Slide 1: Third Quarter Results 2008
Third Quarter Results 2008 24 October 2008
Slide 2: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 2 24.10.2008 Third Quarter Results 2008
Slide 3: CEO's review
CEO’s review Financial and operational highlights Review of the mobile and fixed network businesses Execution of the strategy Progress of 3G services Outlook for 2008 3 24.10.2008 Third Quarter Results 2008
Slide 4: Financial highlights
Financial highlights Q3 2008 HIGHLIGHTS Q3 2008 Q3 2007 Revenue € 374m € 394m EBITDA * € 129m € 132m Earnings per share € 0.33 € 0.45 Cash flow € 51m € 6m Net debt / EBITDA 1.7x 1.2x CAPEX € 42m € 44m * No one-off items 4 24.10.2008 Third Quarter Results 2008
Slide 5: Solid quarter, profitability improved
Solid quarter, profitability improved Q3 2008 HIGHLIGHTS Revenue €374m (394) Effect of lower interconnection and roaming fees € -15m compared to Q3 2007 EBITDA € 129m (132) Expected extra implementation costs of new billing and CRM system € 2m EBITDA margin 35% (33) Net debt increased to € 891m (646
Slide 6: Operational highlights
Operational highlights Q3 2008 HIGHLIGHTS Change Q3 2008 in Q3 2008 Mobile subscriptions 2,830,000 57,400 Fixed broadband 519,800 -3,200 subscriptions Mobile ARPU €26.4 -1.5% Mobile Churn 14.1% -0.8%-unit Mobile network usage, min* 1,498m +75m Active 3G data users 425,400 +51,600 * Outgoing minutes
Slide 7: 57,400 new mobile subscriptions
57,400 new mobile subscriptions Q3 2008 SEGMENT REVIEW, MOBILE BUSINESS Growth in customer base ARPU* and non-voice services Good progress in 3G, growth in mobile 29,9 30,1 broadband and prepaid subscriptions continued 26,8 26,4 25,9 Subscription base increased by 49,800 in Finland and 7,600 in Esto
Slide 8: Positive revenue trend continued in 2008
Positive revenue trend continued in 2008 Q3 2008 SEGMENT REVIEW, MOBILE BUSINESS Revenue EUR 237m (252) Revenue and EBITDA-% Increase in usage and subscriptions 252 253 Decrease in interconnection and roaming 237 fees 223 229 EBITDA EUR 74m (80), 31% of revenue (32) Extra implementation costs of bil
Slide 9: No major trend changes
No major trend changes Q3 2008 SEGMENT REVIEW, MOBILE BUSINESS ARPU Churn Usage 50 ARPU (€) and annualised churn (%) Outgoing traffic (million minutes) 1 600 45 1 400 40 35 1 200 30 25 1 000 20 800 15 10 600 5 0 400 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 08 08 1/
Slide 10: Growth in active mobile data users continued
Growth in active mobile data users continued Q3 2008 SEGMENT REVIEW, MOBILE BUSINESS Active 3G users Active GPRS users Number of active mobile data users in Elisa’s network (‘000) 790 789 740 703 701 668 627 595 526 490 425 398 374 326 282 249 198 173 153 112 72 19 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/0
Slide 11: Broadband growth taken by mobile
Broadband growth taken by mobile Q3 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Slight decrease in fixed Broadband subscriptions (‘000) broadband subscriptions Decrease 3,200 in Q3 2008 518 522 526 523 520 – Growth taken by mobile business Elisa the market leader Decrease in traditional subscription
Slide 12: Cost efficiency improves profitability
Cost efficiency improves profitability Q3 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue EUR 150m (157) Revenue and EBITDA-% Growth in corporate customers 162 Decrease in traditional analogue 157 156 155 150 EBITDA EUR 55m (54), 36% of revenue (34) Efficiency programs EBIT EUR 32m (31), 21% of
Slide 13: Elisa strategy
Elisa strategy STRATEGY EXECUTION New services and new markets 2005 – Strengthening market position in core markets 2003 – Integration of One Elisa 13 24.10.2008 Third Quarter Results 2008
Slide 14: Productivity improvement
Productivity improvement STRATEGY EXECUTION – INTEGRATION OF ONE ELISA • H2 cost saving programs • Extension of mini-laptop • Simplification of product implemented bundles portfolio in consumer unit • Regional IT systems • PC data card for UMTS900 • Streamlining of customer consolidation network del
Slide 15: 1.5 million 3G subscriptions
1.5 million 3G subscriptions STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Good growth in 3G services 3G subscriptions and services in Finland continued 3G subscription market 1465 (cumulative, '000), of which Significant amount of new subscriptions 1275 are 3G 3G service bundle market Strong g
Slide 16: Mobile broadband as volume product
Mobile broadband as volume product STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Strong growth in demand More than 270 3G/UMTS900 cities in the end of 2008 Speed 5 Mb/s Mini laptop with integrated 3G modem Elisa data security service Affordable price and small size For many customer segments 16
Slide 17: Self service concept to corporate customers
Self service concept to corporate customers STRATEGY EXECUTION – STRENGTHENING MARKET POSITION New My Elisa (“Oma Elisa”) also to corporate customers Excellent acceptance Already 850 enterprises as customers Growing demand for self service Almost one third of orders through My Elisa Almost one fourt
Slide 18: Outlook for 2008
Outlook for 2008 Competition remains challenging Focus on service competition Revenue slightly down from the 2007 level Lower volumes in terminal sales EBITDA excluding non-recurring items at the 2007 level Good profitability prospects for Q4 Extra implementation costs of the billing and CRM system
Slide 19: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 19 24.10.2008 Third Quarter Results 2008
Slide 20: Improvement in profitability
Improvement in profitability EUR million Q3/08 Q3/07 2007 Change Revenue 374 394 1 568 -20 Other operating income 2 5 21 -3 Operating expenses -247 -267 -1 090 +21 EBITDA 129 132 499 -3 EBITDA excluding one-offs 129 132 491 -3 EBITDA-% 35 % 33 % 32 % EBITDA-% excluding one-offs 35 % 33 % 31 % Deprec
Slide 21: Temporary billing and CRM system implementation costs will come to an end
Temporary billing and CRM system implementation costs will come to an end Temporary expenses Q1/2008: EUR 5m Q2/2008: EUR 4m Q3/2008: EUR 2m Q4/2008: Costs will come to an end IT costs External services Booked as normal expenses (not non-recurring) Arbitration proceedings ongoing with IBM 21 24.10.2
Slide 22: Revenue decreased through interconnection and fixed analogue business
Revenue decreased through interconnection and fixed analogue business Revenue, EUR million 10 3 14 Analogue lines Broadband, 1 and volumes Cable TV Termination Usage, and roaming subscriptions, devices 395 374 Q3/07 Fixed decrease Fixed growth Mobile decrease Mobile growth Q3/08 22 24.10.2008 Third
Slide 23: Total expenses decreased
Total expenses decreased 3Q 4Q 1Q 2Q 3Q 07 07 08 08 08 Materials Interconnection and termination 175 177 159 169 166 and services cost EUR 14m lower YoY Employee Extra CRM implementation benefit 38 51 45 42 32 expenses costs EUR 2m in Q3 Other Employee expenses continued operating 54 49 56 57 49 exp
Slide 24: CAPEX decreased 5% to EUR 42m
CAPEX decreased 5% to EUR 42m CAPEX / Sales 11% in Q3/08 CAPEX, EURm CAPEX includes 1 3G networks and services Backbone network 31 6 Q3 CAPEX by segments 11 Mobile EUR 25m 1 Fixed network EUR 17m 21 17 % 22 25 21 12 % 11 % 11 % 10 % 38 23 17 19 17 Q3/07 Q4/07 1Q/08 2Q/08 3Q/08 Fixed Line Shares 24 2
Slide 25: Cash Flow grew by EUR 46m to EUR 51m
Cash Flow grew by EUR 46m to EUR 51m EUR million Q3/2008 Q3/2007 2007 Change y-o-y EBITDA 129 132 499 -3 Change in receivables -5 -80 -116 75 Change in inventories 0 6 10 -6 Change in payables 2 15 7 -13 Change in NWC -3 -59 -99 56 Sale of Comptel shares 0 13 13 -13 Interest paid and received -15 -1
Slide 26: Cash Flow stable after billing being normalised
Cash Flow stable after billing being normalised Cash flow EUR 51m in Q3 Cash flow and operative cash flow, EURm 87 Change in net working capital 88 EUR -3m 74 Increase in receivables 69 EUR 5 m 66 Increase in payables EUR 2m 59 59 53 51 6 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 *) Operative cash flow = EBITDA
Slide 27: Solid performance continued in Estonia
Solid performance continued in Estonia Change in termination fees decreased revenue 39 % Subscriptions grew 29,800 YoY 33 % 32 % 36 % 36 % EUR million Q3/08 Q3/07 2007 Revenue 25,2 30,6 113 323 327 335 342 313 EBITDA 9,1 10,1 36 EBITDA-% 36% 33% 32% EBIT 6,9 7,4 25 EBIT-% 28% 24% 22% Capex 4 2 11 Q3
Slide 28: Capital structure within target range
Capital structure within target range Capital structure Balance sheet KPIs 2,1 Net debt / EBITDA 1,7 1) 2,2 Gearing 107% 1,7 Target setting 1,5 Net debt / EBITDA 1.5 – 2x 1,2 121 % Gearing 50 – 100% 109 % 107 % 71 % 65 % 955 898 891 738 646 Q3/07 Q4/07 Q1/08 Q2/08 Q3/08 1) Net Debt/ Q3/08 EBITDA*4 N
Slide 29: No refinancing needs expected in coming years
No refinancing needs expected in coming years Revolving Credit Facilities Bond and Bank loan maturities EUR 170m maturing June 2012 500 EUR 130m maturing November 2014 EUR 120m in use Q3/2008 400 10 Commercial Paper Programme 300 EUR 81m in use Full back up with RCF 200 300 226 100 30 10 10 10 10 36
Slide 30: 2008 EBITDA outlook is reiterated
2008 EBITDA outlook is reiterated Full year EBITDA excluding one-offs at the same level as 2007 Strong Q4/2008 EBITDA Improvement QoQ needed approx. EUR 13m in Q4/2008 Elisa’s competitiveness has improved markedly: customer service quality improved and strong growth in customer intake Sources for EB
Slide 31: Third Quarter Results 2008
Third Quarter Results 2008 24 October 2008
Slide 32: Consolidated Cash flow statement
APPENDIX SLIDE Consolidated Cash flow statement EUR million Q3 2008 Q2 2008 Q1 2008 Q4 2007 Q3 2007 Q2/2007 Q1/2007 Q4 2006 Q3 2006 Cash flow from operating activities Profit before tax 67 38 52 65 89 67 64 69 69 Adjustments to profit before tax 59 67 56 63 41 47 50 46 50 Change in working capital -
Slide 33: Financial situation
APPENDIX SLIDE Financial situation EUR Million 30 Sep 2008 30 Jun 2008 31 Mar 2008 31 Dec 2007 30 Sep 2007 Interest-bearing debt Bonds and notes 604 604 634 634 633 Commercial Paper 81 107 118 92 0 Loans from financial institutions 80 80 0 0 0 Financial leases 26 26 26 28 44 Committed credit line 1)