Telenor Asa · OSL:TEL
Telenor Asa — Q2 2004 Earnings Presentation
36 slides from Telenor Asa's earnings presentation, July 2004
Slide 1: Telenor – Second Quarter 2004
Telenor – Second Quarter 2004
Slide 2: Group Overview
Group Overview Jon Fredrik Baksaas CEO
Slide 3: Record quarter – strong domestic operations
Q2 2004 Record quarter – strong domestic operations Revenues (NOKm) / EBITDA % • Revenue growth of 18% to 15.6 NOKbn 15 624 – Mobile: Revenue growth of 42% 13 223 • EBITDA 5.7 NOKbn - improved by 1.3 NOKbn 32.9 % 36.4 % • Norway: – Mobile: Strong subscriber growth and Q2 2003 Q2 2004 increased ARPU
Slide 4: Mobile: Quarterly financial development
Mobile Quarterly financial development Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 8 202 3 331 3 051 7 214 2 816 2 601 6 322 6 311 2 494 5 789 2 277 2 195 5 388 1 508 1 507 1 432 1 506 1 421 37 % 1 112 1 173 41 % 39 % 41 % 40 % 39 % 984 881 687 678 Q1 Q2 Q3 Q4 Q1 Q2 Q
Slide 5: Strong subscriber growth
Mobile Strong subscriber growth Total Consolidated Total Pro Rata 100% figures (all companies) 38.9 34.2 31.0 27.2 25.1 23.1 18.7 16.9 15.2 14.3 13.0 13.7 13.2 12.1 11.4 9.6 10.0 10.6 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q2 2004 Note: Subscriber figures exclude Cosmote 5
Slide 6: Telenor Mobil - Norway
Telenor Mobil - Norway Subscribers (‘000) 2 451 2 342 2 330 2 364 2 364 2 378 • Revenue growth of 6% • Net 73,000 new subscribers • Solid market share • Increased postpaid ratio Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003 2003 2004 2004 • Improved ARPU ARPU (NOK) 346 354 348 330 326 332 • Continued strong comp
Slide 7: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 2 950 2 796 2 834 2 800 2 610 2 669 37 % 1 083 1 157 1 040 1 076 982 998 41 % 41 % 873 37 % 37 % 36 % 790 760 803 746 706 236 214 255 77 108 79 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4
Slide 8: Sonofon - Denmark
Sonofon - Denmark Subscribers (‘000) 1212 1 065 1 057 998 1 010 996 • Strong competition with decreasing prices • Weak Q2 margins Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003 2003 2004 2004 • Acquired CBB Mobile ARPU (NOK) • Market share of 26% 269 308 277 270 255 250 Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003 2003 2004
Slide 9: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 247 1 195 1 210 1 160 1 185 1 065 347 319 147 283 299 293 126 236 102 85 224 40 29 % 19 % 27 % 28 % 149 167 144 25 % 24 % 121 131 -115 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2
Slide 10: One Nordic mobile operation
One Nordic mobile operation Consolidation in Denmark Other 9% Sonofon Telmore 23 % • Total synergies with more than 11 % NOK 1 Bn in NPV CBB 4% – Short term: NOK 200 Mn lower Orange OPEX level at year end. NPV 11 % approx. NOK 900 Mn Telia TDC 32 % 10 % – Long term: Synergies through simplified oper
Slide 11: Pannon GSM - Hungary
Pannon GSM - Hungary Subscribers (‘000) 2 618 2 596 2 588 • Revenue growth of 12% 2 514 2 514 2 564 • Continued strong competition • Increased post-paid ratio • Activities initiated to regain total Q1 Q2 Q3 Q4 Q1 Q2 market share from 34% 2003 2003 2003 2003 2004 2004 ARPU (NOK) • Growing ARPU despit
Slide 12: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 464 1 445 1 409 1 405 1 292 1 205 39 % 556 556 469 512 508 39 % 40 % 40 % 435 36 % 30 % 290 315 318 257 278 195 200 200 113 136 104 121 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2
Slide 13: Kyivstar - Ukraine
Kyivstar - Ukraine Subscribers (‘000) 3 610 • Revenue growth of 69% 3 037 3 221 2 512 • Strong market growth 2 012 2 205 • Activities initiated in Q2 to increase market share Q1 Q2 Q3 Q4 Q1 Q2 – positive trend on subscriber 2003 2003 2003 2003 2004 2004 growth ARPU (NOK) 106 • High Minutes of use –
Slide 14: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 996 834 591 801 566 760 507 505 465 488 590 412 59 % 403 375 483 338 331 61 % 63 % 61 % 57 % 263 290 55 % 259 257 218 212 186 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 20
Slide 15: DiGi - Malaysia
DiGi - Malaysia Subscribers (‘000) 2 585 2 416 2 207 • Revenue growth of 31% 2 055 1 946 1 803 • Stable market share • Non-voice revenues at 14% Q1 Q2 Q3 Q4 Q1 Q2 despite price reductions 2003 2003 2003 2003 2004 2004 ARPU (NOK) • Commercial launch of EDGE 123 111 117 117 116 110 Q1 Q2 Q3 Q4 Q1 Q2 2
Slide 16: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 963 941 882 826 734 734 530 426 410 43 % 386 307 319 44 % 45 % 283 42 % 39 % 39 % 240 216 202 182 144 162 129 113 112 103 90 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 200
Slide 17: GrameenPhone - Bangladesh
GrameenPhone - Bangladesh Subscribers (‘000) 1795 • Revenue growth of 52% 1 520 1 141 • Market penetration of 2.1% 835 928 1 047 • Market share of 62% • Interconnection with all mobile Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003 2003 2004 2004 operators established ARPU (NOK) • ARPU affected by lower prices an
Slide 18: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 535 493 424 433 309 309 353 274 283 326 258 268 258 71 % 58 % 249 221 231 65 % 60 % 63 % 197 189 57 % 183 160 161 77 86 77 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003
Slide 19: DTAC and VimpelCom
Mobile DTAC and VimpelCom • Strong growth in subscribers – VimpelCom 16.3 Million 1 – DTAC 7.3 million 2 • Telenor’ share of Market Value – VimpelCom: 10.4 NOKbn 3 – Vimpel-R, derived: 3.5 NOKbn 3 – Market value DTAC and UCOM: 3.3 NOKbn 3 Note 1: Source: Prime-Tass Note 2: Subscriber figures as at M
Slide 20: Fixed: Highlights
Fixed Highlights Revenues (NOKm) / EBITDA % • Revenues down 5.5% - affected by 5 150 4 868 – Sale of Comincom – Sale of IT services unit to EDB 33 % 33 % • EBITDA-margin in line with Q2 2003 Q2 2003 Q2 2004 • EBIT improvement of NOK 100 mill to NOK 729 mill EBITDA and Capex (NOKm) EBITDA CAPEX 1 690
Slide 21: Adjusted Revenues and EBITDA
Domestic Fixed Line Adjusted Revenues and EBITDA Reported Revenues (NOKm) / EBITDA % 4 540 4 413 • Adjusted revenues down 1% – EDB effect NOK 81 Mn 36,2 % 35,7 % • Adjusted EBITDA margin down 0.1% points Q2 2003 Q2 2004 – EDB effect NOK 17 Mn Adjusted Revenues (NOKm) / EBITDA % – Restructuring effec
Slide 22: Market trends
Domestic Fixed Line Market trends Fixed Telephony Subscribers ADSL subscribers 429 2 247 2 215 2 148 380 2 040 108 1 939 1 885 313 96 259 80 86 224 76 68 195 56 59 53 41 31 21 437 448 460 473 476 467 235 208 237 268 177 161 134 150 69 121 19 20 Q1 2003 Q2 2003 Q3 2003 Q4 2004 Q1 2004 Q2 2004 Q1 2003
Slide 23: Broadcast: Highlights
Broadcast Highlights Revenues (NOKm) / EBITDA % • Revenue growth of 14% 1 336 1 169 • Record EBITDA margin 28.0 % 29.2 % • Positive Q2 customer/subscriber Q2 2003 Q2 2004 uptake in Canal Digital EBITDA and Capex (NOKm) • Successful launch of Intelsat 10-02 EBITDA CAPEX 390 327 • Positioned for growt
Slide 24: Focus and Strategy
Focus and Strategy • Maintain a strong home market position • Execute Scandinavian mobile synergies • Create value in international mobile • Increased transparency and simplicity 24
Slide 25: Group Financial Overview Q2 2004
Group Financial Overview Q2 2004 Torstein Moland CFO
Slide 26: Key messages Q2 2004
Key messages Q2 2004 • Q2 confirms our solid position in Norway – Mobile: Strong subscriber growth and increased ARPU – Fixed: Strengthened position within ADSL and traffic minutes • Nordic mobile synergy projects on track • Strong growth in emerging mobile markets • Continued strong performance in
Slide 27: Reported P&L
Reported P&L Q2 2004 Q2 2003 2003 2002 Revenue 15 624 13 223 53 121 48 826 EBITDA 5 681 4 350 18 302 13 469 EBIT 2 739 1 612 7 560 (320) Profit before Tax 2 662 2 490 7 426 (5 136) Net Income 1 410 1 683 4 560 (4 298) NOKm 27
Slide 28: Adjusted P&L
Adjusted P&L Q2 2004 Q2 2003 2003 2002 Revenue 15 258 13 147 52 889 48 668 EBITDA 5 505 4 529 18 586 14 506 EBIT 2 564 1 838 7 989 4 270 Assoc. comp 202 (49) (251) (205) Profit Before Tax 2 460 1 289 6 300 2 488 NOKm 28
Slide 29: Solid quarterly revenue growth
Solid quarterly revenue growth Revenues (NOKm) * Comments Q2 (YoY)* • Revenue growth of 16% adjusted 15 258 for sales gains 14 276 13 147 13 469 13 671 – underlying growth of 8% 12 602 • Underlying Business area growth – Mobile: 17% – Fixed: -1% – Broadcast 13% Q1 Q2 Q3 Q4 Q1 Q2 2003 2003 2003 2003
Slide 30: EBITDA – margin increased by 1.7%-points
EBITDA – margin increased by 1.7%-points Adjusted EBITDA (NOKm) and Margin Comments 5 505 • Mobile increased share of 5 004 5 035 4 529 4 864 Group EBITDA 4 189 • Consolidation of Sonofon contributes negatively to Group margin 36.1% 33.2% 34.4% 37.2% 35.6% 35.3% • Operational excellence Q1 Q2 Q3 Q4
Slide 31: Cost cutting and capital discipline
Cost cutting and capital discipline Capex Breakdown 1st half Headcount Capex / Sales 2004 (NOKm) International Domestic Fixed Domestic Group Domestic Mobile functions Total Capex/Sales Other 4% Fixed 2% 9% 20 600 Broadcast 20 200 2 % 19 450 Dom estic Mobile 6% 8 650 8 750 19% 7 450 18% 16% 12% Int.
Slide 32: Increased Net Debt/EBITDA
Increased Net Debt/EBITDA Net Debt (NOKbn) to LTM EBITDA (x) Net Debt Changes (NOKbn) Net Debt 31 March 2004 19.3 EBITDA - 5.3 26.1 25.3 Net investment 21.6 22.0 (excl. Pakistan) + 2.3 19.3 Licence in Pakistan + 1.8 17.8 Net Interest + 0.3 Income tax paid + 0.4 Dividends + 1.7 Share buy back + 1.3 1
Slide 33: Dividend and share buy back NOK 4.2 Bn
Dividend and share buy back NOK 4.2 Bn Share buy back (NOK Bn) • Acquired and committed to buy shares for NOK 2,531 1,315 1,216 Mn 695 • Dividend: NOK 1,690 Mn 657 620 559 Q1 2004 Q2 2004 Acquired in the market To be acquired from the state 33
Slide 34: Outlook for 2004
Outlook for 2004 z Growth in revenues Mobile z Pressure on international EBITDA margin z Increased Capex z Revenues: Reduced access and traffic revenues, Domestic increased ADSL revenues Fixed Line z Stable underlying margin z Continued revenue growth Broadcast z EBITDA and EBIT growth z Increased C
Slide 35: Appendix
Appendix @ telenor
Slide 36: International mobile associates
International mobile associates (100% figures in NOK millions according to local GAAP) Subscriptions ('000) 1) Revenues YTD EBITDA YTD 2) CAPEX YTD Net debt 3) Dec 31 %-change Dec 31 %-change Dec 31 %-change Dec 31 Dec 31 2002 2003 2002/2003 2002 2003 2002/2003 2002 2003 2002/2003 2002 2003 2003 Eur