Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q3 2010 Earnings Presentation
19 slides from Telia Company AB's earnings presentation, November 2010
Slide 1: TeliaSonera January – September 2010
TeliaSonera January – September 2010 Lars Nyberg President and CEO 1 Improving growth and record earnings • Net sales SEK 26,754 million (27,053) – Increase of 4.3 percent, in local currencies and excl. acquisitions • EBITDA* SEK 9,776 million (9,763) – Highest EBITDA* so far, margin of 36.5 percent
Slide 2: Further improvement in net sales growth; Accelerated growth in Eurasia
Further improvement in net sales growth Net sales (SEK billion) and growth y/y* • Organic growth of 18% in Eurasia 30.0 5% 25.0 4% • Data growth in Nordic mobile markets 3% 20.0 • Highest gross intake ever for Yoigo, Spain 2% 15.0 1% 10.0 0% 5.0 -1% 0.0 -2% Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Slide 3: Gaining market share in Uzbekistan; Significant subscription growth in Nepal
Gaining market share in Uzbekistan Network coverage at time of acquisition Important milestones • Acquired in July, 2007 • Geographical coverage: 34% (21) • Population coverage: 84% (54) • Clear number 2 in Uzbekistan • Market share increased to 31 percent (12) Network coverage today Subscription de
Slide 4: Smart phones continue to dominate sales; Improving growth trends in Mobility Services
Smart phones continue to dominate sales % of handsets sold being Smart phones* Sweden Denmark Norway Finland 0% 20% 40% 60% 80% 100% Operating Systems 100% 75% Others 50% Android iPhone 25% 0% Jan 2010 Today * In own retail channels (Q3 2010) 7 Improving growth trends in Mobility Services • Net sale
Slide 5: Highest gross intake ever in Spain; Willingness to invest in Broadband Services
Highest gross intake ever in Spain Record number of gross adds in Q3 2010 • 82 percent revenue growth Subscriptions 500,000 • 60 percent growth in subscriptions 400,000 300,000 • ~4 percent market share 200,000 • EBITDA breakeven in Q4 2010 100,000 0 Q1 07 Q3 07 Q1 08 Q3 08 Q1 09 Q3 09 Q1 10 Q3 10 Y
Slide 6: TeliaSonera January – September 2010 (CFO)
TeliaSonera January – September 2010 Per-Arne Blomquist Executive Vice President and CFO 11 January – September 2010 • Net sales SEK 79,808 million (81,612) • Net sales in local currencies +3.4 percent • Addressable cost base** unchanged • EBITDA* SEK 27,953 million (27,627) • EBITDA* margin improve
Slide 7: Continued improvement in growth and margin; Cost development under control
Continued improvement in growth and margin Net sales growth* EBITDA margin** – 4 quarters rolling % % 5.0 38% 4.3 4.0 36% 3.4 34.5% 3.3 3.0 34% 2.5 34.3% 34.0% 2.0 32% 1.0 30% 0.0 28% Q1 10 Q2 10 Q3 10 Jan-Sep 10 Q1 10 Q2 10 Q3 10 * In local currencies and excluding acquisitions ** Excluding non-rec
Slide 8: Marketing explains cost increase; Higher income from associated companies
Marketing explains cost increase Addressable cost base SEK million • More than 2/3 of higher 8,000 marketing explained by increased marketing spending in Yoigo, Spain 7,750 7,500 7,250 7,000 6,750 Cost IT Marketing Other Personnel FX Telia Cost base Q3 Stofa base Q3 2009* 2010* * Addressable cost ba
Slide 9: Strong performance by MegaFon; MegaFon the leader in mobile data in Russia
Strong performance by MegaFon Income from associated companies SEK million 2,500 16% 2,000 23% 1,500 1,000 1% 500 0 Russia Turkey Total Q3 2009 Q3 2010 17 MegaFon the leader in mobile data in Russia Subscriber market share, % • 35 percent market share in mobile data revenues in Q2 2010 100% 16 17 18
Slide 10: Constantly reviewing our asset portfolio; Higher paid tax in the third quarter
Constantly reviewing our asset portfolio • Sale of Telia Stofa in Denmark to Ratos • Capital gain of SEK 831 million in Q3 2010 • Sale of shares (7.8%) in Digitel in the Philippines • Capital gain of SEK 67 million in Q3 2010 • Transferred from Eurasia to Other operations* • Write-down of SEK 678 mi
Slide 11: Lower FCF due to timing of dividends and taxes; EPS increased by 19 percent
Lower FCF due to timing of dividends and taxes Free cash flow, SEK million 7,000 6,000 5,000 4,000 3,000 2,000 Free cash EBITDA* Dividends Income Cash Other Free cash flow Q3 from ass taxes paid CAPEX flow Q3 2009 comp 2010 * EBITDA, excluding non-recurring items 21 EPS increased by 19 percent in Q3
Slide 12: EPS January-September 2010 +14%; Solid financial position
EPS January-September 2010 +14% Change per SEK million 2010 2009 share, SEK EBITDA* 29,358 27,627 +0.39 Depreciation and amortization* -10,249 -9,601 -0.14 Income from associated companies* 5,726 6,080 -0.08 Non-recurring items -111 -1,287 +0.26 Changes in fx-rates -840 -0.19 Operating income 23,884
Slide 13: Unchanged CAPEX-to-sales ratio; Outlook for 2010 (revised)
Unchanged CAPEX-to-sales ratio CAPEX-to-sales – Q3 2010 Group CAPEX-to-sales – 9 months 2010 24% 14% 21% 12% 18% 10% 15% 8% 12% 6% 9% 6% 4% 3% 2% 0% 0% Mobility Broadband Eurasia Group 2010e 9M 09 9M 10 • CAPEX-to-sales ratio of 11.0 • CAPEX-to-sales ratio of 11.4 (12.0) percent in Q3 2010 percent*,
Slide 14: Q&A; Strong financial key ratios
Q&A 27 Strong financial key ratios Sept 30, 2010 Dec 31, 2009 Return on equity* 17.6% 15.2% Return on capital employed* 16.9% 15.5% Equity/assets ratio 50.5% 49.1% Net debt/equity ratio 38.3% 34.9% Net Debt/EBITDA rate* multiple 1.29x 1.26x * Rolling 12 months, EBITDA excl. non-recurring items One o
Slide 15: Debt maturity schedule; Liquidity position TeliaSonera Group
Debt maturity schedule SEK million Debt Maturing next 12 months, September 30, 2010 3,000 2,500 2,000 1,500 1,000 500 0 10/10 11/10 12/10 01/11 02/11 03/11 04/11 05/11 06/11 07/11 08/11 09/11 SEK million Debt Portfolio Maturity Schedule, 2010 & onwards 10,000 8,000 6,000 4,000 2,000 0 -10 -11 -12 -1
Slide 16: TeliaSonera AB credit ratings (A3/A-); Organic revenue growth
TeliaSonera AB credit ratings (A3/A-) TeliaSonera AB long-term ratings migration history 2002-to-today AA 5 AA- 4 A+ 3 A 2 A- 1 0 Q1/ 0 2 Q4 / 0 2 Q1/ 0 3 Q4 / 0 3 Q4 / 0 4 Q1/ 0 5 Q4 / 0 5 Q4 / 0 6 Q4 - 0 7 Q4 - 0 8 Q4 - 0 9 Q2 - 10 Q3 - 10 Moody’s (A3/P-2) Standard & Poor’s (A-/A-2) • January 8, 2
Slide 17: Net sales and EBITDA by Business area
Net sales - Group and by Business area Jul – Sep Jul – Sep Change SEK million 2010 2009 % Mobility Services 12,959 12,631 3 Broadband Services 9,772 10,785 -9 Eurasia 4,288 3,706 16 Other operations 1,157 1,361 -15 The Group 26,754 27,053 -1 33 EBITDA* - Group and by Business area EBITDA* Jul - Sep
Slide 18: Statement of cash flows; Dividend policy
Statement of cash flows SEK million Q3 2010 Q3 2009 Diff EBITDA excluding non-recurring items 9,776 9,763 13 Dividends received from ass companies 0 1,169 -1,169 Interest paid (net) -238 -256 18 Income taxes paid -1,780 -791 -989 Payment of restructuring provisions -159 -298 139 Diff between paid/re
Slide 19: 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