Telia Company AB · OMXSTO:TELIA

Telia Company AB — Q3 2001 Earnings Presentation

40 slides from Telia Company AB's earnings presentation, Nov 7, 2001

  1. Slide 1: Third Quarter Report, Jan-Sep 2001

    www.telia.com Third Quarter Report, Jan-Sep 2001 Stockholm, 7 November 2001

  2. Slide 2: Higher growth

    Higher growth Growth in core businesses +13% Telia Mobile +21% Telia Internet Services +33% Telia International Carrier +37% Telia Networks +1% Telia AB, IR, 020-2001, eng 2

  3. Slide 3: Improved profitability

    Improved profitability ! Underlying EBITDA increased 8% — the margin totaled 24% Q3 2000 Q3 2001 Mobile 23% 30% Networks 30% 35% Telia AB, IR, 020-2001, eng 3

  4. Slide 4: Mobile

    Mobile Sales growth "Sales " growth 21% 21% Underlying EBITDA "Underlying " EBITDA margin margin up up from 23% from 23% toto 30% 30% Finland Nordic synergies "Nordic synergies • UMTS license Sweden " • •UMTS GPRSlicense launched Ground laid "Ground " laid for for mobile mobile data data Norway grow

  5. Slide 5: Mobile

    Mobile Russia Growth Jan-Sep 2001 MegaFon (17.8%) North West GSM (12.7%+11,3%) Finland through Telecominvest 460,000 ** +207,000 Telia Mobile Finland 186,000 +37,000 Estonia Sweden Eesti Mobiililtelefon (24.5%) Telia Mobile Sweden 3,395,000 2 Total proportional number 376,000 ** +138,000 of customer

  6. Slide 6: Mobile: Sweden

    Mobile Sweden Growth both in use and revenue per customer ARPU (SEK) 500 426 446 436 426 432 439 419 418 415 375 394 400 Subscription 300 348 330 331 333 314 Total 306 304 303 303 200 273 280 100 Cash 121 119 108 109 123 106 108 125 101 96 101 0 Q3 Q3 Q3 MoU (minutes) 1999 2000 2001 200 167 170 175

  7. Slide 7: Mobile: Norway

    Mobile Norway Growth both in use and revenue per customer ARPU (NOK) 567 600 528 534 486 485 496 487 444 444 460 Subscription 500 406 400 300 Total 320 325 337 327 317 341 305 289 301 308 292 200 Cash 100 152 147 136 142 118 124 127 119 115 128 107 0 Q3 Q3 Q3 1999 2000 2001 MoU (minutes) 231 238 250

  8. Slide 8: Mobile: Continued growth for SMS

    Mobile Continued growth for SMS Shareof Share ofsales salesQ3 Q32001 2001 (million messages) Sweden4%, Sweden 4%,Norway Norway15% 15% 700 Norway 2001 Norway 2000 350 Sweden 2001 Sweden 2000 0 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec Telia AB, IR, 020-2001, eng 8

  9. Slide 9: Mobile: New data services launched

    Mobile New data services launched SMS ! MobileQuiz ! InfoBrain ! QuickDeal GPRS ! Telia Mobile OnLine ! Telia Mobile Access ! Telia Mobile InTouch ! NetCom MobiMail W-LAN ! HomeRun “hot-spots” Ongoing testing of MMS Telia AB, IR, 020-2001, eng 9

  10. Slide 10: Internet Services: Strong growth in broadband customers

    Internet Services Strong growth in broadband customers (‘000) 180 150 120 90 60 30 0 1999 2000 Q1 2001 Q2 2001 Q3 2001 Skanova High-speed Internet via cable ADSL/LAN Sweden Denmark Telia AB, IR, 020-2001, eng 10

  11. Slide 11: Internet Services: Sales growth +33%

    Internet Services Sales growth +33% ! Sales growth for access services +51% (customers) 800,000 700,000 600,000 NarrowbandInternet Narrowband Internetaccess: access: 37%market 37% marketshare sharein inSweden Sweden 500,000 400,000 300,000 200,000 Broadband: Broadband: 100,000 55%market 55% marketsh

  12. Slide 12: International Carrier: Sales growth +37%

    International Carrier Sales growth +37% ! Robust sales growth in ! capacity +185% ! IP traffic +228% ! infrastructure +271% ! voice -1% Telia AB, IR, 020-2001, eng 12

  13. Slide 13: International Carrier: Earnings weakened

    International Carrier Earnings weakened Actions ! Reinforcing sales and marketing resources ! Continued market turbulence ! Further tightening of the ! Additional reserves for bad credit policy debt expense ! Replacing leased lines ! Increased costs for leased with own infrastructure capacity for ne

  14. Slide 14: International Carrier: Rapid network buildout

    International Carrier Rapid network Rapid network buildout buildout Scopeof Scope ofthe thenetwork: network: Infrastructurebuildout buildout 30Sep Sep2001 2001 Infrastructure 30 Totalfiber-optics fiber-opticsininkm km(in (inuse) use) 29,500 Total 29,500 Ductskm km(Europe) (Europe) 8,000 Ducts 8,000

  15. Slide 15: Networks

    Networks ! Mature fixed network operations show +1% sales growth ! Good improvement in profitability — underlying EBITDA +15% ! Margin strengthened from 30% to 35% ! More stable prices Telia AB, IR, 020-2001, eng 15

  16. Slide 16: Networks: Retail market

    Networks Retail market Residential customers Business customers ! Subscription fees raised ! Increased sales for value-added from March 1 services +11% ! Cost management and ! New service - Telia City Connect increased efficiency ! Maintained prices and increased ! Development of value- efficiency a

  17. Slide 17: Networks: Wholesale market

    Networks Wholesale market ! Sales growth +17% ! Demand for leased capacity +25% ! Powercom supplements Telia’s business and network ! Telehost Telia AB, IR, 020-2001, eng 17

  18. Slide 18: Networks: Continued streamlining

    Networks Continued streamlining ! Product portfolio ! Sales costs ! Capital productivity ! Quality improvements Stable market shares and improved profitability Telia AB, IR, 020-2001, eng 18

  19. Slide 19: Refine and focus strategy

    Refine and focus strategy Divestitures/partial divestitures 2000-2001 Telia IPO IN good company AB Starman Kaabel- Smålandsbörsen 51% of Telefos Eniro shares televisiooni AS Data AB companies Telia Real Svefo AB Telia Academy AB Eircom (Eircell) DRS Estate Scandinavia Telia Contracting System & Comb

  20. Slide 20: The Telia Group: Net sales

    The Telia Group Growth+7%, Growth +7%, Net sales Corebusiness Core business+13% +13% Quarter (MSEK) Rolling 12 month (MSEK) 16,000 58,000 14,431 13,487 12,000 54,000 8,000 50,000 4,000 46,000 0 42,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 99 99 99 99 00 00 00 00 01 01 01 Telia AB, IR, 020-2001, eng 20

  21. Slide 21: The Telia Group: Underlying EBITDA

    The Telia Group Growth+8%, Growth +8%, Underlying EBITDA Corebusiness Core business+15% +15% Quarter (MSEK) Rolling 12 month (MSEK) 4,000 14,500 3,420 3,180 14,000 3,000 13,500 2,000 13,000 12,500 1,000 12,000 0 11,500 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 99 99 99 99 00 00 00 00 01 01 01 Telia AB, IR, 0

  22. Slide 22: The Telia Group: Underlying EBITDA margin

    The Telia Group Underlying EBITDA margin Rolling 12 month 28% 26% 24% 22% 20% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1999 1999 2000 2000 2000 2000 2001 2001 2001 Telia AB, IR, 020-2001, eng 22

  23. Slide 23: Effects of the refine and focus strategy

    Effects of the refine and focus strategy (Equity) (MSEK) Sales (MSEK) Underlying EBITDA 5,000 5,000 4,487 4,000 4,000 3,000 3,000 2,392 2,000 2,000 1,046 1,000 668*) 1,000 188 254 *) 0 0 9m 2000 9m 2001 31/10 2001 9m 2000 9m 2001 31/10 2001 retained retained companies companies *) Excluding the Orbi

  24. Slide 24: Mobile: Financial overview, Sales

    Mobile Financial overview GrowthQ3 Growth Q300 00# Q301 #Q3 01 21% 21% Sales Quarter (MSEK) 5,000 4,439 4,000 3,664 3,000 2,000 1,000 0 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 24

  25. Slide 25: Mobile: Underlying EBITDA

    Mobile GrowthQ3 Growth Q300 00# Q301 #Q3 01 Underlying EBITDA 53% 53% Quarter (MSEK) Margin 1,600 35% 1,448 1,400 30% 1,200 944 25% 1,000 20% 800 15% 600 10% 400 200 5% 0 0% Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 25

  26. Slide 26: Internet Services: Sales

    Internet Services GrowthQ3 Growth Q300 00# Q301 #Q3 01 Sales 33% 33% Quarter (MSEK) 1,000 797 800 601 600 400 200 0 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 26

  27. Slide 27: Internet Services: Underlying EBITDA

    Internet Services ImprovementQ3 Improvement Q300 00# Q301 #Q3 01 Underlying EBITDA 24% 24% Quarter (MSEK) Margin 0 0% - 50 - 10% - 100 - 20% - 150 - 200 - 30% - 250 -229 - 40% - 300 - 50% - 350 -303 - 60% - 400 - 450 - 70% Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 27

  28. Slide 28: International Carrier: Sales

    International Carrier GrowthQ3 Growth Q300 00# Q301 #Q3 01 Sales 37% 37% Quarter (MSEK) 976 1,000 800 710 600 400 200 0 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 28

  29. Slide 29: International Carrier: Underlying EBITDA

    International Carrier Underlying EBITDA Quarter (MSEK) Margin 100 10% 0 0% -100 -10% -87 -200 -20% -300 -30% -400 -40% -500 -600 -50% -614 -700 -60% Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 29

  30. Slide 30: Networks: Sales

    Networks GrowthQ3 Growth Q300 00# Q301 #Q3 01 Sales 6%*)*) 6% Quarter (MSEK) 8,000 7,601 7,199 6,000 4,000 2,000 0 Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 *) For comparable units growth was 1% Telia AB, IR, 020-2001, eng 30

  31. Slide 31: Networks: Underlying EBITDA

    Networks GrowthQ3 Growth Q300 00# Q301 #Q3 01 Underlying EBITDA 15% 15% Quarter (MSEK) Margin 3,500 3,052 40% 3,000 2,655 35% 30% 2,500 25% 2,000 20% 1,500 15% 1,000 10% 500 5% 0 0% Q1 00 Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Telia AB, IR, 020-2001, eng 31

  32. Slide 32: Growth: Increasing share of revenue from growth areas

    Growth Increasing share of revenue from growth areas Internet International International Services Carrier Carrier Internet 4% 5% Services 7% 6% Mobile 17% Mobile 31% Equity 13% Networks 61% Networks 4% Equity 52% 1999 Q3 2001 Telia AB, IR, 020-2001, eng 32

  33. Slide 33: Share of earnings in associated companies

    Share of earnings Share of earnings in associated companies (MSEK) 2,500 2,339 2,000 1,500 1,000 500 0 -500 -1,000 -759 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1999 1999 2000 2000 2000 2000 2001 2001 2001 Telia AB, IR, 020-2001, eng 33

  34. Slide 34: Associated companies

    Associated companies Participation Book Market in percent value value (MSEK) at 30 Sep at 30 Sep Eniro AB (Sweden) 25.5 402 3,218 Scandinavia Online AB (Sweden) 24.6 95 30 AS Eesti Telekom (Estonia) 24.5 537 1,168 AB Lietuvos Telekomas (Lithuania) 30.0 2,374 797 Netia Holdings S.A. (Poland) 48.1 0 1

  35. Slide 35: Investments

    Investments (MSEK) of which CAPEX 18,000 16,745 15,000 12,000 9,000 5,965 6,000 3,000 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1999 1999 2000 2000 2000 2000 2001 2001 2001 Telia AB, IR, 020-2001, eng 35

  36. Slide 36: Non-recurring items

    Non-recurring items (MSEK) 7,000 4,500 2,000 -500 -116 -239 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1999 1999 2000 2000 2000 2000 2001 2001 2001 Telia AB, IR, 020-2001, eng 36

  37. Slide 37: Income after financial items

    Income after financial items (MSEK) 7,658 7,500 5,000 3,436 2,445 2,491 2,500 1,244 909 356 267 502 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 1999 1999 2000 2000 2000 2000 2001 2001 2001 Telia AB, IR, 020-2001, eng 37

  38. Slide 38: Net debt

    Net debt Change in net debt (MSEK) 40,000 14,308 12,766 30,000 9,782 1,655 20,235 20,000 1,501 618 15,769 10,000 0 1 Jan Tax Net Divest- Under- Dividend Other 30 Sep 2001 invest- itures lying 2001 ments EBITDA Telia AB, IR, 020-2001, eng 38

  39. Slide 39: Financial position

    Financial position Strong financial position (GSEK) 70 Debt/equityratio Debt/equity ratio0.26 0.26 60 50 40 30 61.9 20 10 15.8 0 Equity Net interest-bearing liability Telia AB, IR, 020-2001, eng 39

  40. Slide 40: Overall goals

    Overall goals Improved free cash flow through " revenue growth " improved margins " reduced CAPEX Telia AB, IR, 020-2001, eng 40

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