Telia Company AB · OMXSTO:TELIA
Telia Company AB — H1 2002 Earnings Presentation
36 slides from Telia Company AB's earnings presentation, Jul 25, 2002
Slide 1: Slide 1
Slide 2: Interim Report, January-June 2002
Interim Report, January-June 2002 Stockholm, 25 July, 2002 2 25 07 2002 Telia AB, IR
Slide 3: Anders Igel, President and CEO
Anders Igel President and Chief Executive Officer 3 25 07 2002 Telia AB, IR
Slide 4: The Group: Positive underlying earnings trend
The Group Positive underlying earnings trend • Growth in core business +6% • Underlying EBITDA margin reaches 25% • Efficiency measures for continued improvement • Reduced investments (CAPEX) • Improved cash flow 4 25 07 2002 Telia AB, IR
Slide 5: The Group: Efficiency measures for enhanced profitability
The Group Efficiency measures for enhanced profitability • Improved margin in all core segments • Streamlining – Affecting over 1,000 employees – Cost in Q2: MSEK 482 • Intense focus on efficiency – The first stage: distribution and sales – Potential is still substantial 5 25 07 2002 Telia AB, IR
Slide 6: Telia Mobile: Nordic customer base
Telia Mobile Customer base, Nordic Region Improvements for ARPU and 5,128,000* (+117,000) MoU in all markets • Increase in traffic per customer • Improved underlying EBITDA • Efficiency measures – Pan-Nordic organization – Redundancy over 500 employees * Excluding 179,000 SP customers 6 25 07 2002 T
Slide 7: Telia Mobile: Increased usage in Sweden
Telia Mobile Customer base, Sweden Increased usage in Sweden 3,484,0001) (+25,000) • Record-breaking MoU • Improved ARPU despite drops in interconnection price • New sales primarily of cash cards • New, flexible subscription launched 1) Excluding 87,000 SP customers 7 25 07 2002 Telia AB, IR
Slide 8: Telia Mobile: Earnings improvement in Norway
Telia Mobile Customer base, Norway Earnings improvement in Norway 996,0001) (+11,000) • Higher sales and improved margin (44%) • Underlying EBITDA +82% • Simple and appealing offers to customers driving increased usage • SMS growth still strong • Lower customer acquisition costs 1) Excluding 92,000
Slide 9: Telia Mobile: Denmark and Finland
Telia Mobile Customer growth in Denmark • Customer growth paving the way towards the turning point • Customer acquisition costs affecting Q2 results Higher sales in Finland • Switch-over to proprietary network – National roaming with Suomen 2G Customer base, Denmark • Efficiency measures and 413,000
Slide 10: Telia Mobile: Baltic Region and Russia
Telia Mobile Customer base Baltic Region/Russia Growth in the Baltic Region 3,179,0001) (+828,000) and Russia • Improved earnings Russia MegaFon (17.8%) • Growth and potential in Russia 1,680,0002) +736,000 – Market penetration 7% Estonia Eesti Mobiiltelefon (24.5%) • First pan-Russian operator 405,
Slide 11: Internet Services: Focus on profitability and margins
Telia Internet Services Focus on profitability and improved margins • Higher sales +25% • Lower costs – Strengthened market position – Portfolio review in broadband – Consultant phase-out – Price increase – Restructuring of the – Strong demand from the business business segment – Redundancy approx.
Slide 12: Internet Services: Three times as many ADSL customers
Telia Internet Services Three times as many ADSL customers in one year 350 (thousands) • Strong potential in the business segment 300 250 • Partnership with TV4 200 • 470,000 households 150 Internet Cable-ready 100 in Sweden 50 0 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Skanova ADSL/LAN Sweden Denmark High spe
Slide 13: International Carrier: Turbulent market
Telia International Carrier Turbulent market • Competitors in bankruptcy • Telia has a strong market position • Increased order inflow • Efficiency measures – Redundancies: consultants and employees – Reduced leased capacity – Lower operating and maintenance costs • Improved underlying EBITDA for th
Slide 14: Networks: Stable underlying EBITDA margin
Telia Networks Stable underlying EBITDA margin despite lower sales • Local preselection implemented. Compensated for by: – Redundancies approx. 400 employees, mainly in distribution – Lower interconnection fees • Continued efficiency measures Market trends are forging new opportunities • A strengthe
Slide 15: Comments on earlier financial targets
Comments on earlier financial targets The Telia Group – medium term CEO’s comments: • Sales growth 8% • Too high in current market situation • Underlying EBITDA margin 25-30% • 25% reached in Q2 • CAPEX GSEK 10-15 • Realistic Telia International Carrier • Positive EBITDA on a monthly basis, year • N
Slide 16: Sonera: Approval by the EU
Telia Sonera Approval by the EU • Approval of the EU Commission on July 10 conditional upon certain measures • Bid period should begin in about two weeks • The deal should be finalized in early September • Comprehensive planning undertaken 16 25 07 2002 Telia AB, IR
Slide 17: The Group: Market outlook
The Group Market outlook • Overcrowded telecom market • Several players in trouble • Weakening trend in the wholesale market • Market position is critical • Leading players getting stronger 17 25 07 2002 Telia AB, IR
Slide 18: The Group: Telia'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 • Resolve problem areas – International Carrier – Telia Mobile Denmark • Finalize the merger with Sonera • Sharpen Telia’s customer- and earnin
Slide 19: Bo Jacobsson, Chief Financial Officer
Bo Jacobsson Chief Financial Officer 19 25 07 2002 Telia AB, IR
Slide 20: The Group: Net sales
The Group • Growth +1% Net sales • Core Business +6% MSEK 16,000 Rolling 12- 14,203 14,346 months (MSEK) 13,180 60,000 12,000 40,000 8,000 20,000 4,000 0 0 Q2 00 Q2 01 Q2 02 20 25 07 2002 Telia AB, IR
Slide 21: The Group: Underlying EBITDA
The Group • Growth +19% Underlying EBITDA • Core Business +12% • Margin 25% MSEK 4,000 35% Margin 3,587 30% 2,857 3,014 3,000 25% 20% 2,000 15% 10% 1,000 5% 0 0% Q2 00 Q2 01 Q2 02 21 25 07 2002 Telia AB, IR
Slide 22: Mobile: Sales
Telia Mobile • Growth +17% Sales - Customer growth - Increased MoU 5,110 • Norway +28% MSEK 5,000 • Reduced interconnect 4,372 fees in Sweden 4,000 3,000 2,000 1,000 0 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 22 25 07 2002 Telia AB, IR
Slide 23: Mobile: Underlying EBITDA
Telia Mobile • Growth +26% Underlying EBITDA • Margin 25% • Sweden: – Reduced inter- MSEK 1,400 1,357 40% connect fees • Norway: 1,200 – Efficiency 1,074 measures 30% 1,000 800 20% 600 400 10% 200 0 0% Margin Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 23 25 07 2002 Telia AB, IR
Slide 24: Internet Services: Sales
Telia Internet Services • Growth +25% Sales • Continued customer growth • Increased prices 1,018 MSEK 1,000 813 800 600 400 200 0 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 24 25 07 2002 Telia AB, IR
Slide 25: Internet Services: Underlying EBITDA
Telia Internet Services • Improvement +14% Underlying EBITDA • Increased prices • Decreased development costs Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 • Improved profitability 0 0% in the cable TV business -100 -20% -144 -168 -200 -40% -300 MSEK -400 -60% Margin 25 25 07 2002 Telia AB, IR
Slide 26: International Carrier: Sales
Telia International Carrier • Growth +22% Sales • IP-traffic growth • Telephony is 60% of 1,074 revenues • Increase in orders MSEK 1,000 877 800 600 400 200 0 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 26 25 07 2002 Telia AB, IR
Slide 27: International Carrier: Underlying EBITDA
Telia International Carrier • Improvement 44 Underlying EBITDA MSEK, compared with Q1 2002 • Increased sales Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 • Efficiency measures 0% – Less leased -50 capacity -10% – New operating -150 agreements -20% – Reduction in -250 number of -30% consultants and -302 -287
Slide 28: Networks: Sales
Telia Networks • Sales decrease 5%; Sales Comparable units –4% • Local preselection • Weakened wholesale market MSEK 8,000 7,262 6,879 6,000 4,000 2,000 0 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 28 25 07 2002 Telia AB, IR
Slide 29: Networks: Underlying EBITDA
Telia Networks • EBITDA unchanged Underlying EBITDA • Slightly strengthened margin • Efficiency measures MSEK 3,500 50% Margin 3,000 2,793 2,794 40% 2,500 30% 2,000 1,500 20% 1,000 10% 500 0 0% Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 29 25 07 2002 Telia AB, IR
Slide 30: The Group: Share of earnings in associated companies
The Group • Capital gains MSEK 335 Share of earnings in associated • Units divested in 2001 companies MSEK 4,000 3,746 3,500 3,000 2,500 2,339 2,000 1,500 1,000 500 363 208 12 0 -157 -500 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 30 25 07 2002 Telia AB, IR
Slide 31: The Group: Review of earnings
The Group Review of earnings MSEK Apr-Jun Apr-Jun Apr-Jun Apr-Jun 2002 2001 2002 2001 Net sales 14,346 14,203 28,231 27,795 Underlying EBITDA 3,587 3,014 6,968 6,362 Operating income 119 988 828 1,799 Income after financial items -78 909 457 1,411 Net income 30 250 157 541 Earnings per share (SEK) 0
Slide 32: The Group: Investments
The Group • Reduction 56% Investments • Fixed network in Sweden • International carrier network • GSEK 10-15 in 2002 MSEK 18,000 16,042 Of which CAPEX 12,000 5,954 6,000 2,637 0 Q2 00 Q2 01 Q2 02 32 25 07 2002 Telia AB, IR
Slide 33: The Group: Strong financial position
The Group • Low debt/equity ratio: 0.17 Strong financial position • Small decrease in total assets GSEK 70 60.8 60 50 40 30 20 10.3 10 0 Adjusted equity Net interest-bearing liability 33 25 07 2002 Telia AB, IR
Slide 34: The Group: Improved operating cash flow
The Group • Improved operating cash flow Cash flow from operating activities • Reduced investments MSEK 10 000 8 000 Operating cash flow 6 000 3 158 4 000 1 722 Operating cash flow 1 472 excl. acquisitions and 2 000 divestments of shares, participations, 0 operations and financial fixed assets -2 00
Slide 35: The Group: Summary
The Group Summary • Growth – Net sales in core business +6% • Margin improvement – Underlying EBITDA margin 25% • Improved free cash flow adjusted for divestments • Strong balance sheet 35 25 07 2002 Telia AB, IR
Slide 36: Slide 36