadband and fixed capacity SEK +165 million 1,000 20% 800 11.9% 600 10% 7.1% 400 5.0% 200 2.4% 0 0% Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q3 2003 Q4 2003 Q1 20
Slide 10: Finland: CAPEX development Q3 2003 – Q3 2004
Finland: CAPEX development Q3 2003 – Q3 2004 CAPEX (SEK million) CAPEX as % of sales 1,400 30% 1,200 • Mobile capacity SEK +16 million • Broadband and fixed capacity SEK +18 million 1,000 20% 13.6% 14.3% 800 600 10% 400 8.8% 8.7% 200 0 0% Q3 2003 Q4 2003 Q1 2004 Q2 2004 Q3 2004 Q3 2003 Q4 2003 Q1 20
Slide 11: Restructuring provisions
Restructuring provisions Balance Paid in Paid in Paid in Balance Dec 31, cash cash cash Other Sep 30, SEK million 2003 Q1 2004 Q2 2004 Q3 2004 2004 International Carrier – former Telia 2,266 -81 -173 -60 -63 1,889 International Carrier – former Sonera – 327 -27 -5 -32 71 334 Integration Denmark Fixe
Slide 12: Cash flow statement
Cash flow statement • Tax payment – SEK 2 billion higher than in 2003 SEK billion • Change in working capital – mainly a fluctuation in quarters • CAPEX 11.4% of net sales – driven by mobile and broadband growth 22.7 2.8 1.1 0.8 7.1 6.6 6.8 4.7 0.3 18.0 12.3 Free cash flow SEK 10.9 billion Cash and
Slide 13: Financial position further strengthened
Financial position further strengthened Sep 30, Dec 31, SEK billion 2004 2003 18.2 10.9 Equity-to-assets ratio 62% 57% Net debt-to-EBITDA ratio 0.2 0.6 1.4 6.6 Net debt-to-equity ratio 5% 17% 4.7 1.1 5.7 Free cash flow yield 9% 12% Book return on equity 13% 7% Net debt Free Acquisitions Sale of Divi
Slide 14: Acquisition of Orange Denmark
Acquisition of Orange Denmark Substantial synergies Implementation costs and • Total NPV of synergies before CAPEX implementation costs estimated • Implementation costs 2004- to around SEK 4,100 million 2005 estimated to approx. SEK 540 million • Pre-tax cash flow synergies from • Capital expenditur
Slide 15: Accounting for 3G joint venture in Sweden
Accounting for 3G joint venture in Sweden • TeliaSonera is buying capacity from SUNAB (50% ownership) • The fee is included as a cost in EBITDA (Sweden, mobile communications) • Any result in SUNAB (sold capacity minus cost for operation) is accounted for in TeliaSonera as income from associated com
Slide 16: Shareholder return specified
Shareholder return specified • SEK 30 billion to shareholders during 2005-2007 in addition to ordinary dividends • The board has decided to recommend to the AGM in April 2005 a distribution of approx. SEK 10 billion • Repurchase of shares through a public offering with tradable rights will be propos
Slide 17: Forward-looking statements
Forward-looking statements Statements made in this document relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and
Slide 18: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader October 28, 2004 Investor Presentation, London