Telia Company AB · OMXSTO:TELIA
Telia Company AB — Q3 2002 Earnings Presentation
37 slides from Telia Company AB's earnings presentation, Oct 25, 2002
Slide 1: Telia
TELUS
Slide 2: Interim Report January-September 2002
Interim Report January-September 2002 Stockholm, 25 October 2002 2 25 10 2002 Telia AB, IR
Slide 3: Anders Igel, President and CEO
Anders Igel President and Chief Executive Officer 3 25 10 2002 Telia AB, IR
Slide 4: The Group: Improved underlying EBITDA margin
The Group Improved underlying EBITDA margin • Underlying EBITDA margin 30% (24%) • Strong free cash flow of MSEK 2,059 • Extensive restructuring programs within International Carrier and Telia Denmark 4 25 10 2002 Telia AB, IR
Slide 5: Focus-shift in fixed network operations in Denmark
The Group Focus-shift in fixed network operations in Denmark • Product range cut by more than half • Operating costs cut by more than half • Target: Attain positive underlying EBITDA at the end of 2003 • Reaching objective dependent on the regulatory developments in Denmark • Write-downs of fixed as
Slide 6: International Carrier: Ongoing restructuring
Telia International Carrier Ongoing restructuring • Limited number of nodes • Concentration of operations − Wholesale sales to key accounts based on profitable network segments • Phase-out of unprofitable operations • Centralization of sales, administration, and customer service to Sweden • Reduce n
Slide 7: Mobile – Nordic Region
Telia Mobile – Nordic Region Customer base, Nordic Region Strong improvement in profitability 5,258,0001) (+130,000) and continued customer growth • Underlying EBITDA +31% • Underlying EBITDA margin 31.3% (26.2%) • Increased usage and customer growth in all Nordic markets 1) Excl. 173,000 SP custome
Slide 8: Mobile – Sweden
Telia Mobile – Sweden Customer base, Sweden Continued customer growth 3,401,0001) (+57,000) and improved profitability • Underlying EBITDA +6% • Underlying EBITDA margin 48.4% (46.3%) • Cost streamlining and increased usage • SMS +24% 1) Excl. 89,000 SP customers 8 25 10 2002 Telia AB, IR
Slide 9: Mobile – Norway
Telia Mobile – Norway Customer base, Norway Continued growth and 1,022,0001) (+26,000) improved earnings • Increased sales +25% and improved margin • Underlying EBITDA margin 41.6% (35.4%) • More than 1 million customers • Simple and attractive customer offers and an increased share of postpaid cust
Slide 10: Mobile – Denmark and Finland
Telia Mobile – Denmark and Finland Strong sales growth in Denmark • Sales +62% • Strong customer growth • SMS +300% Sales growth and reduced deficit in Finland • Sales +34% Customer base, Denmark • Greater part of traffic in own 449,000 (+36,000) network Customer base, Finland • Sales process underw
Slide 11: Mobile – Baltic Region and Russia
Telia Mobile – Baltic Region and Russia Customer base Baltic Region/Russia Growth in Baltic Region 3,814,0001) (+635,500) and Russia • Continued positive Russia MegaFon (17.8%) development for 2,300,0001) associated companies +520,000 Estonia • Strong customer growth Eesti Mobiiltelefon (24.5%) 413,
Slide 12: Internet Services
Telia Internet Services Concentration on access business completed • Increased sales +30% • Internet access accounts +45% • Strengthened market position in business broadband segment • Portfolio review, restructuring and centralized customer service for sharper focus on sales and cost effectiveness
Slide 13: Networks
Telia Networks Improved underlying EBITDA in Sweden despite lower sales • Revenue decline in the Swedish retail market partially compensated for by: − Increased sales in the wholesale market, +23% for comparable units • Redundancy: 400 employees to date, primarily in distribution • Reinforced cash f
Slide 14: Sonera: Main conditions of the offer
TeliaSonera Main conditions of the offer • Tendering by more than 90% of Sonera shares • Cash offer for remaining shares based on 12-month rule • No top-up payment (RATA) • Approval by Telia extraordinary general meeting on November 4 • Authorization for listing in Stockholm, Helsinki and on Nasdaq
Slide 15: The Group's opportunities
The Group Telia’s opportunities • Take advantage of Telia’s strength • Strengthen Telia’s position on the domestic market • Continue the efficiency measures • Finalize the merger with Sonera • Extensive restructuring and efficiency measures − International Carrier − Denmark • Sharpen Telia’s custome
Slide 16: Jörgen Latte, Acting Chief Financial Officer
Jörgen Latte Acting Chief Financial Officer 16 25 10 2002 Telia AB, IR
Slide 17: The Group: Net sales
The Group • Growth 5% for Net sales comparable units MSEK 16,000 Rolling 12- 14,431 14,496 month (MSEK) 13,487 60,000 12,000 40,000 8,000 20,000 4,000 0 0 Q3 00 Q3 01 Q3 02 17 25 10 2002 Telia AB, IR
Slide 18: The Group: Underlying EBITDA
The Group • Growth 25% Underlying EBITDA • Margin 30% (24%) MSEK 4,500 4,281 35% Margin 4,000 30% 3,180 3,420 3,500 25% 3,000 2,500 20% 2,000 15% 1,500 10% 1,000 5% 500 0 0% Q3 00 Q3 01 Q3 02 18 25 10 2002 Telia AB, IR
Slide 19: Mobile: Sales
Telia Mobile • Growth 12% Sales • Increased customer base 5,367 MSEK • Increased SMS 5,000 4,786 • Increased MoU 4,000 3,000 2,000 1,000 0 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 19 25 10 2002 Telia AB, IR
Slide 20: Mobile Sweden: ARPU, churn and MoU
Telia Mobile Sweden ARPU ARPU 500 432 439 461 418 415 431 441 (SEK) 394 397 Post paid 400 300 Total 304 303 303 289 283 293 200 273 280 262 Pre paid 100 123 101 108 125 109 99 100 109 106 0 Q3 00 Q3 01 Q3 02 Churn 13% MoU MoU 250 207 (minutes) 180 195 200 170 179 181 176 Post paid 160 165 150 Total
Slide 21: Mobile Norway: ARPU, churn and MoU
Telia Mobile Norway ARPU ARPU 700 616 (NOK) 600 567 562 Post paid 528 534 524 536 496 487 500 400 Total 300 327 341 346 377 200 308 292 317 317 326 Pre paid 100 127 119 107 115 128 125 121 130 132 0 Q3 00 Q3 01 Q3 02 Churn 32% MoU MoU 300 262 (minutes) 238 250 225 231 230 Post paid 209 210 223 200 1
Slide 22: Mobile: Underlying EBITDA
Telia Mobile • Growth 31% Underlying EBITDA • Margin 31.3% (26.2%) MSEK 2,000 40% • Sweden +6% 1,800 • Norway +48% 1,500 1,375 30% Margin 1,000 20% 500 10% 0 0% Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 22 25 10 2002 Telia AB, IR
Slide 23: Internet Services: Sales
Telia Internet Services • Growth 30% Sales • Continued customer growth MSEK 1,200 • Increased prices 1,034 1,000 797 800 600 400 200 0 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 23 25 10 2002 Telia AB, IR
Slide 24: Internet Services: Underlying EBITDA
Telia Internet Services • Improvement 60% Underlying EBITDA • Increased prices • Streamlining Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 0 0% - 100 -92 - 20% - 200 -229 MSEK - 300 - 40% Margin 24 25 10 2002 Telia AB, IR
Slide 25: International Carrier: Sales
Telia International Carrier • Growth 17% Sales • Increased sales in all main product areas 1,200 1,176 MSEK 1,003 1,000 800 600 400 200 0 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 25 25 10 2002 Telia AB, IR
Slide 26: International Carrier: Underlying EBITDA
Telia International Carrier • Improvement MSEK Underlying EBITDA 32, compared with Q2 02 • Increased sales Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 • Streamlining 0% - 50 - 10% - 150 - 20% - 250 -255 - 30% - 350 - 40% - 450 - 50% - 550 - 60% MSEK - 650 -614 - 70% Margin 26 25 10 2002 Telia AB, IR
Slide 27: Networks: Sales
Telia Networks • Sales declined by Sales 8%; 4% for comparable units • Decline in Swedish MSEK 8,000 retail sales 7,183 6,615 6,000 4,000 2,000 0 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 27 25 10 2002 Telia AB, IR
Slide 28: Networks: Underlying EBITDA
Telia Networks • Weaker earnings Underlying EBITDA attributable to losses in the Danish operations MSEK 3,500 50% • Sweden MSEK 3,245 3,129 3,000 2,832 40% 2,500 Margin 30% 2,000 1,500 20% 1,000 10% 500 0 0% Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 28 25 10 2002 Telia AB, IR
Slide 29: Earnings summary MSEK
The Group Earnings summary MSEK Jul-Sep Jul-Sep Jan-Sep Jan-Sep 2002 2001 2002 2001 Net sales 14,496 14,431 42,727 42,226 Underlying EBITDA 4,281 3,420 11,249 9,782 Underliggande EBITDA-margin 30% 24% 26% 23% Net operating income -10,815 2,745 -9,987 29 4,544 25 10 2002 Income Telia AB, IR after fin
Slide 30: Underlying operating income
The Group MSEK Underlying operating income Q3 2002 Q3 2001 Operating income -10,815 2,745 Adjustments of depreciation, amortization and write-offs Write-offs +8,112 +149 of which International Carrier 5,307 Denmark 2,786 Adjustments of items not reflecting underlying business operations +3,997 +239
Slide 31: Streamlining and restructuring costs affecting operating income
The Group Streamlining and restructuring costs affecting MSEK operating income Fixed operations in Denmark Write-offs 2,786 Restructuring costs 286 International Carrier Write-offs 6,131 Restructuring costs 2,825 Internet Services Write-offs systems and platforms 12 Restructuring costs for streamlin
Slide 32: Change in net debt
The Group Change in net debt MSEK 20,000 6,306 1,144 11,249 15,000 10,661 163 10,000 1,714 8,107 1,656 5,000 0 1 Jan Taxes Net Divest- Underl. Dividend1) Other 30 Sep 2002 invest- ments EBITDA 2002 ments 1) Incl. Dividend to Overseas minority 32 25 10 2002 Telia AB, IR
Slide 33: Investments/Net sales
The Group • The Group Jan-Sep 2002 Investments/Net sales CAPEX: MSEK 5,896 (MSEK 12,864) 45% The Group 30% Telia Networks Telia Mobile 15% 0% Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 33 25 10 2002 Telia AB, IR
Slide 34: Free cash flow
The Group • Improved cash flow Free cash flow 1) from operating activities • Reduced investments MSEK 2,500 2,059 2,000 1,500 1,000 500 0 - 500 - 1,000 - 1,500 - 1,527 - 2,000 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Q3 02 1) Cash flow from operating activity after paid CAPEX 34 25 10 2002 Telia AB, IR
Slide 35: Strong financial position
The Group • Low debt/equity ratio: 0.16 Strong financial position GSEK 60 50.1 50 40 30 20 10 8.1 0 Adjusted equity Net interest-bearing debt 35 25 10 2002 Telia AB, IR
Slide 36: Summary
The Group Summary • Underlying EBITDA marginal reaches 30% • Reduced CAPEX Jan-Sep 2002: MSEK 5,896 (MSEK 12,864) • Significantly improved cash flow • Strong balance sheet • Increased sales, 5% for comparable units 36 25 10 2002 Telia AB, IR
Slide 37: Telia
TELUS