Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q1 2007 Earnings Presentation
29 slides from Telia Company AB's earnings presentation, April 2007
Slide 1: Interim Report January - March, 2007
Interim Report January - March, 2007 Anders Igel President and CEO
Slide 2: TeliaSonera group: Strong sales and net income but margin dip in Broadband
TeliaSonera group Strong sales and net income but margin dip in Broadband SEK million 21,979 22,724 Jan-Mar, 2007 • Net sales in local currencies +5% • Strong development in Mobility and Eurasia but margin drop in Broadband • Additional efficiency measures needed on top of the ongoing efficiency pro
Slide 3: More than 100,000,000 customers in total
More than 100,000,000 Million subscriptions customers in total 100,158 84,432 Associated 69,185 companies 55,285 Majority-owned 29,147 30,973 operations Mar 2006 Mar 2007 3
Slide 4: Mobility Services: Good development of sales and profitability
Mobility Services Good development of sales and profitability SEK million 10,391 Jan-Mar, 2007 9,971 + 6% growth in local currencies + Improving margins, especially in Finland + Yoigo, 100,000 customers + Usage increase Scope: Personal mobility services Target for consumer and enterprise mass market
Slide 5: Positive mobile usage trend
Positive mobile usage trend Minutes % 200 30 ■ Mobile minutes of use 179 Average per month and customer (Group) 25 180 20 173 16% 160 163 15 13% 10 11% 140 ■ Non voice percentage of ARPU 5 (Group) 120 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2005 2006 2007 5
Slide 6: Broadband Services: Growth initiatives and fixed voice migration affected margins
Broadband Services Growth initiatives and fixed voice migration affected margins SEK million 10,195 Jan-Mar, 2007 10,206 + IPTV exceeds expectations - Efficiency improvements not sufficient to offset fixed voice decline Target • Exploit triple play services and migrate services • High broadband grow
Slide 7: Communications services life cycle
Communications services life cycle Traditional services Services with strong future… Sales Sales Cost Cost 0 7
Slide 8: Integrated Enterprise Services: Laying the foundation for future growth
Integrated Enterprise Services Laying the foundation for future growth SEK million In focus 3,250 3,259 Jan-Mar, 2007 • Industrialize solutions + Acquisition of Cygate • Grow the business + Strong position among • Improve efficiency multinational customers • Complementary - Margins below peer group
Slide 9: Integrated Enterprise Services
Integrated Enterprise Services Consultation Systems integration and migration to IP solutions Service desk (single point of contact) End to end management (service guarantees) Security solutions Call Center management Telecom/IT infrastructure applications (voice, e-mail etc) Managed work stations/d
Slide 10: Integrated Enterprise Services
Integrated Enterprise Services • Adapted solutions and Systems integration for larger demanding customers (relationship selling) • Modular standard solutions for broader market (sales force) • Standard packages solutions to SME segment (distribution channels) 10
Slide 11: Eurasia: Continued strong growth and profitability
Eurasia Continued strong growth and profitability SEK million 2,065 Jan-Mar, 2007 2,274 MegaFon (43.8% holding) 1,870 • Effect on Operating income SEK 773 million (437) 1,827 Turkcell (37.3% holding) • Effect on Operating income SEK 664 million (569) Target • Penetration growth • Enhanced shareholde
Slide 12: Outlook
Outlook Net Sales expected to continue to grow, reaching the target of approx. SEK 100 billion during 2008 with maintained good profitability Efficiency Measures to be implemented during the rest of 2007 from the ongoing programs in Sweden and Finland are estimated to give an annual gross savings ef
Slide 13: Anders Bruse
Anders Bruse President Business Area Broadband Services
Slide 14: Kim Ignatius
Kim Ignatius Executive Vice President and Chief Financial Officer
Slide 15: New versus old reporting structure
New versus old reporting structure
Slide 16: New versus old reporting structure - FY 2006
New versus old reporting structure - FY 2006 • Integrated Enterprise Services, acts as a distributor to Mobility and Broadband for mass market services to selected corporate customers • Wholesale and international carrier businesses reported as a separate unit • Mobile terminal sales move to Mobilit
Slide 17: Internal sales flows – New structure
Internal sales flows – New structure Broadband Mainly mobile interconnect Mobility Services Services Integrated Enterprise Mobile services Services Mainly fixed interconnect and Mobility transmission capacity Services Broadband Services Integrated Enterprise Fixed voice, Internet and data services S
Slide 18: January-March, 2007
January-March, 2007
Slide 19: Key Financials – Income Statement and Cash Flow
Key Financials – Income Statement and Cash Flow SEK million Jan - Mar 2007 Jan - Mar 2006 Net sales 22,724 21,979 Gross income 10,181 10,350 Margin (%) 44.8 47.1 EBITDA excl. non-recurring items 7,583 7,816 Margin (%) 33.4 35.6 Operating income excl. non-recurring items 6,191 6,129 Margin (%) 27.2 2
Slide 20: Q1 2007 Net Sales +3.4%
Q1 2007 Net Sales +3.4% SEK million • Declining internal trade due to volume decline for traditional fixed services • Acquisition of Cygate, +115 MSEK • Price decline and migration from traditional data services to IP put pressure sales to large corporate customers +132 +195 +420 -11 +9 22,724 • Con
Slide 21: Q1 2007 Operating Income Year-on-Year
Q1 2007 Operating Income Year-on-Year SEK million • Net sales +420 MSEK • Reversal of interconnect provision in Sweden +140 MSEK • Lower interconnect and sales and marketing costs in Finland • Russia +336 MSEK, includes capital gain +100 MSEK • Start-up activities in Spain –319 MSEK EBITDA • Turkey
Slide 22: Q1 2007 Net Sales Compared to Q4 2006
Q1 2007 Net Sales Compared to Q4 2006 SEK million • Seasonal decrease (high revenue for • Seasonality and declining internal trade equipment and installation in Q4) offset due to volume decline for traditional by the acquisition of Cygate fixed services -16 -301 23,187 -39 -224 +117 22,724 • Seasona
Slide 23: Q1 2007 Operating Income vs Q4 2006
Q1 2007 Operating Income vs Q4 2006 SEK million • Reversal of interconnect provision net +60 MSEK • Lower sales (seasonality) • Restructuring costs • Provision for pensions +138 -286 -45 -135 +15 -130 6,504 6,191 6,061 • Lower fixed voice sales • Higher release of provisions for interconnect in Swed
Slide 24: Cost efficiency programs
Cost efficiency programs • Responsibilities of the ongoing programs in Sweden and Finland are divided between respective business areas – Measures to be implemented during the rest of 2007 are est. to give annual gross savings effect of approx. SEK 2.3 billion with full effect as of 2008 – Restructu
Slide 25: Statement of cash flows
Statement of cash flows SEK million Jan-Mar 2007 Jan-Mar 2006 EBITDA excluding non-recurring items 7,583 7,816 Dividends received from associated companies 530 663 Income taxes paid -1,900 -840 Payment of restructuring provisions -113 -262 Difference between paid/recorded pensions 243 82 Changes in
Slide 26: Strong financial position and cash flow generation
Strong financial position and cash flow generation SEK billion 57.8 3.4 3.4 10.6 10.6 2.6 2.6 15.0 2.5 0.1 12.9 28.3 0.5 Net debt Free Net cash Other Net debt Proposed ordinary Pension Operating Contingencies, Adjusted Dec 31, cash paid for Mar 31, and extraordinary obligation leases* blocked cash n
Slide 27: Strong financial key ratios
Strong financial key ratios Mar 31, 2007 Dec 31, 2006 Return on equity* 16.3% 17.2% Return on capital employed* 18.6% 19.5% Equity/asset ratio 48.9% 49.9% Net debt/equity ratio 12.1% 15.0% * Rolling 12 months High yielding share 27
Slide 28: 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 29: Slide 29