Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — H1 2003 Earnings Presentation
22 slides from Telia Company AB's earnings presentation, Jul 31, 2003
Slide 1: Interim report January-June 2003
Interim report January-June 2003 Anders Igel President and CEO July 31, 2003
Slide 2: Q2 in brief
Q2 in brief • Rapid profitability improvement • Cash flow more than doubled • Fast integration • Synergies ahead of plan • Increased market focus is beginning to yield results • Turnaround targets reached in Danish fixed business and in former Telia International Carrier 2
Slide 3: Strong earnings and cash flow development
Strong earnings and cash flow development • Record high EBITDA Q2 2002 margin excl. non-recurring Q2 2003 items 8,070 SEK million – Group 40% 6,241 – Sweden 45% 5,155 3,963 • Maintained investment 2,534 efficiency 800 • Record high free cash CAPEX flow Operating EBITDA Free cash flow1 income excl. n
Slide 4: Successful turnaround
Successful turnaround International Carrier • Restructuring program yields positive impact • In April and May end-of-year target of positive EBITDA-CAPEX was reached Denmark • Improved earnings in both the fixed and mobile operations • End-of-year target of positive EBITDA for Danish fixed was reach
Slide 5: Full speed in integration and synergy implementation
Full speed in integration and synergy implementation • Successful integration is yielding results – Synergy decision making ahead of schedule • The EU requirements have been met – ComHem sold, gain of SEK 1,811 million – Telia Mobile Finland sold, loss of SEK 108 million – Fixed and mobile networks
Slide 6: More aggressive in the market
More aggressive in the market • Start to offer bundled products • Telemarketing stepped up 6
Slide 7: Increased market efforts yield results
Increased market efforts yield results • Wide range of new offers and products launched with visible results by the end of the period – Reduced losses in Swedish consumer segment and held position in Finnish consumer segment – Strengthened position in Finnish and in Swedish Corporate segments – Impr
Slide 8: Geographical focus
Geographical focus • Strengthening footprint in the markets where TeliaSonera currently operates • Selected acquisitions in current footprint • Long term strong cash flow provides us flexibility to grow in the consolidation of the European telecom industry 8
Slide 9: Outlook
Outlook We have reached previously stated mid-term targets earlier than expected • Net sales for full year 2003 are expected to grow in line with the first half year • CAPEX/Sales expected around 12% for 2003 • Operating income excl. non-recurring items for the second half year of 2003 is expected n
Slide 10: Focus going forward
Focus going forward • Commercial actions – win back market shares • Continued synergy realization • Efficiency improvements • Strengthen existing geographical footprint 10
Slide 11: Kim Ignatius, CFO
Kim Ignatius CFO July 31, 2003
Slide 12: Net sales change
Net sales change SEK million +626 -450 Lower fixed Consolidation traffic volume of Fintur -167 20,290 -160 +95 20,275 +197 -16 -50 -90 Downsizing in Denmark, International Carrier and Holding decreases growth Correction of mobile Continued strong revenue accruals growth in Norway Net sales Sweden Fi
Slide 13: EBITDA excl. non-recurring items improvement + SEK 1,829 million
EBITDA excl. non-recurring items improvement + SEK 1,829 million SEK million 353 -250 8,070 357 139 -73 -3 92 1,214 Consolidation Lower OPEX through of Fintur restructuring Carrier • Release of interconnect provision SEK 400 million • Effects from restructuring 2002 SEK 300 million • Synergy benefit
Slide 14: CAPEX reflecting business needs
CAPEX reflecting business needs 2003 level around 12% of sales SEK million 2,909 -498 Tight CAPEX control Restructuring decreases CAPEX in Denmark Fixed +117 -26 -177 and International Carrier -216 +154 -214 Build out of broadband and backbone network to meet market demand +13 -3 2,059 Lower CAPEX i
Slide 15: TeliaSonera January-June key figures
TeliaSonera January-June key figures SEK million Jan-Jun 2003 Jan-Jun 2002 Net sales 40,624 39,932 Growth in net sales (%) 1.7 n/c EBITDA excl. non-recurring items 15,632 12,213 Margin (%) 38.5 30.6 Income from associated companies -670 -30,676 Operating income 5,971 -33,349 Operating income excl. n
Slide 16: Synergies ahead of plan
Synergies ahead of plan Impact of decisions taken during 2003 Decisions during Q2 Full run rate annual Effect SEK million effect (by 2005) in 2003 • Eliminate duplicate platforms OPEX such as positioning services, Product and service development 137 60 e-mail, customer support IT systems and infrast
Slide 17: Continued efficiency improvements in Finland and Sweden
Continued efficiency improvements in Finland and Sweden Integration and governance models significantly increase efficiency and eliminate overlaps • Sweden – Estimated redundancy of approx. 1,500 employees. Approx. 700 employees remain affected by redundancy – A provision of SEK 374 million has been
Slide 18: Non-recurring items Q2 2003
Non-recurring items Q2 2003 Affecting operating Affecting financial No effect on pro forma income items profit & loss statement Operating income excl. Financial net excl. Capital gain non-recurring items 3,963 non-recurring items -116 ComHem +1,811 Within income from Capital gains from assoc. compan
Slide 19: Income taxes
Income taxes • Effective tax rate (42% in Q2) is mainly increased by non-deductible Infonet write-down and by non- deductible goodwill amortization • Deferred tax liability of SEK 12 billion mainly relates to Sweden • Deferred tax benefit of SEK 16 billion mainly relates to European 3G and other wri
Slide 20: Strong cash flow – Strong financial position
Strong cash flow – Strong financial position Strong cash flow strengthening financial position by reducing net debt SEK billion 38.1 -9.1 +1.9 -2.3 28.6 Net debt Free cash flow Dividend Other (incl. gain Net debt Dec 31, 2002 Jan-Jun 2003 from divestitures) Jun 30, 2003 SEK million Jun 30, 2003 Dec
Slide 21: 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 22: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader July 31, 2003