Telenor Asa · OSL:TEL
Telenor Asa — Q2 2005 Earnings Presentation
39 slides from Telenor Asa's earnings presentation, Jul 28, 2005
Slide 1: Telenor – Second Quarter 2005
Telenor – Second Quarter 2005
Slide 2: Group Overview
Group Overview Jon Fredrik Baksaas President and CEO
Slide 3: Strong revenue and subscriber growth
Q2 2005 Strong revenue and subscriber growth Revenues (NOKm) 9% growth 16 542 • Revenue growth of 9% 15 226 • Record high mobile subscriber growth • Increased or stable market shares Q2 2004 Q2 2005 in all mobile operations Mobile subscriber development (million, 100% Basis) • Kyivstar ARPU improved
Slide 4: Stable EBITDA and underlying CAPEX growth
Q2 2005 Stable EBITDA and underlying CAPEX growth Revenues (NOKm) / EBITDA % • EBITDA: 16 542 – Strong improvement in 15 226 Kyivstar 37,4 % – Offset by Q204 sales gains, 34,0 % Fixed and Telenor Pakistan Q2 2004 Q2 2005 • CAPEX: EBITDA and Capex (NOKm) – Growth due to strong EBITDA CAPEX subscriber
Slide 5: Mobile
Mobile @_ telenor
Slide 6: Record high subscriber growth
Mobile Record high subscriber growth Total Consolidated Total Pro Rata 100% figures (all companies) Subscriber figures in millions 67,1 60,1 52,7 45,2 38,9 34,2 31,2 27,8 24,8 24,8 21,3 21,4 18,7 19,0 16,9 16,5 13,2 14,3 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 6
Slide 7: Telenor Mobil Norway: Revenue and subscriber growth
Telenor Mobil – Norway Revenue and subscriber growth Revenues (NOKm) / EBITDA % 3 049 2 954 3 009 2 963 2 804 2 838 • Mobile revenue growth of 5% • 52k net adds in Q2 35 % 36 % 37 % 37 % 38 % 35 % • Stable market share at 56% Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 • EBITDA margin down due t
Slide 8: Sonofon Denmark: Strong improvement
Sonofon - Denmark Strong improvement Revenues (NOKm) / EBITDA % 1 308 1 266 1 243 1 207 1 225 1 193 • Revenue growth of 11% in local currency 21 % 24 % 25 % • 10% ARPU increase from Q1 19 % 21 % Q1 Q2 Q3 1Q4 % Q1 Q2 2004 2004 2004 2004 2005 2005 • Market position improved Subscriptions (‘000) • EBIT
Slide 9: Kyivstar Ukraine: Close to 10 million subscribers
Kyivstar – Ukraine Close to 10 million subscribers Revenues (NOKm) / EBITDA % 1 643 1 229 1 184 1 163 • Revenue growth of 73% in local 825 981 55 % currency 61 % 60 % 63 % 60 % 54 % • 1.7 million net adds in Q2 • High investments in infrastructure Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 • AR
Slide 10: Pannon GSM Hungary: Pressure on margins
Pannon GSM – Hungary Pressure on margins Revenues (NOKm) / EBITDA % 1 552 1 510 1 498 1 401 1 444 1 415 • Revenue growth of 8% in local currency 32 % 40 % 39 % 36 % 37 % • 32k net adds in Q2 28 % • Market share stable at 34% Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 Subscriptions (‘000) • EBIT
Slide 11: DiGi Malaysia: Another strong quarter
DiGi – Malaysia Another strong quarter Revenues (NOKm) / EBITDA % 1 161 1 048 1 004 1 034 936 958 • Revenue growth 30% in local currency 43 % 46 % 44 % 44 % 43 % 43 % • EBITDA margin and ARPU stable • 304k net adds in Q2 Q1 2004 Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005 Subscriptions (‘000) • Market s
Slide 12: GrameenPhone Bangladesh: Strong growth – reduced margins
GrameenPhone – Bangladesh Strong growth – reduced margins Revenues (NOKm) / EBITDA % 705 640 598 570 • Revenue growth of 52% in local 529 489 currency 58 % 58 % 64 % 59 % 51 % 47 % • 776k net adds in Q2 • Market share increased to 62% Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 • Strong subscrib
Slide 13: Telenor Pakistan: Nearly one million subs
Telenor Pakistan Nearly one million subs after four months Subscriber market share • 492k net adds in Q2 (Telenor estimates) • Total subs 836k Ufone 20 % • Low ARPU Paktel GSM • Population coverage 23% 5% PaktelTDMA • Penetration approx. 8% Mobilink 2% Instaphone 58 % 4% W arid Tel 4% Telenor 7% 13
Slide 14: Major associated mobile companies
Major associated mobile companies Vimpelcom – Russia/CIS DTAC – Thailand Subscribers (million) Subscribers (million) 35,1 30,8 8,2 8,1 26,6 7,8 7,4 7,6 20,6 7,0 16,3 13,4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 May 2004 2004 2004 2004 2005 2005 2004 2004 2004 2004 2005 2005 Telenor’ share of Market Value (
Slide 15: Fixed Line
Fixed Line @_ telenor
Slide 16: Fixed Norway: Migration from PSTN/ISDN continues
Fixed Norway Migration from PSTN/ISDN continues Revenues (NOKm) / EBITDA % 4 427 4 367 • Revenues down 1.4% 36,3 % 35,1 % • Further reductions in PSTN/ISDN Q2 2004 Q2 2005 • 30k net adds within ADSL in Q2 EBITDA and Capex (NOKm) EBITDA CAPEX • EBITDA-margin down, but 1 606 1 532 positively affected
Slide 17: Fixed Norway: ADSL growth fuels VOIP migration
Fixed Norway ADSL growth fuels VOIP migration ADSL subscribers • 62% YoY growth in ADSL 694 634 • 32% ADSL penetration 562 192 172 483 145 429 87 • 180k new Telenor retail 123 77 108 91 subscribers the last 12 months 90 86 415 385 326 270 • Telenor ADSL retail market 235 share 60% Q2 2004 Q3 2004 Q4
Slide 18: Fixed Norway: Migration to VoIP
Fixed Norway Migration to VoIP Total Market - Telephony Subscribers • Modest reduction in total fixed telephony subscribers 2 218 2 195 2 188 2 173 2 158 Total 1 885 1 838 1 800 1 757 1 702 Tel retail • Migration from PSTN/ISDN to VoIP • Wholesale line rental stable 268 288 302 308 316 Tel wholesale
Slide 19: Broadcast
Broadcast @_ telenor
Slide 20: Broadcast: Continued strong position
Broadcast Continued strong position Revenues (NOKm) / EBITDA % • Revenue growth of 5% 1 335 1 401 • Continued subscriber growth 29,4 % 29,3 % Q2 2004 Q2 2005 • Stable EBITDA margin EBITDA and Capex (NOKm) EBITDA CAPEX • EBIT margin increased 392 411 96 70 Q2 2004 Q2 2005 20
Slide 21: Group Financial Overview Q2 2005
Group Financial Overview Q2 2005 Torstein Moland CFO
Slide 22: Key messages Q2 2005
Key messages Q2 2005 • Revenue growth of 9% • Record high mobile subscriber growth • Increased or stable market shares in all mobile operations • Kyivstar ARPU improved from last quarter 22
Slide 23: Reported P&L
Reported P&L NOKm Q2 2005 Q2 2004 2004 2003 * 15 226 60 701 52 889 Revenue 16 542 EBITDA 5 630 5 698 20 957 18 302 EBIT 2 859 2 990 6 789 7 560 Profit before Tax 3 325 2 983 9 296 7 426 2 041 1 709 Net Income 5 677 4 560 EPS (NOK) 1.19 0.97 3.25 2.57 * Not IFRS adjusted 23
Slide 24: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA (NOKm) and Margin Comments Q2 (YoY) 5 529 5 672 5 564 5 068 5 098 5 085 Reduced EBITDA-margin mainly explained by: – Launch in Pakistan – Reduced EBITDA in Fixed – Strong growth and increased 35,6 % 36,3 % 36,3 % 32,6 % 33,3 % 33,6 % competition in the mobile operatio
Slide 25: Headcount and CAPEX
Headcount and CAPEX Headcount Capex / Sales Capex Breakdown (NOKm) International Mobile Fixed Domestic Fixed Domestic Domestic Mobile Broadcast Other Total Capex/Sales 12 745 675 880 22 20 900 400 1 791 19 450 21% 20% 11100 7 450 9500 6 454 6 283 12% 744 296 143 252 937 10% 1 791 9 399 9% 8% 9% 12 0
Slide 26: Net Debt/EBITDA of 0.9
Net Debt/EBITDA of 0.9 Net Debt (NOKbn) to LTM EBITDA (x) Net Debt Changes (NOKbn) Net Debt 31 March 2005 15.9 22.0 EBITDA - 5.6 20.6 Net interest 0.4 19.3 19.2 Income tax paid 0.2 17.8 Investments - paid 3.6 15.9 Investments - proceed -1.2 Share buy back 1.5 Dividends, incl. to minority 2.7 Accrual
Slide 27: Share buy back this quarter
Share buy back this quarter • Buy back of 13.9 million shares – 6.4 million shares in the market – 7.5 million shares from the government 27
Slide 28: Outlook for 2005
Outlook for 2005 High growth in revenues and EBITDA Mobile Increased Capex Decrease in revenue and EBITDA Domestic Strong growth in ADSL subscribers Fixed Line Cost reductions Broadcast Improved EBITDA High revenue growth Telenor High EBITDA growth Group Capex/sales ratio stable vs
Slide 29: ARPU development in mobile operations (NOK)
ARPU development in mobile operations (NOK) Telenor Mobil - Norway Sonofon - Denmark Kyivstar - Ukraine 332 328 95 315 318 308 250 253 93 297 233 229 84 219 207 68 62 53 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 2004 2004 2004 2004 2005 2005 2004 2004 2004 2
Slide 30: MoU/APPM development in Mobile Operations
MoU/APPM development in Mobile Operations MoU APPM (Local currency) Telenor Mobil - Norway Sonofon - Denmark Kyivstar - Ukraine 95 95 182 91 90 191 157 153 187 187 147 151 74 139 68 182 179 175 0,96 0,97 1,47 1,35 0,77 1,75 1,40 1,29 1,76 1,78 1,75 1,7 1,33 1,24 0,60 1,61 0,49 0,55 Q1 Q2 Q3 Q4 Q1 Q2
Slide 31: International mobile associates
International mobile associates International Mobile Associates Total per Company 2004- 2005 (100% figures in NOK millions according to local GAAP) Subscriptions ('000) 1) Revenues YTD EBITDA YTD 2) CAPEX YTD Net debt 3) Mar 31 %-change Mar 31 %-change Mar 31 %-change Mar 31 Mar 31 2004 2005 2004/20
Slide 32: Interest bearing debt in partly owned companies
Interest bearing debt in partly owned companies Ne t inte re s t- be a ring de bt O w ne rs hip NO K m illio n inte re st Q 2 2005 Q 1 2005 Q 2 2004 DiGi. Com 6 1 .0 % - 579 - 158 539 Kyivst ar 5 6 .5 % 1 938 1 712 877 GrameenPhone 6 2 .0 % 531 82 - 266 EDB Business Part ner 5 1 .8 % 892 655 492 32
Slide 33: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 2 954 3 009 2 963 3 049 2 804 2 838 35 % 1 002 1 081 1 103 1 119 1 001 1 066 833 827 824 36 % 37 % 37 % 38 % 35 % 763 805 790 332 343 214 255 172 194 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2
Slide 34: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 266 1 243 1 308 1 207 1 225 1 193 -45 -20 -117 -109 -100 296 308 260 253 24 % 238 25 % 132 144 140 19 % 21 % 21 % 102 76 16 28 -3 551 Q1 Q2 Q3 1Q4 % Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2
Slide 35: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 643 1 024 911919 627 772 580 1 229 735 555 1 184 1 163 712 687 632 464 981 592 566 505 401 825 55 % 380 61 % 60 % 63 % 60 % 54 % 331 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 200
Slide 36: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 552 1 510 1 498 1 444 1 415 1 401 820 556 556 561 517 484 32 % 40 % 39 % 420 36 % 37 % 243 225 28 % 230 235 201 206 104 121 121 109 87 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2
Slide 37: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 161 1 048 1 004 1 034 936 958 499 426 453 443427 451 410 43 % 46 % 43 % 43 % 44 % 44 % 246 228 222 228 197 184 193 162 178 103 108 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2004
Slide 38: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 482 496 705 640 418 598 383 570 357 529 338 334 489 329 325 309 283 258 258 263 252 249 245 64 % 47 % 58 % 59 % 58 % 51 % 160 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 20
Slide 39: Quarterly financial performance
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 166 76 118 123 110 104 98 96 42 49 % 58 % 26 54 % 53 % 49 % 59 55 60 18 48 46 12 39 % 34 13 -2 3 4 5 4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 2004 2004 2004 2004 2005 2005 2004