Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q1 2004 Earnings Presentation
35 slides from Telia Company AB's earnings presentation, Apr 28, 2004
Slide 1: Interim report January–March 2004
Interim report January–March 2004 Anders Igel President and CEO April 28, 2004
Slide 2: 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 3: TeliaSonera January-March 2004
TeliaSonera January-March 2004 • Net sales amounting to SEK 19,946 million (20,349), were on the same level as the preceding year adjusted for changes in exchange rates • EBITDA excl. non-recurring items decreased to SEK 7,200 million (7,562) • Free cash flow amounted to SEK 2,194 million (3,897), n
Slide 4: Good performance despite tough competition in home market
Good performance despite tough competition in home market • Declining market trends turned around in Sweden • Accelerating initiatives to reach competitive cost levels in all operations • Impressive growth and profitability in Eurasia • Important steps towards simplicity and usage of mobile data – I
Slide 5: Strong market initiatives yield strong customer growth
Strong market initiatives yield strong customer growth Consolidated companies Associated companies 22,400,000 28,900,000 +8% +34% 20,700,000 21,500,000 April 28, 2004 5
Slide 6: Advantages by being a large international group
Advantages by being a large international group TeliaSonera is more than the sum of its parts • Pan-Nordic service offerings – Homerun – Nordic mobile offering • Exceeded synergies – Executed decisions higher than target so far – Common product development – Best practice benchmarking throughout the
Slide 7: Rapid GPRS expansion in Nordic markets
Rapid GPRS expansion in Nordic markets GPRS subscriptions (thousands) Sweden Finland 489 322 138 66 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Norway Denmark 5441 135 46 3 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 1) GPRS inc
Slide 8: Encouraging early MMS growth
Encouraging early MMS growth Number of MMS (thousands) Sweden Finland 2,113 1,124 645 500 Q4 2003 Q1 2004 Q4 2003 Q1 2003 Norway Denmark 1,585 5821 469 335 Q4 2003 Q1 2004 Q4 2003 Q1 2004 1) Paid MMS started in Dec April 28, 2004 8
Slide 9: Faster, easier and more fun!
Faster, easier and more fun! Improved mobile data services with 3G • The speed of 3G radically improves the customer experience • Range of services will be expanded April 28, 2004 9
Slide 10: Broadband – climbing on all markets
Broadband – climbing on all markets Subscriptions (thousands) Sweden Finland ADSL 423 Broadband Residentials 341 233 174 94 35 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2002 2002 2002 2002 2003 2003 2003 2003 2004 2002 2002 2002 2002 2003 2003 2003 2003 2004 Denmark Lithuania Internet Ca
Slide 11: Market share gains and sustained strong margins in Sweden
Market share gains and sustained strong margins in Sweden • Increased market and customer Performance Q1 2004 orientation yield results • Gained market shares within mobile services to business Mobile Sales, year-on-year customers and within consumer +5% Customers, total fixed voice 4,008,0001 • Acc
Slide 12: TeliaSonera Sweden – ARPU and MoU
TeliaSonera Sweden – ARPU and MoU ARPU Maintained SEK 500 434 431 post-paid 414 429 428 416 370 387 387 ARPU despite 400 Post-paid lower prices 300 268 279 267 263 270 Total 200 247 252 237 227 Churn 8% 100 Prepaid 99 100 109 99 87 101 114 95 in Q1 2004 84 0 Q1 2002 Q1 2003 Q1 2004 Unchanged MoU ble
Slide 13: Negative trend broken in Sweden fixed
Negative trend broken in Sweden fixed +110,000 Telia callers • Positive impact by bundled and flat-rate offers such as: – Favorit – Fritid – Vi Bjuder Q4 2003 Q1 2004 April 28, 2004 13
Slide 14: Increased sales on a tough Finnish market
Increased sales on a tough Finnish market • Increased net sales due to : Performance Q1 2004 – Strong broadband growth – Increased sales to mobile service providers Mobile Sales, year-on-year +2% – Acquisition of Auria Customers, total 2,321,000 • Increased efforts to regain Fixed voice end-customer
Slide 15: TeliaSonera Finland – ARPU and MoU
TeliaSonera Finland – ARPU and MoU ARPU Quite stable ARPU despite EUR 50 substantial price 38.5 40.1 39.4 38.4 38.8 38.4 39.6 38.1 36.9 reductions 40 30 20 10 0 Q1 2002 Q1 2003 Q1 2004 Churn 37% MoU in Q1 2004 minutes 300 200 234 236 237 236 222 100 MoU continues to grow 0 Q1 2003 Q1 2004 April 28,
Slide 16: Lower prices reduce total market growth in Norway
Lower prices reduce total market growth in Norway • Competition still intensive Performance Q1 2004 – High subsidises – Lower prices Mobile Sales, year-on-year -5% • NetCom continues with offerings in local currency +8% and new marketing programs Customers, total 1,190,000 • Initiatives to drive MMS
Slide 17: Norway – Mobile ARPU and MoU
Norway – Mobile ARPU and MoU ARPU 590 571 NOK 600 553 551 553 538 511 522 515 500 Continued strong 400 Post-paid increase in 300 usage combined 357 338 337 347 345 337 Total 306 318 334 with price 200 reductions gives Prepaid 100 115 124 126 128 128 132 131 123 135 stable ARPU 0 Q1 2002 Q1 2003 Q1 2
Slide 18: Robust sales and earnings growth in Denmark
Robust sales and earnings growth in Denmark • Positive growth across all operations after Performance Q1 2004 a successful restructuring • Mobile – Telia Xpress – SMS and MMS Mobile Sales, year-on-year success +34% Customers, total – Increased traffic volume per 544,000 customer Fixed voice Sales, y
Slide 19: Denmark – Mobile MoU
Denmark – Mobile MoU MoU Strong customer and MoU growth minutes 200 174 175 168 Post-paid 151 150 138 130 134 100 121 129 Total 102 50 42 50 34 34 17 Prepaid 0 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 April 28, 2004 19
Slide 20: Strong mobile growth in Baltic countries
Strong mobile growth in Baltic countries • Strong mobile growth and Performance Q1 2004 reduced customer loss within Estonia : Fixed 1 Mobile fixed voice in Lithuania Sales, year-on-year +8% +12% Customers, total 502,000 • Strong mobile growth 500,0002 Latvia: Mobile Fixed 1 and good earnings in Sal
Slide 21: Rapidly reduced churn in Lietuvos Telekomas
Rapidly reduced churn in Lietuvos Telekomas Loss of main lines (thousands) Q3 2002 Q4 2002 Q1 2003 Q2 2003 Q3 2003 Q4 2003 Q1 2004 -2 -8 -23 -32 -43 -59 -68 April 28, 2004 21
Slide 22: Strong performance in International operations
Strong performance in International operations Russia Performance Q1 2004 • Over 1.4 million new customers Eurasia Russia – MegaFon Customers, total • Strong margin improvement 7,587,000 and strong customer growth Turkey • Continued strong customer Eurasia – Fintur companies growth Customers, total
Slide 23: Outlook – Focused growth by acquisitions
Outlook – Focused growth by acquisitions • Ready to take majority in associated companies • Financial position and merger Cash offer on Eesti Telekom experience allow us now to • Owns Estonian operators participate in European consolidation Elion and EMT • Build on or increase strength in the Nordic
Slide 24: Outlook 2004 – Commitment to pursue profitable growth
Outlook 2004 – Commitment to pursue profitable growth • Good growth in mobile, decline in fixed voice and strong growth in Internet based services is expected in the market • Ambition to develop organic revenue growth in line with or better than our markets • Continued adaptation of cost structure t
Slide 25: Focus going forward
Focus going forward Main challenge 2004 • Continue to improve market position while maintaining our strong profits and cash flow – Commercial actions – win back market shares – Continued synergy realization – Efficiency improvements – Profitable growth organically and by acquisitions – Realize the v
Slide 26: Kim Ignatius, CFO
Kim Ignatius CFO April 28, 2004
Slide 27: TeliaSonera key figures Jan–Mar 2004
TeliaSonera key figures Jan–Mar 2004 SEK million Jan–Mar 2004 Jan–Mar 2003 Net sales 19,946 20,349 Change in net sales (%) -2.0% 3.6% EBITDA excl. non-recurring items 7,200 7,562 Margin (%) 36.1% 37.2% Income from associated companies 354 84 Operating income 4,122 3,288 Operating income excl. non-re
Slide 28: Net sales change
Q1 2003 – Q1 2004 Net sales change • Net sales were on the same level adjusted for Sales per market changes in exchange rates • Acquisitions/divestitures positive effect of 1% International Carrier • Acquisition of Auria Restructuring Eurasia Holding SEK million • Wholesale revenue Baltic up countri
Slide 29: Continued reduction of OPEX excl. non-recurring items -1%
Q1 2003 – Q1 2004 Continued reduction of OPEX excl. non-recurring items -1% SEK million • Auria acquisition High production Restructuring • Higher interconnection cost due to costs revenue growth • Higher marketing 72 costs 124 30 47 12,787 -593 131 329 66 12,615 -247 Increased traffic Volume volume
Slide 30: EBITDA excl. non-recurring items down -5%
Q1 2003 – Q1 2004 EBITDA excl. non-recurring items down -5% SEK million • Price erosion • Centralized HQ • Higher marketing cost Customer growth functions • Shift from end customer and higher • Higher internal to wholesale ARPU eliminations 7,562 in Mobile -164 -132 36 -31 -120 92 -40 164 -167 7,200
Slide 31: Operating income excl. non-recurring items
Q1 2003 – Q1 2004 Operating income excl. non-recurring items SEK million • Lower depreciation in Sweden • Growth and improved profitability in Russia • Provision for legal disputes and deferred tax asset booked in Turkcell. Growth and improved profitability excluding one offs. • Improved profitabili
Slide 32: Further initiatives keep synergies ahead of schedule
Further initiatives keep synergies ahead of schedule • Decided synergies yearly run rate by the end of 2005 – OPEX SEK 1,868 million – CAPEX SEK 460 million • Realized synergies 2003 – OPEX SEK 882 million – CAPEX SEK 481 million Committed to merger target • Realized synergies Q1 2004 • Total annual
Slide 33: Non core assets
Non core assets • Successful divestment of Telia Finans generated a capital gain of SEK 429 million and positive cash flow of SEK 6,000 million. Several smaller divestments were done as well. • Yahoo exercised its option to sell back its 16% stake in ZED to TeliaSonera. Purchase price EUR 7 million.
Slide 34: Financial position further strengthened
Financial position further strengthened SEK billion Mar 31, Dec 31, 18.2 -2.2 0.5 -6.0 2004 2003 Equity-to-assets ratio 59% 57% -0.7 9.8 Net debt-to-equity ratio 9% 17% Free cash flow yield 6% 12% Book return on equity 9% 7% Net debt Free cash Acquisitions Sale of Telia Other Net debt Dec 31, flow F
Slide 35: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader April 28, 2004