Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q3 2004 Earnings Presentation
38 slides from Telia Company AB's earnings presentation, Oct 27, 2004
Slide 1: Interim Report July-September 2004
Interim Report July-September 2004 Anders Igel President and CEO October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 2: July-September 2004 Summary
July-September 2004 Summary • Good result • Proposal regarding shareholder return • Initiatives for the future prepared – Platform for Future Growth – Measures to keep profitability – Take advantage of Eastern opportunity October 27, 2004 Interim Report July-September 2004, Stockholm 2
Slide 3: July-September 2004 highlights
July-September 2004 highlights • High EBITDA margin 39.8% maintained (39.4) • Sales increased 3% • Strong customer growth Y-o-Y – 1 million new customers in Nordic and Baltic countries – 11 million new customers in Eurasia, Russia and Turkey • Market positions maintained • Successful acquisitions su
Slide 4: Outlook
Outlook • Long term view unchanged compared to previous quarter • For the TeliaSonera group, the fourth quarter of 2004 is expected to show the same trends as the comparative quarter last year in terms of profitability and CAPEX October 27, 2004 Interim Report July-September 2004, Stockholm 4
Slide 5: Shareholder return specified
Shareholder return specified • SEK 30 billion to shareholders during 2005-2007 in addition to ordinary dividends • The board has decided to recommend to the AGM in April 2005 a distribution of approx. SEK 10 billion • Repurchase of shares through a public public offering with tradable rights will be
Slide 6: Performance during July-September 2004
Performance during July-September 2004 October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 7: Market positions in Nordic home markets maintained
Market positions in Nordic home markets maintained • Maintained market positions Performance and sequential margin pick up Jul-Sep 2004 in Nordic markets Sweden Mobile, sales year-on-year -2% Fixed, sales year-on-year -3% • Usage increases but price EBITDA margin 42.5% reductions limit growth in Fin
Slide 8: Mobile growth continues in Baltic markets
Mobile growth continues in Baltic markets • Stable development in Sales growth Q3 2003-Q3 2004 Estonia • Strong mobile growth in Latvia Estonia1 Mobile 13% Fixed 3% • Strong mobile customer intake in Lithuania Latvia – Significantly lower price Mobile local currency 13% 16% levels affected net sales
Slide 9: Closing of Orange deal strengthens Nordic and Baltic leadership
Closing of Orange deal strengthens Nordic and Baltic leadership • From № 4 to № 2 in Denmark Denmark Mobile subs.1 • Possibility to become Danish TDC 1.6 million New Telia DK 1.1 million customers’ № 1 choice Sonofon 1.0 million • Critical mass in Denmark #1 • Large and tangible synergies #2 #1 #1 #
Slide 10: Turkcell – more customers and higher ARPU
Turkcell – more customers and higher ARPU • Customer growth and increased usage created strong growth • Stable pricing increased ARPU of USD 15.50 (14.39) Number of customers1 (million) Sales1, 2 (USD million) TeliaSonera Share of Net income 20.9 +30% 835 17.2 640 269 218 Q2 2003 Q3 2003 Q4 2003 Q1
Slide 11: 2.4 million new subscribers in MegaFon
2.4 million new subscribers in MegaFon • MegaFon took 25% of the total Russian customer increase during Q3 and increased its market share • The TeliaSonera share of net income increased 19% Number of customers (million) Sales (USD million) TeliaSonera Share of Net income 11.5 +74% 418 271 240 227 5.
Slide 12: High growth and improved margins in Eurasia – Fintur
High growth and improved margins in Eurasia – Fintur • Customer growth and increased ARPU pushed up sales by 54% (In local currency sales increased 67%) • Customer growth during Q3 was 458,000, Y-o-Y +1,300,000 Number of customers (million) Sales (USD million) EBITDA1 and CAPEX 1) Excl. non-recurrin
Slide 13: Opportunities for the future
Opportunities for the future • Platform for Future Growth • Measures to keep profitability • Take advantage of Eastern opportunity October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 14: Migration trend
Migration trend Mobile gr at ion +8.6% in Q3 Mi TeliaSonera group Fixed -6.3% in Q3 TeliaSonera group Migr at Internet ion +14.7% in Q3 Broadband +25.1% TeliaSonera group October 27, 2004 Interim Report July-September 2004, Stockholm 14
Slide 15: Take the lead in the migration
Take the lead in the migration October 27, 2004 Interim Report July-September 2004, Stockholm 15
Slide 16: TeliaSonera – Markets in different stages
TeliaSonera – Markets in different stages Transformation New High growth Mature growth markets markets Migration phase? Nordic Baltic Turkey Russia Eurasia October 27, 2004 Interim Report July-September 2004, Stockholm 16
Slide 17: TeliaSonera – Dual opportunities
TeliaSonera – Dual opportunities Nordic – Baltic Turkey – Russia – Eurasia 31 234 million million Inhabitants 36 million 22 million TeliaSonera customers Approaching 100% Penetration Still low Modest Sales growth High Stable Profitability Accelerating October 27, 2004 Interim Report July-September 2
Slide 18: TeliaSonera – Dual opportunities
TeliaSonera – Dual opportunities Nordic – Baltic Turkey – Russia – Eurasia Inhabitants TeliaSonera customers Create growth Exploit growth Penetration Keep profitability Enhance value Sales growth Profitability October 27, 2004 Interim Report July-September 2004, Stockholm 18
Slide 19: The Nordic Baltic Opportunity
The Nordic Baltic Opportunity October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 20: The Nordic Baltic Opportunity
The Nordic Baltic Opportunity Platform for Create growth future growth Competitive Keep profitability Cost Levels October 27, 2004 Interim Report July-September 2004, Stockholm 20
Slide 21: Platform for Future Growth – Focused Service Portfolio
Platform for Future Growth – Focused Service Portfolio Legacy Mobile Internet Managed Services Mobile voice Content Residential distribution broadband Mobile data Business IP Combinations October 27, 2004 Interim Report July-September 2004, Stockholm 21
Slide 22: Platform for future growth
Platform for future growth Enhanced growth opportunities ears 3y Customer Service Enhancement t ely ma xi p ro Migration Strategies Fixed IP and Mobility Ap Renewed offering and pricing strategies Focused Service Portfolio, based on simplicity 22 million Customer Base – Scale Advantage – Clear Vis
Slide 23: Keep profitability
Keep profitability • The opportunities identified enables TeliaSonera to reduce costs to completely different levels than today • Growth initiatives will be accelerated and prioritized without losing focus on actions securing competitive cost levels October 27, 2004 Interim Report July-September 200
Slide 24: Keep profitability
Keep profitability Competitive Cost Levels ars Business culture programmes ye 3 tely Common tools and processes implementation a x im o pr Ap Telecom and IT-systems restructuring Operational improvements (marketing, channels, network, order, delivery etc) Focused Service Portfolio OPEX: SEK 52 billi
Slide 25: The Eastern Opportunity
The Eastern Opportunity October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 26: The Eastern opportunity
The Eastern opportunity Turkey Russia Eurasia Active Board Part of TeliaSonera process Closer alliance Increase ownership if possible October 27, 2004 Interim Report July-September 2004, Stockholm 26
Slide 27: Focus going forward
Focus going forward • Short term Platform for – Maintain or increase market shares future growth – Synergy realizations – Acquisitions within footprint Competitive • Medium term Cost Levels – Create Platform for Future Growth – Take measures to keep profitability – Take advantage of Eastern opportun
Slide 28: Kim Ignatius
Kim Ignatius Executive Vice President and Chief Financial Officer October 27, 2004 Interim Report July-September 2004, Stockholm
Slide 29: TeliaSonera Key figures July–September 2004
TeliaSonera Key figures July–September 2004 • Net sales increased 3% • High EBITDA margin maintained • Continued improvement in associated companies • Improved Operating Income excl. non-recurring items and GWA SEK million Jul–Sep 2004 Jul–Sep 2003 Net sales 20,649 20,094 EBITDA excl. non-recurring
Slide 30: Net sales +3% in the quarter
Net sales +3% in the quarter • Acquisitions/divestitures positive effect of 1% • Sales volume: +8% • Prices: -6% • Price erosion • Reduced scope Improved usage and customer base -87 SEK million 403 -46 50 20,649 157 -14 20,094 -254 218 128 • Positive mobile development Strong customer Divested busin
Slide 31: Increased Operating income excl. non-recurring items and GWA
Increased Operating income excl. non-recurring items and GWA SEK million • Goodwill amortization discontinued, assets annually tested for impairment • Lower depreciation in Sweden, improved income from associates Sales growth and streamlining 124 5,898 44 -255 319 compensating for price pressure 218
Slide 32: Non core assets
Non core assets • Total earnings improved significantly – Most operations developed positively – Unprofitable operations have been divested • Non-recurring items – Zed divested for EUR 30 million, yielding capital gain of SEK 107 million – Release of reserve related to holding in Telefos, SEK 745 mi
Slide 33: Improved Net income
Improved Net income • Net income over SEK 4 billion • Goodwill amortization in comparative quarter was SEK 1,012 million SEK million Jul–Sep 2004 Jul-Sep 2003 Income after financial items 5,985 3,353 Income taxes -1,246 -1,339 Minority interests -419 -222 Net income 4,320 1,792 Earnings/ per share (
Slide 34: Cash flow statement
Cash flow statement • Tax payment – SEK 2 billion higher than in 2003 SEK billion • Change in working capital – mainly a fluctuation in quarters • CAPEX 11.4% of net sales – driven by mobile and broadband growth 22.7 2.8 1.1 0.8 7.1 6.6 6.8 4.7 0.3 18.0 12.3 Free cash flow SEK 10.9 billion Cash and
Slide 35: Financial position further strengthened
Financial position further strengthened Sep 30, Dec 31, SEK 2004 2003 billion 18.2 10.9 Equity-to-assets ratio 62% 57% Net debt-to-EBITDA ratio 0.2 0.6 1.4 6.6 Net debt-to-equity ratio 5% 17% 4.7 1.1 5.7 Free cash flow yield 9% 12% Book return on equity 13% 7% Net debt Free Acquisitions Sale of Divi
Slide 36: Shareholder return specified
Shareholder return specified • SEK 30 billion to shareholders during 2005-2007 in addition to ordinary dividends • The board has decided to recommend to the AGM in April 2005 a distribution of approx. SEK 10 billion • Repurchase of shares through a public public offering with tradable rights will be
Slide 37: 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 38: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader October 27, 2004 Interim Report July-September 2004, Stockholm