Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Debt Investor Presentation (October 2008)
31 slides from Telia Company AB's debt investor presentation, October 2008
Slide 1: Per-Arne Blomquist, Executive Vice President and CFO
Per-Arne Blomquist Executive Vice President and CFO
Slide 2: TeliaSonera AB (A3/A-) - strong business
TeliaSonera AB (A3/A-) - strong business • Attractive industry with high barriers to entry • Success based on providing high quality networks and first class services • Unique position in the Nordic and Baltic region • Well positioned in high growth emerging markets 2
Slide 3: Mobility Services - Nordic and Baltic leadership
Mobility Services - Nordic and Baltic leadership Norway (NetCom, Chess) Finland (Sonera, TeleFinland) Mobile subscriptions 1,580,000 Mobile subscriptions 2,631,000 Sweden (Telia, Halebop) Estonia (EMT, Diil) Mobile subscriptions 5,229,000 #1 #1 Mobile subscriptions 778,000 #2 Denmark (Telia, Call me
Slide 4: Broadband Services - Nordic and Baltic leadership
Broadband Services - Nordic and Baltic leadership Finland (Sonera) Broadband subscriptions 479,000 Fixed subscriptions 446,000 Cable TV subscriptions 176,000 Norway (NextGenTel) Broadband subscriptions 176,000 IPTV subscriptions 10,000 Estonia (Elion) Broadband subscriptions 172,000 Fixed subscripti
Slide 5: Eurasia - strong growth potential
Eurasia - strong growth potential Azerbaijan (Azercell) Mobile subscriptions 3,395,000 Georgia (Geocell) Mobile subscriptions 1,456,000 Kazakhstan (K’cell) Mobile subscriptions 7,018,000 #3 Moldova (Moldcell) Mobile subscriptions 529,000 Tajikistan (Indigo & Somoncom) #3 Mobile subscriptions 954,000
Slide 6: Capital structure and dividend policy
Capital structure and dividend policy • Target a solid investment grade long-term credit rating (A- to BBB+) • TeliaSonera’s dividend policy is to distribute at least 40% of net income attributable to shareholders of the parent company • Excess capital shall be returned to shareholders, after the Bo
Slide 7: Interim Report January - September, 2008
Interim Report January - September, 2008
Slide 8: Growing sales and strong EBITDA
Growing sales and strong EBITDA Q3 2008 in brief • Net sales SEK 25,817 million (24,798) – In local currencies +3.3% • EBITDA* SEK 8,949 million (8,714) – EBITDA-margin* 34.7% (35.1) • EPS SEK 1.06 (1.20) * Excl. non-recurring items 8
Slide 9: Efficiency measures
Efficiency measures • Improve operational efficiency • Stable EBITDA margin despite price pressure and changing product mix • Half way towards personnel reductions of 2,900 • Focus on net savings, per business area and business unit • Gross savings effect for 2008 above SEK 1.5 billion compared to c
Slide 10: Growth opportunities
Growth opportunities Create leading market positions by organic growth and acquisitions • Grow business in fast-growing and profitable markets – Market size, young and growing population – Low mobile penetration and high economic growth – Cultural fit and co-operation with strong local partners – Ma
Slide 11: Growing sales and strong EBITDA
Growing sales and strong EBITDA SEK million Q3 2008 Q3 2007 Change % Net sales 25,817 24,798 4.1 EBITDA* 8,949 8,714 2.7 EBITDA* margin 34.7% 35.1% Operating income* 8,203 8,354 -1.8 Non-recurring items -299 -114 162.3 Operating income 7,904 8,240 -4.1 Financial items -818 -335 144.2 Net income** 4,
Slide 12: Growing sales and strong EBITDA
Growing sales and strong EBITDA Jan-Sep Jan-Sep SEK million 2008 2007 Change % Net sales 75,489 71,423 5.7 EBITDA* 24,682 23,813 3.6 EBITDA* margin 32.7% 33.3% Operating income* 22,363 21,120 5.9 Non-recurring items -1,071 -1,023 -4.7 Operating income 21,292 20,097 5.9 Financial items -1,462 -615 13
Slide 13: Net sales trend
Net sales trend 27 100.4 99.4 26 98.0 25.8 96.3 25 25.3 24.8 24.9 SEK billion 24 94.6 24.4 23.9 93.0 23 91.8 22.7 22 21 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Net sales Rolling 4 quarters 13
Slide 14: EBITDA trend (excl. non-recurring items)
EBITDA trend (excl. non-recurring items) 10 32.0 31.9 9 31.7 8.9 8.7 31.6 8 31.6 7.9 SEK billion 7.6 7.7 7.5 7 7.2 31.2 6 31.0 5 4 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 EBITDA Rolling 4 quarters 14
Slide 15: Statement of cash flows Q3 2008
Statement of cash flows Q3 2008 SEK million Jul - Sep 2008 Jul - Sep 2007 EBITDA excluding non-recurring items 8,949 8,714 Dividends received from associated companies - 1,547 Interest paid (net) -542 -409 Income taxes paid -1,010 -925 Payment of restructuring provisions -61 -11 Difference between p
Slide 16: Key financials – Balance sheets Sep 30, 2008
Key financials – Balance sheets Sep 30, 2008 Condensed consolidated balance sheets Sep 30, Dec 31, Sep 30, Dec 31, SEK million SEK million 2008 2007 2008 2007 ASSETS EQUITY & LIABILITIES Goodwill and other intangible Shareholders’ equity 115,336 117,274 assets 90,236 83,909 Property, plant and equip
Slide 17: Outlook for 2008 unchanged
Outlook for 2008 unchanged Net sales • Expected to show stable growth in the financial year 2008 compared to the previous year – Jan-Sep 2008 +5.7% and in local currencies +5.2% EBITDA-margin • TeliaSonera’s ambition for 2008 is to maintain the EBITDA- margin level of 2007, excl. non-recurring items
Slide 18: Strong business amid global financial turmoil
Strong business amid global financial turmoil • TeliaSonera has a strong balance sheet • Attractive and relatively non-cyclical industry with high barriers to entry • Regulatory intervention, intense competition and customer migration remain primary challenges • Unique position in the Nordic and Bal
Slide 19: Krister Kylås, Treasurer
PN ex's Kylas "Treasurer '
Slide 20: Credit statistics – TeliaSonera Group
Credit statistics – TeliaSonera Group TeliaSonera Estimates SEK billion Q3 2008 (A) 2007 Gross Debt 58.4 43.6 Cash & Liquidity 1) 7.6 6.7 Net Debt 50.8 36.9 Moody’s Adjusted Net Debt 2) 73.1 55.6 Adjusted Retained Cash Flow 3) 16.3 19.1 Adjusted (RCF/Net Debt) 22% 34% S&P Adjusted Net Debt 4) 64.7 4
Slide 21: TeliaSonera pension obligations
TeliaSonera pension obligations • TeliaSonera uses defined benefit pension plans for most employees in Sweden, Finland & Norway. • TeliaSonera uses Government Bond yields when discounting the Swedish pension liabilities, which account for ca 85% of the total pension liabilities. • TeliaSonera pensio
Slide 22: TeliaSonera pension obligations (cont’d)
TeliaSonera pension obligations (cont’d) Main reasons for the increase in the estimated “pension gap” by some SEK 3.6 billion (est. Q3 2008 vs. YE 2007) • Decrease of discount rate for pension obligations – Pension liabilities increased by SEK 2.4 billion • Negative overall returns on assets (total
Slide 23: TeliaSonera pension obligations (cont’d)
TeliaSonera pension obligations (cont’d) TeliaSonera Group pension related risks • Reduction of the discount rate for pension obligations by 100 bps from a level of 3.9%, would imply an increase in TeliaSonera Group pension liabilities, all else equal, by some SEK 3.6 billion • The expected impact o
Slide 24: TeliaSonera AB credit ratings (A3/A-)
TeliaSonera AB credit ratings (A3/A-) TeliaSonera AB long-term ratings migration history 2002-to-today AA 5 AA-4 A+ 3 A 2 A- 1 0 Q1/02 Q4/02 Q1/03 Q4/03 Q4/04 Q1/05 Q4/05 Q4/06 Q4-07 Q3-08 Moody’s (A3/P-2) Standard & Poor’s (A-/A-2) • January 8, 2003, lowered long-term debt • February 5, 2003, lower
Slide 25: Debt maturity schedule (excl. lease and pension liabilities)
Debt maturity schedule (excl. lease and pension liabilities) September 30, 2008 Debt Maturing next 12 months (SEK million) 2,500 TeliaSonera AB 2,000 TeliaSonera Finland Oyj 1,500 (formerly Sonera Corporation) 1,000 500 0 10/08 11/08 12/08 01/09 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 Debt P
Slide 26: Liquidity position, TeliaSonera Group
Liquidity position, TeliaSonera Group Cash and cash equivalents, less blocked funds approx. SEK 7.6 billion* Committed bank lines Maturity Size Amount undrawn Bilateral credit facility Sep 2010 SEK 2 billion SEK 2 billion Syndicated revolving credit facility Dec 2011 EUR 1 billion EUR 1 billion Bila
Slide 27: TeliaSonera’s funding strategy
TeliaSonera’s funding strategy • Liquidity position, as of September 30, 2008 – Cash and cash equivalents, less blocked funds approx. SEK 7.6 billion – Available unutilized amount of committed bank credit lines approx. SEK 13.1 billion • Primary means of external borrowing – EMTN (€7 billion) 1) – S
Slide 28: TeliaSonera’s funding strategy (cont’d)
TeliaSonera’s funding strategy (cont’d) • Base-case implies a focus on EMTN financing in the coming 12-15 months, primarily in the form of smaller sized EMTN-PP’s • Public Eurobond is an alternative, subject to market conditions. • Some continued utilisation of our CP programmes is likely for interi
Slide 29: Strong business amid global financial turmoil
Strong business amid global financial turmoil • TeliaSonera has a strong balance sheet • Attractive and relatively non-cyclical industry with high barriers to entry • Regulatory intervention, intense competition and customer migration remain primary challenges • Unique position in the Nordic and Bal
Slide 30: 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 31: TeliaSonera
TeliaSonera
TeliaSonera — Debt Investor Presentation (October 2008) on 6ix