Sonera — FY2001 Earnings Presentation
27 slides from Sonera's earnings presentation, Feb 6, 2002
Slide 1: Financial Statements for 2001
Financial Statements for 2001 February 6, 2002 Q4 Report Febuary 6, 2002 / 1
Slide 2: Contents
Contents •Year 2001 in Brief, and Progress of Efficiency-Boosting Program Harri Koponen, President & CEO •Financial Statements as per Business, Financial Overview Kim Ignatius, CFO Q4 Report Febuary 6, 2002 / 2
Slide 3: Sonera's Year 2001 in Brief
Sonera’s Year 2001 in Brief • Growth continued in rapidly deteriorated market conditions: comparable revenues grew 8% and were EUR 2,187 million • Profitability improved: comparable EBITDA grew 12% and was EUR 562 million • Cash flow from operations strengthened in the second half • Net debt fell co
Slide 4: Goals of Efficiency-Boosting Program
Goals of Efficiency-Boosting Program 1. Capping investments in UMTS joint ventures 2. Radical scale-down of service businesses while retaining innovative strengths 3. Capitalize on best-of-breed Finnish Mobile business to develop capital-efficient transition to GPRS and UMTS for new growth 4. Improv
Slide 5: 1. Capping Investments in UMTS Joint Ventures
PROGRESS OF PROGRAM 1. Capping Investments in UMTS Joint Ventures • No additional investments to Germany Quam has launched subscription sales and GSM&GPRS service, 3G services are estimated to start in Q1/2003 • Contractual obligation of EUR 300 million in Spain unchanged Xfera’s market entry postpo
Slide 6: 2. Radical scale-down of service businesses while retaining innovative strengths
PROGRESS OF PROGRAM 2. Radical scale-down of service businesses while retaining innovative strengths Sonera zed: – Netherlands and Turkey closed down, US business to be sold or closed – Number of data centers reduced from five to two – Head office reduced and transferred from England to Finland – Ex
Slide 7: 3. Capitalize on best-of-breed Finnish Mobile business
PROGRESS OF PROGRAM 3. Capitalize on best-of-breed Finnish Mobile business to develop capital-efficient transition to GPRS and UMTS for new growth • Profitability of Domestic Mobile continued to improve, and capex fell considerably in 2001 • Sonera’s GPRS service covers the whole of Finland, the use
Slide 8: 4. Improve Overall Cash Flows from Operations
PROGRESS OF PROGRAM 4. Improve Overall Cash Flows from Operations • Cash flow from operations 91 grew to EUR 91 million in Q4 84 25 (3) Q1/2001 Q2/2001 Q3/2001 Q4/2001 Q4 Report Febuary 6, 2002 / 8
Slide 9: 5. Drive forward asset disposals, but avoid fire-sales
PROGRESS OF PROGRAM 5. Drive forward asset disposals, but avoid ”fire-sales” • With the proceeds of altogether EUR 703 million from the sales of Pannon and Deutsche Telekom shares in December - February Sonera will reduce its net debt • Sonera continues carefully considered disposals of non-core ass
Slide 10: 6. Remove Immediate Pressure on Balance Sheet
PROGRESS OF PROGRAM 6. Remove Immediate Pressure on Balance Sheet • Immediate pressure on balance sheet was removed by a successful EUR 1 billion Rights Offering in November 2001 • Balance sheet has been notably strengthened by the completed sales of the Pannon holding and the continued, successful
Slide 11: 7. Improve Customer Focus
PROGRESS OF PROGRAM 7. Improve Customer Focus • Comprehensive account responsibilities taken into use in the segment of key corporate customers • Unification of organization has started, three functional layers to be taken into use during the year: – Sales and Marketing – Products and Services – Pro
Slide 12: Outlook for Year 2002
Outlook for Year 2002 • No sure signs of revival of economical growth in market areas • Revenues are estimated to grow clearly slower than in the previous year • EBITDA loss from service businesses cut to EUR 50 million following the sale of profitable Info Communications • The Group’s comparable EB
Slide 13: Financial Statements as per Business Area, and Financial Overview
Financial Statements as per Business Area, and Financial Overview • Kim Ignatius Q4 Report Febuary 6, 2002 / 13
Slide 14: Consolidated Income Statement
Consolidated Income Statement EUR million 2001 2000 % Q4/2001 Q4/2000 Revenues 2,187 2,057 6 556 560 EBITDA 1,283 2,047 (37) 42 84 Operating profit 951 1,748 (46) (38) 9 • Comparable revenues were up 8% • Comparable EBITDA excluding non-recurring items rose 12% to EUR 562 million (501) • Comparable
Slide 15: Consolidated Income Statement (cont.)
Consolidated Income Statement (cont.) EUR million 2001 2000 % Q4/2001 Q4/2000 Equity income in associated (202) 121 - (67) 18 companies Net financial expenses (32) (9) 256 3 (3) Profit before extraordinary items and taxes 445 1,860 (76) (8) 24 Earnings per share 0.44 1.68 (74) 0.06 0.07 • Associated
Slide 16: Profitability of Business Areas: Mobile Communications Finland
Profitability of Business Areas Mobile Communications Finland EUR million 2001 2000 % Q4/2001 Q4/2000 Revenues 1,213 1,134 7 306 299 EBITDA 604 543 11 141 150 Operating profit 477 414 15 109 113 • Comparable revenue growth was 9% • Revenues from non-voice services grew by 29% to EUR 147 million • Pr
Slide 17: Profitability of Business Areas: Service Businesses
Profitability of Business Areas Service Businesses EUR million 2001 2000 % Q4/2001 Q4/2000 Revenues 321 254 26 88 74 EBITDA (337) (303) (11) (120) (127) Operating profit (384) (335) (15) (131) (131) • SmartTrust’s comparable revenues grew by 44% and totaled EUR 36 million (25) • Zed’s revenues tripl
Slide 18: Profitability of Business Areas: Sonera Telecom
Profitability of Business Areas Sonera Telecom EUR million 2001 2000 % Q4/2001 Q4/2000 Revenues 1,024 1,020 - 264 285 EBITDA 231 300 (23) 55 64 Operating profit 108 162 (33) 24 29 • Comparable revenues grew by 2% • Domestic voice revenues fell 10%, revenues from international calls grew 37%, total r
Slide 19: Associated Companies
Associated Companies EUR million Equity income Carrying value 2001 2000 2001 2G mobile associates (101) 147 926 3G mobile associates (79) (2) 3,583 Fixed network associates 35 38 591 Other associated companies 2 4 143 Goodwill amortization (59) (66) n/a Total (202) 121 5,243 • Sonera’s share of the
Slide 20: Carrying values of UMTS investments
Carrying values of UMTS investments • Sonera examines carrying values on a regular basis • Group 3G’s carrying value compared with cash flows determined on the basis of approved business plan • Analysis performed according to both Finnish and US practice (U.S. GAAP) • No grounds for write-downs • Ip
Slide 21: Group 3G's Business Plan
Group 3G’s Business Plan Basis of the new business plan: network infrastructure shared by two operators; six operators on the market •Cumulative Capex through 2010 approximately EUR 2.4 billion •EBITDA at breakeven in 2006 •Cumulative EBITDA losses to breakeven less than EUR 2 billion •Market share
Slide 22: Financial Income and Expenses
Financial Income and Expenses EUR million 2001 2000 Change Q4/2001 Q4/2000 Dividend income 14 21 (7) 2 - Interest income 183 82 101 44 52 Interest expense (279) (155) (124) (51) (78) Capitalized interest expense 52 20 32 12 14 Other fin. income and exp. 1 23 (22) - 13 Exchange gains (losses) (3) - (
Slide 23: Balance Sheet
Balance Sheet Dec 31, Dec 31, EUR million 2001 2000 Change Fixed assets 1,367 1,381 (14) Long-term investments 6,068 4,779 1,289 Inventories and current receivables 643 3,458 (2,815) Short-term investments 620 68 552 Cash and cash equivalents 96 88 8 Total 8,794 9,774 (980) Shareholders’ equity and
Slide 24: Financial Strategy 2002
Financial Strategy 2002 • Focus on long-term liquidity position (over 12 months) • Increasing financial flexibility • NO financial covenants, incl. rating covenants • Balancing the maturity schedule of the debt portfolio • Continuing stringent derivative policy Q4 Report Febuary 6, 2002 / 24
Slide 25: Liquidity (as of December 31, 2001)
Liquidity (as of December 31, 2001) Liquid funds EUR 212 million Undrawn long-term revolving credit facilities EUR 241 million DT shares + Pannon EUR 814 million + EUR 1,267 million Less loans falling due in 2002 EUR (1,418 million) Liquidity is further supported by non-committed limits and cash flo
Slide 26: Divestiture of 2G investments in the USA / divestiture of DT holding
Divestiture of 2G investments in the USA / divestiture of DT holding • Sonera’s aggregate investments in the GSM operators in the USA in 1998 through 2001 totaled about EUR 1,235 million • To date, Sonera’s proceeds about EUR 1,867 million; Sonera still owns about 19 million Deutsche Telekom shares
Slide 27: Net debt
Net debt • Current net debt EUR 2.8 billion (2.5 including the remaining DT shares) • Committed to solid investment grade credit rating (triple-B flat or higher) Rights Offering Sales of €1.0 billion Pannon and €4.5 billion DT shares, €703 million €3.5 billion Further asset €2.8 billion disposals an