Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q1 2014 Earnings Presentation
19 slides from Telia Company AB's earnings presentation, April 2014
Slide 1: Interim Report January-March, 2014
Interim Report January-March, 2014 Johan Dennelind President and CEO Steady margin and cash flow in the first quarter • Top-line growth remains challenging • Strong consumer business in the Nordics - tougher within enterprise • Improved profitability in Eurasia • Growing market share in Spain but hi
Slide 2: Stable group performance
Stable group performance Net sales & EBITDA margin* CAPEX & CAPEX-to-sales** SEK million SEK million -1.8% organic 3.000 2,719 2,581 24,582 23,972 2.000 34.6% 34.8% 1.000 10.4% 10.8% 0.000 Q1 13 Q1 14 Q1 13 Q1 14 • Positive billed revenue trend, lower • Increasing share of 4G and fiber equipment and
Slide 3: Challenges in enterprise segment
Challenges in enterprise segment Nordic Mobility - B2B billed revenues* y-o-y % • Slightly easing pressure on B2B Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 billed revenues in Q1 -1.1 -2.3 -3.5 -4.1 -5.3 Nordic Broadband - B2B net sales* y-o-y % • Migration from fixed voice services and price pressure • Several
Slide 4: Improved profitability in Finland
Improved profitability in Finland Mobility Broadband Net sales & EBITDA margin* Net sales & EBITDA margin* SEK million SEK million -2.7% organic -6.2% organic 1,844 1,871 2.000 35.1% 1,319 1,290 1.000 31.3% 23.7% 23.3% 0.000 Q1 13 Q1 14 Q1 13 Q1 14 • Back to positive billed revenue growth • Continue
Slide 5: Continued strong profitability in Eurasia
Continued strong profitability in Eurasia Net sales & EBITDA margin* CAPEX & CAPEX-to-sales** SEK million SEK million +6.0% organic 1.000 832 4,684 4,622 54.7% 53.0% 355 14.4% 7.7% 0.000 Q1 13 Q1 14 Q1 13 Q1 14 • Mobile data main growth driver • Low CAPEX in Q1, to be normalized over the year • Stro
Slide 6: Focus on corporate governance and sustainability
Focus on corporate governance and sustainability • The Board’s review of past transactions in Eurasia finalized in the quarter • Several measures implemented to transform control systems and improve corporate governance • Further attention to our sustainability agenda – Roll-out of our code of ethic
Slide 7: Full year 2014 outlook reiterated
Full year 2014 outlook reiterated Outlook 2014 Q1 2014 Around 2013 level Net sales growth* -1.8% (0%) Around 2013 level EBITDA margin** 34.8% (35%) CAPEX-to-sales Around 15% 10.8% ratio*** * In local currencies, excluding acquisitions and disposals ** Excluding non-recurring items *** Excluding lice
Slide 8: Summary first quarter 2014
Summary first quarter 2014 • Net sales SEK 23,972 million (24,582) – Decline of 1.8 percent in local currency, excluding acquisitions and disposals • EBITDA* SEK 8,345 million (8,509) – Unchanged in local currency, excluding acquisitions and disposals • EBITDA margin* 34.8 percent (34.6) • Earnings
Slide 9: Lower equipment sales in Spain
Lower equipment sales in Spain Spain - net sales split* EBITDA** SEK million SEK million 2,500 100 2,000 50 1,500 0 1,000 -50 500 -100 0 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 -150 Billed Interconnect Equipment Other Oct Nov Dec Jan Feb Mar • Billed revenues in Spain remained flat • Profitability in past two
Slide 10: Currency headwind in Eurasia
Currency headwind in Eurasia Eurasia Q1 FX vs. SEK y-o-y Eurasia Q1 sales FX impact AZN 1.0% +6.0% TJS 0.1% GEL -4.3% +0.2% Eurasia -7.4% -3.6% 0.0% MDL -8.5% -1.6% -0.2% UZS -9.2% -0.2% KZT -11.3% -1.9% -1.3% NPR -14.2% • Approximately 20 percent devaluation of Kazakhstan tenge in February, full im
Slide 11: Steady margin trend across the group
Steady margin trend across the group Mobility Services Broadband Services Eurasia EBITDA* margin EBITDA* margin EBITDA* margin 54.7% 53.0% 29.0% 28.9% 29.9% 30.2% Q1 13 Q1 14 Q1 13 Q1 14 Q1 13 Q1 14 • Higher profitability in five • Higher margins in five • Margin supported by out of eight markets ou
Slide 12: Slightly higher Free Cash Flow
Slightly higher Free Cash Flow Free Cash Flow SEK billion • Positive impact from working capital +0.8 2.6 2.4 +0.1 0.0 +0.1 -0.5 -0.2 0.0 -0.1 * Excluding non-recurring items 23 Reduced Net debt Net debt SEK billion 65.9 +13.0 55.8 52.9 +2.9 -5.5 -0.3 Q4 2013 Cash flow Cash FX & Q1 2014 Dividend Pro
Slide 13: EPS impacted mainly by FX
EPS impacted mainly by FX Earnings per share, SEK 0.95 0.00 +0.01 0.91 +0.01 +0.02 -0.03 0.00 -0.05 Q1 Operat. Ass Non- FX Net fin Taxes Min int Q1 2013 comp rec 2014 items 25 New reporting structure as from second quarter • TeliaSonera’s second quarter report is due on July 17 • Financial reporting
Slide 14: First quarter summary
First quarter summary • Stable organic revenues excluding equipment and interconnect • Flat EBITDA in local currencies and steady free cash flow • Profitability in core operations backed by lower cost • Full year outlook reiterated 27 14
Slide 15: Appendix: Maintained focus on capturing mobile data growth
Appendix Maintained focus on capturing mobile data growth Mobile data growth* 120% 100% 80% 60% Volume 40% Revenue 20% 0% Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 * Mobility Services 30 15
Slide 16: Organic revenue growth Q1 2014
Organic revenue growth Q1 2014 of which Revenue growth (%) Reported of which acquisitions of which Q1 2014 growth currency and organic disposals Mobility Services -3.5 1.0 - -4.5 Broadband Services -2.3 1.4 -0.9 -2.8 Eurasia -1.3 -7.3 - 6.0 The Group -2.5 -0.4 -0.3 -1.8 31 Statement of cash flows Q1
Slide 17: Financial key ratios
Financial key ratios Mar 31, 2014 Dec 31, 2013 Return on equity* 15.9% 15.9% Return on capital employed* 13.9% 13.9% Equity/assets ratio 39.6% 39.5% Net debt/equity ratio 53.5% 55.8% Net debt/EBITDA rate* multiple 1.49 1.57 Net debt/assets ratio 21.2 22.1 * Rolling 12 months 33 MMO Debt maturity sch
Slide 18: Liquidity position TeliaSonera Group
Liquidity position TeliaSonera Group Cash and cash equivalents, less blocked funds approx. SEK 26.4 billion Committed bank lines Maturity Size Amount undrawn Syndicated revolving Dec 2017 EUR 1 billion EUR 1 billion credit facility March 31, 2014 35 TeliaSonera AB credit ratings (A3/A-) TeliaSonera
Slide 19: Dividend policy
Dividend policy • The company shall target a solid investment grade long-term credit rating (A- to BBB+) to secure the company’s strategically important financial flexibility for investments in future growth, both organically and by acquisitions • The ordinary dividend shall be at least 50% of net i