Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — FY2002 Earnings Presentation
36 slides from Telia Company AB's earnings presentation, Feb 19, 2003
Slide 1: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader
Slide 2: Year-End Report 2002
Year-End Report 2002 Stockholm, February 19, 2003 Anders Igel President and CEO
Slide 3: Year-End Report January-December 2002
Year-End Report January-December 2002 Merger of Telia and Sonera completed in December 2002 Pro forma highlights 2002 • Comparable net sales >+5% • Underlying EBITDA SEK 25,457 million (21,768), margin 31.4% (26.9%) • Strong free cash flow of SEK 9,534 million (-7,008) • Costs totaling SEK 53,278 mi
Slide 4: Improved underlying performance
Improved underlying performance Pro forma underlying EBITDA (SEK million) • Strong improvement in 25,000 underlying operations 20,000 • Underlying EBITDA 15,000 margin increasing from 26.9% to 31.4% 10,000 5,000 0 2001 2002 Sonera Telia TeliaSonera
Slide 5: Key performance drivers
Key performance drivers • Strong mobile development in home markets – Streamlining in Sweden gives 50% EBITDA margin in Q4 – Tight cost control in Finland gives 50% EBITDA margin for 2002 – Business initiatives in Norway make EBITDA climb by 42% in Q4 – Strong customer growth in Denmark gives signif
Slide 6: Reduced investments / Improved cash flow
Reduced investments / Improved cash flow Pro forma (SEK billion) 25 20.7 • Improved cash flow from 20 14.2 – Improved margins 15 10 9.5 – Reduced investments 5 0 -5 -10 -7.0 -11.2 -15 -20 -21.2 -25 2001 2002 Cash flow from operating activities CAPEX Free cash flow*) *) Excluding effects of other inv
Slide 7: Taking action with problem areas
Taking action with problem areas Operating income affected by cost for restructuring and streamlining of SEK 53,278 million AREA ACTION TARGET International Carrier New strategic focus Cash flow positive on a monthly basis during 2003 Danish fixed Refocus and streamlining Positive underlying network
Slide 8: Summary 2002 TeliaSonera
Summary 2002 TeliaSonera • Very strong development with improved margins within our home market businesses • The exceptions are: – Danish fixed network operations – International Carrier – Group 3G • We have dealt with these problems during the year and initiated thorough restructuring programs
Slide 9: What's next – It's about customers and profits
What’s next – It’s about customers and profits • Actions to gain market shares in selected home market segments • Quick decisions in synergy implementation • Ensure competitive cost levels in all TeliaSonera operations
Slide 10: Outlook
Outlook In the current business and regulatory environment Key figures Group level mid-term targets Revenue Few percentage points growth annually Underlying EBITDA Increasing margin, approaching 34% CAPEX / Sales Few percentage points higher than 2002 In the longer term TeliaSonera expects a signifi
Slide 11: Dividend
Dividend • Based on current circumstances the Board of Directors will be proposing a dividend of SEK 0.40 per share to the AGM, resulting in a total distribution of SEK 1,870 million. Dividend policy • The outlook for operating cash flow generation, capital expenditure requirements, earnings growth
Slide 12: Harri Koponen, Deputy CEO
Harri Koponen Deputy CEO TeliaSonera
Slide 13: Market development
Market development Characteristics • Advanced IT and telecom market • Competitive environment • Increased regulatory impact Positions • Strong market leader in fixed, mobile and Internet segments in home markets • Strong growth potential in Russia and Eurasia
Slide 14: Market actions
Market actions • MMS launched in all Nordic countries • 3G build out according to market demand and license requirements • Actions to win back lost market share – Focus on customer and Pan-Nordic services • Pursuing broadband growth opportunity
Slide 15: Mobile operations – Sweden
Mobile operations – Sweden ARPU ARPU 500 439 441 461 456 432 394 415 431 397 (SEK) Post paid 400 300 Total 303 280 303 289 283 293 281 200 273 262 Pre paid 100 108 125 109 109 106 101 99 100 99 0 Q4 00 Q4 01 Q4 02 Churn 13% MoU MoU 250 (minutes) 207 195 196 200 180 179 181 176 Post paid 170 165 150
Slide 16: Mobile operations – Finland
Mobile operations – Finland ARPU ARPU 60 (EUR) 40 Total (Post paid) 40 42 41 40 39 41 40 39 39 20 0 Q4 00 Q4 01 Q4 02 Churn 16% MoU MoU 200 (minutes) 150 150 149 147 143 155 153 153 141 139 Total (Post paid) 100 50 0 Q4 00 Q4 01 Q4 02
Slide 17: Mobile operations – Norway
Mobile operations – Norway ARPU 700 616 ARPU 567 579 600 534 524 536 562 Post paid (NOK) 496 487 500 400 Total 300 377 308 317 341 317 326 346 358 200 292 Pre paid 100 119 115 128 125 121 130 132 134 0 107 Q4 00 Q4 01 Q4 02 Churn 31% MoU MoU 300 (minutes) 250 262 255 231 238 223 230 Post paid 209 21
Slide 18: Integration
Integration • Synergies work has started – Common MMS platform – Telia Homerun and Sonera W-gate roaming – Pan-Nordic IP-VPN service • Several large contracts landed because of enhanced Pan-Nordic capability – Axfood – Fläkt woods group – TietoEnator – KONE – Partek – Schlumberger SEMA • Competence
Slide 19: The work continues
The work continues • New Group structure and new control models implemented • Customer orientation – Attractive service packaging – Cross selling – Tailored offerings for different customer segments • Fulfillment of EU requirements • Stand-alone improvements – major rationalization program will cont
Slide 20: Kim Ignatius, CFO
Kim Ignatius TeliaSonera
Slide 21: TeliaSonera legal
TeliaSonera legal • Net sales increased 4% to SEK 59,483 million (57,196) • Underlying EBITDA increased to SEK 15,692 million (12,915) and the margin increased to 26% from 23% • Comparison affected by the consolidation of Sonera and new Baltic subsidiaries in December SEK million Oct-Dec 02 Oct-Dec
Slide 22: TeliaSonera legal
TeliaSonera legal • No significant gains from associated companies in 2002 (significant sales of shares in 2001) • A net loss per share due to significant write-downs and provisions SEK million Oct-Dec 02 Oct-Dec 01 FY 2002 FY 2001 Associated companies 195 3,746 528 6,136 Financial items -201 -10 -7
Slide 23: Goodwill summary
Goodwill summary SEK billion EUR billion Purchase price of Sonera securities (up to Dec 31, 2002) 56.5 6.2 Sonera’s book equity 16.4 1.8 Difference 40.1 4.4 Allocated to: Amortized over • Goodwill 28.5 3.1 20 years • Associated companies, other minority holdings 10.1 1.1 10 years • Other assets and
Slide 24: Balance sheet
Balance sheet • Strong financial position • Balance sheet impacted by share issue of SEK 56 billion, and increase of SEK 19 billion in net debt through the merger Dec 31 2002 Dec 31 2001 Equity-to-assets ratio (%) 53.0 46.2 Net debt (SEK million) 38,075 20,004 Net debt-to-equity (%) 35.0 33.4
Slide 25: Pro forma income statement 2002 and 2001
Pro forma income statement 2002 and 2001 EU conditions1) TeliaSonera TeliaSonera and pro forma pro forma pro forma SEK billion Telia Sonera Baltic adjustments 2002 2001 % Net sales 57.1 20.5 6.2 -2.8 81.0 80.9 0 Underlying EBITDA 14.9 7.3 3.0 0.2 25.5 21.8 17 Underlying EBITDA margin, % 26.1 35.7 48
Slide 26: Pro forma underlying income statement 2002 and 2001
Pro forma underlying income statement 2002 and 2001 EU conditions1) TeliaSonera TeliaSonera and pro forma pro forma pro forma SEK billion Telia Sonera Baltic adjustments 2002 2001 % Net sales 57.1 20.5 6.2 -2.8 81.0 80.9 0 EBITDA 14.9 7.3 3.0 0.2 25.5 21.8 17 EBITDA margin, % 26.1 35.7 48.4 31.4 26.
Slide 27: Telia breakdown external sales
Telia breakdown external sales • Strong mobile growth due to over 500,000 additional customers and increased volumes • Fixed telephony drop due to introduction of local carrier pre-selection and overall market development • Strong demand for broadband access. Increase in Internet accesses close to 2
Slide 28: Telia breakdown underlying EBITDA
Telia breakdown underlying EBITDA • Volume growth and streamlining efforts improving profitability in Mobile, positive trend continues in Q4 2002 • Record-high margins for Telia Networks Sweden – Refocus program in Denmark continues • Price increases and efficiency measures reducing EBITDA losses fr
Slide 29: Sonera breakdown net sales
Sonera breakdown net sales • Mobile sales growth from increased usage and revised revenue sharing, negatively impacted by new interconnection and lower prices • Comparable growth in Fintur 38%. Consolidated as of September 2002. • Sale of Info Communications and restructured operations reducing sale
Slide 30: Sonera breakdown underlying EBITDA
Sonera breakdown underlying EBITDA • Strong Mobile profitability based on cost control and process development • Fintur full year EBITDA at the level of 51% • Focused strategy leading to narrowed losses in Services, beating the target • Revised revenue sharing and sale of businesses reducing Telecom
Slide 31: Baltics summary
Baltics summary Pro forma, SEK million Jan-Dec 02 Jan-Dec 01 Change % Revenues 6,212 5,744 +8 Underlying EBITDA 3,006 2,859 +5 Operating profit 1,396 1,411 -1 Capex 1,300 1,962 -34 Income from associates before goodwill amortization 430 450 -4 Revenues, Operator Country SEK million Growth % EBITDA m
Slide 32: Significant associated companies
Significant associated companies • Significant growth in MegaFon customer base in 2002 • Turkcell back to profitable results during the year, continued growth Equity income 2002, Customers, million Growth % pro forma1), SEK million Baltic associates 1.6 -1 430 MegaFon (43.8%) 3.0 +227 172 Turkcell (
Slide 33: Free cash flow – Strong improvement
Free cash flow – Strong improvement Pro forma free cash flow 20011) Pro forma free cash flow 20021) (SEK billion) (SEK billion) 1.1 9.5 0.9 3.5 4.0 Telia Sonera Baltic Adjustments 2) Total assets Telia Sonera Baltic Adjustments 2) Total assets -6.5 -7.0 -1.5 0.1 0.9 1) Cash flow from operating activ
Slide 34: Forward-looking statements
Forward-looking statements This document contains statements concerning, among other things, TeliaSonera's financial condition and results of operations that are forward-looking in nature. Such statements are not historical facts but, rather, represent TeliaSonera's future expectations. TeliaSonera
Slide 35: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader
Slide 36: TeliaSonera
TeliaSonera