Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — FY2003 Earnings Presentation
27 slides from Telia Company AB's earnings presentation, Feb 11, 2004
Slide 1: Year-End Report 2003
Year-End Report 2003 Anders Igel President and CEO February 11, 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: Major steps towards fulfilling merger promises
Major steps towards fulfilling merger promises 2003 • Record profit and cash flow • Integration completed with a common direction • Increased market efforts starting to yield results with increased market shares Strong customer growth Consolidated companies Associated companies • 12 million mobile c
Slide 4: Record profit
Record profit SEK million Operating income Operating income excl. non-recurring items 13,140 14,831 -45,958 Jan–Dec Jan–Dec SEK million 2003 2002 Net sales 81,772 80,979 5,992 Net Income 7,671 -32,890 Earnings per share 1.64 -7.03 Jan–Dec Jan–Dec Jan–Dec Jan–Dec 2002 2003 2002 2003 4
Slide 5: Lower CAPEX levels
Lower CAPEX levels SEK million • CAPEX reflecting Jan–Dec 2002 Jan–Dec 2003 business needs -11,710 -8,960 • Reduction by 23% • CAPEX/Sales 11% 5
Slide 6: Record free cash flow, strong financial position
Record free cash flow, strong financial position SEK million • Improvement 83.5% 17,499 9,534 Jan–Dec 2002 Jan–Dec 2003 6
Slide 7: Mobile market share gain and negative fixed consumer trend broken in Sweden
Mobile market share gain and negative fixed consumer trend broken in Sweden • Aggressive market initiatives yield results Performance 2002–2003 • Strengthened position on the mobile market within all customer segments Mobile External Net Sales • More than 25,000 new fixed voice +5% Customers consume
Slide 8: Sustained profitability in fierce competition in Finland
Sustained profitability in fierce competition in Finland • Sustained performance despite Performance 2002–2003 escalated competition following the introduction of mobile Mobile number portability External Net Sales -3% Adj. of accruals • Strong broadband growth -1% Customers and mobile usage 2,428,0
Slide 9: Continued strong development in Norway
Continued strong development in Norway • Continued strong profitable Performance 2002–2003 growth despite much tougher competition Mobile Net Sales +10% • Increased usage per customer in local currency +17% • Strong SMS and MMS trend Customers 1,195,000 Growth • NetCom awarded for: +10% – Successful
Slide 10: Successful turnaround in Denmark
Successful turnaround in Denmark • Both fixed and mobile EBITDA Performance 2002–2003 positive in the fourth quarter • Mobile Mobile External Net Sales – Growing customer base and +75% improving profitability Adj. for accounting change +52% – Robust increase in SMS Customers 525,000 (Telia Xpress) G
Slide 11: Strong mobile growth in Baltic Countries
Strong mobile growth in Baltic Countries • Strong mobile growth and Performance 2002–2003 turnaround program in fixed in Lithuania • Strong mobile growth Estonia1: Mobile Fixed and good earnings in Sales Customers +11% 478,000 +1% 445,000 fixed in Latvia Growth +12% -4% • Good performance Latvia: Mo
Slide 12: Strong performance in International operations
Strong performance in International operations Russia Performance 2002–2003 • Nearly 3.2 million new mobile Russia – MegaFon customers and increased Customers market share 6,175,000 Growth Eurasia +104% • Continued strong growth and profit development Eurasia – Fintur companies International Carrier
Slide 13: 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 14: Outlook – Focused growth by acquisitions
Outlook – Focused growth by acquisitions • Ready to take majority in associated companies Auria • Financial position and merger • Fixed line telecom experience allow us to participate operator in Finland in European consolidation • Full ownership • Build on or increase strength in the Nordic and Bal
Slide 15: Dividend proposal
Dividend proposal • Proposed dividend increase to SEK 1.00, consisting of an ordinary dividend of SEK 0.80 (0.40) and an extra dividend of SEK 0.20, reflecting the exceptionally strong cash flow • Financial strength maintained to take advantage of growth opportunities organically and by acquisitions
Slide 16: 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 17: Kim Ignatius, CFO
Kim Ignatius CFO February 11, 2004
Slide 18: Net sales change
Q4 2002 – Q4 2003 Net sales change SEK million • Net sales +0.5% Sales per market • Exchange rate negative effect of –2% • Acquisitions/divestitures positive effect of 1% International Carrier Eurasia Holding Auria acquisition, Strong growth Lower level of equipment sales internal sales Baltic count
Slide 19: Continued reduction of OPEX excl. non-recurring items -4.7%
Q4 2002 – Q4 2003 Continued reduction of OPEX excl. non-recurring items -4.7% SEK million Higher cost related to Restructuring Successful cost- Lower level of internal sales in 2002 of fixed cutting program internal sales, 14,590 centralized HQ -94 functions -362 227 124 -207 38 13,911 Auria acquisi
Slide 20: OPEX excl. non-recurring items reduced with SEK 4,440 million in 2003
Jan-Dec 2002 – Jan-Dec 2003 OPEX excl. non-recurring items reduced with SEK 4,440 million in 2003 SEK million Release of interconnect reserve, lower personnel and consultant expenses and lower internal sales 55,522 Restructuring Restructuring Lower level of internal -2,939 174 of fixed sales, centra
Slide 21: Strong EBITDA excl. non-recurring items growth +12%
Q4 2002 – Q4 2003 Strong EBITDA excl. non-recurring items growth +12% SEK million EBITDA per market Successful International Carrier restructuring Eurasia Holding Successful restructuring. 7,143 Baltic Positive earnings trend -69 countries throughout. 484 Denmark Strong marketing efforts, Norway pri
Slide 22: EBITDA excl. non-recurring items Q4 vs. Q3 seasonality
Q3 2003 – Q4 2003 EBITDA excl. non-recurring items Q4 vs. Q3 seasonality SEK million 7,915 Seasonal marketing Continued and interconnect improvement -516 -120 104 -72 -199 -45 46 30 7,143 Seasonally high cost Price decrease fixed, for marketing and seasonal marketing subcontractors EBITDA Sweden Fin
Slide 23: Synergies progressing faster than planned
Synergies progressing faster than planned Network Operations: Synergy savings from decisions to date • Phase out of overlapping functions Full run rate annual Effect SEK million effect (by 2005) in 2003 • Replace leased lines with own network • Common testing functions and systems OPEX Product and s
Slide 24: TeliaSonera Holding
TeliaSonera Holding • Some 30 holdings sold in whole or in part in 2003. Largest gains from ComHem, Bharti and Netia, largest losses from Metro One and Telia Mobile Finland. ComHem and Telia Mobile Finland not included in pro forma numbers. • Sale of Telia Finans in early 2004, cash inflow of SEK 6.
Slide 25: Income taxes 2003
Income taxes 2003 Nominal corporate tax rates in major countries below 30% • Sweden 28%, Finland 29% (proposal to 26% – no gov’t bill yet), Norway 28% Effective tax rate in 2003 was 30%, fourth quarter only 4% • Increased by non-deductible goodwill amortization and non-deductible write-downs • Decre
Slide 26: Strong cash flow – Strong financial position
Strong cash flow – Strong financial position SEK billion 38.1 -17.5 Dec 31, Dec 31, 2003 2002 +2.2 -6.5 Equity-to-assets ratio 57% 52% +1.9 18.2 Net debt-to-equity ratio 17% 36% Free cash flow yield 12% 7% Book return on equity 7% -31% Net debt Free cash Dividend Acquisitions Other (incl. Net debt D
Slide 27: The Nordic and Baltic telecommunications leader
The Nordic and Baltic telecommunications leader February 11, 2004