Elisa Oyj Class A · OMXHEX:ELISA
Elisa Oyj Class A — Q2 2013 Earnings Presentation
32 slides from Elisa Oyj Class A's earnings presentation, Jul 12, 2013
Slide 1: 2nd Quarter Results 2013
Slide 2: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 3: CEO's review
CEO’s review • Q2 2013 financial and operational highlights • Segment review • Strategy execution • Outlook for 2013 3
Slide 4: Q2 2013 highlights
Q2 2013 highlights • PPO companies consolidated as of 1 May • Intense competition in mobile continued • Macro environment still challenging • Mobile subscription base continued to grow • Smartphone market continued to grow • Elisa Viihde IPTV success continued • Fixed broadband base increased marked
Slide 5: Revenue and EBITDA at last year's level
Q2 2013 financial highlights Revenue and EBITDA at last year’s level • Revenue €390m (389) • EBITDA €122m (122), 31% of 36 % revenue (31) 35 % 33 % 32 % 32 % 31 % 31 % 31 % • EBIT €69m (72) 30 % • EPS €0.30 (0,32) • CAPEX €47m (51), 12% of revenue 401 396 • Net debt €1,042m (909) 378 378 382 389 387
Slide 6: Growth in subscription bases
Q2 2013 operational highlights Growth in subscription bases • 19,700 new mobile subscriptions 4427 4446 4470 4490 • Growth in corporate segment, slight decrease in 4337 4158 4244 consumer segment 3991 4094 • Estonia +5,400 subscriptions • Strong growth in fixed broadband • Through PPO acquisition +5
Slide 7: Mobile usage up, churn down
Q2 2013 operational highlights Mobile usage up, churn down • Mobile data YoY growth +60% 1 790 1 804 1 797 1 768 1 754 1 755 1 747 1 741 1 707 • Outgoing minutes 1.74bn, slight increase 20,0 % 15,3 % 19,3 % 14,1 % 17,2 % 17,7 % • 570m SMS, YoY growth +2% 11,9 % 12,7 % 13,4 % • Churn* 17.7% (14.1) Q2
Slide 8: Business Segments
Business Segments 8
Slide 9: Q2 2013 Consumer Customers
Q2 2013 Consumer Customers Revenue and EBITDA at last year’s level • Revenue €239m (239) 35 % • Growth in new services 34 % 33 % • PPO acquisition 32 % 32 % 31 % 31 % 31 % • Decrease in traditional fixed network business, mobile 29 % usage and interconnection revenue • EBITDA €74m (74), 31% of reven
Slide 10: Q2 2013 Corporate Customers
Q2 2013 Corporate Customers Growth through ICT services and PPO • Revenue €151m (150) 37 % 36 % • Growth through ICT services and PPO acquisition 33 % • Decrease in traditional fixed network business and 32 % 32 % 32 % 32 % 32 % 32 % interconnection revenue • EBITDA €48 (48), 32% of revenue (32) 156
Slide 11: Strategy execution
Strategy execution Build value on data Accelerate new services businesses Improve performance with customer intimacy and operational excellence 11
Slide 12: Mobile data growth continues
Mobile data growth continues Penetration in Elisa’s network in Finland • Over one in three customers uses a 55,0 % 57,0 % new type of smartphone 50,0 % 52,5 % • Smartphones top the list of most 43,5 % 46,0 % sold phones in June 39,5 % 37,5 % 1. Nokia 301 (feature phone) 35,5 % 34,0 % 2. Samsung Gala
Slide 13: Security service enhanced
Security service enhanced • Security service to enable secure online banking connection • Security coverage for mobile devices and computer in one package • Cooperation with F-Secure 13
Slide 14: Exclusive rights to sell new smartphone
Exclusive rights to sell new smartphone • Huawei Ascend P6 smartphone presales with exclusive right • Thinnest smartphone at the moment • Will be launched in six countries in addition to Finland • Long-term cooperation with Huawei guaranteed exclusive right 14
Slide 15: HBO TV series to Elisa Viihde IPTV
HBO TV series to Elisa Viihde IPTV • HBO TV series to be available 24 hours after premiering in the US • Finnish subtitles • All new series in program library • Other Hollywood studios’ movies and series also provided • 70% of Elisa Viihde users watch TV series 15
Slide 16: New features in Elisa Wallet service
New features in Elisa Wallet service • Elisa ”money message” transfers payments to all mobile subscriptions • First payment service in Finland based on mobile number • Easy to use for small loans and repayments • Easy registration for service through Elisa Wallet message 16
Slide 17: Municipal service models have productivity potential
Municipal service models have productivity potential • Study results on how to improve municipal service models using technology show: • Significant need for reform in transaction services and municipal service solutions • Need for support-services in sparsely populated areas and reform tools for mo
Slide 18: Outlook for 2013
Outlook for 2013 • Macroeconomic environment still weak in 2013 • Competition remains challenging • Revenue at the same level or slightly higher than last year • EBITDA excluding one-offs at the same level as last year • CAPEX approximately 13% of revenue • PPO consolidation • Mid term target of max
Slide 19: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 20: Improvement from previous quarter
Improvement from previous quarter EUR million Q2/13 Q2/12 Δ 2) Δ% H1/13 H1/12 Δ 2) Δ% Revenue 390 389 1 0% 751 771 -20 -3 % Other operating income 1 1 1 2 Operating expenses -269 -269 -522 -530 EBITDA 1) 122 122 -0 0% 231 243 -12 -5 % EBITDA-% 31 % 31 % 31 % 32 % Depreciation and amortisation -53 -5
Slide 21: Good progress in efficiency improvements
Good progress in efficiency improvements Elisa well on track with accelerated cost efficiency measures in: • Streamlining product portfolio • Increasing efficiency in customer service • Improving sales efficiency • Simplification of IT • Decreasing costs in general administration Results in H2/13 an
Slide 22: Integration of PPO on track
Integration of PPO on track • PPO acquisition closed on 30 April Elisa Q2/13 PPO companies 1) • Consists of PPO-Yhtiöt 100%, Kymen Puhelin 49% and Telekarelia 67% EUR million • Acquiring minorities in Kymen Revenue 390 15 Puhelin and Telekarelia EBITDA 122 4 • Share exchange for minority shareholder
Slide 23: Revenue change
Revenue change Change Q2/13 vs Q2/12, EURm 389 390 5 -16 13 -1 - MTR reduction + PPO companies + PPO companies + Online services + ICT services + Fixed broadband - Estonia +/- Estonia - Mobile +/- Cable TV - PSTN - Mobile - PSTN Q2/12 Interconnection Equipment Consumer Corporate Q2/13 and roaming sa
Slide 24: Total expenses at previous year's level
Total expenses at previous year’s level Q2 Q3 Q4 Q1 Q2 • OPEX decreases in Q2/13 EURm 12 12 12 13 13 • Interconnection and roaming Materials and 164 163 171 146 155 • Productivity improvements services • network management and maintenance costs Employee • general administration benefit 61 53 62 64 6
Slide 25: CAPEX in line with guidance
CAPEX in line with guidance • Q2 CAPEX €47m (51) 20% 14% 13% 13% 13% 13% • CAPEX/Sales 12% (13) 12% 12% 12% 15% 11% • Consumer €25m (30) 10% • Corporate €22m (21) • Major CAPEX areas 5% • 3G and 4G coverage and upgrade 103 0% • Fixed access and backbone networks -5% • IT systems • Customer equipment
Slide 26: Cash flow
Cash flow EUR million Q2/13 Q2/12 Δ1) H1/13 H1/12 Δ1) 2012 EBITDA 122 122 0 231 243 -12 501 Change in receivables 3 22 -18 11 24 -13 -14 Change in inventories 3 0 3 5 -7 12 -19 Change in payables -7 -16 9 -7 -25 18 -16 Change in NWC 0 6 -6 9 -9 18 -50 Financials (net) -2 -2 0 -13 -21 8 -30 Taxes for
Slide 27: MTR cuts effected Estonian revenue
MTR cuts effected Estonian revenue • Revenue €24m (28) 30 % • Revenue decrease 15% 28 % 27 % 27 % 27 % MTR decrease 79% 26 % • 25 % 26 % 23 % • Growth in mobile subs: +5 400 QoQ • Mobile broadband growing • EBITDA €7m (8) • MTR decrease 30 29 27 28 26 26 • CAPEX 3m (1) 25 21 24 • 3G Coverage 1 Jan 1
Slide 28: Liquidity position remained good
Liquidity position remained good Bond and bank loan maturities • Cash and undrawn committed facilities €170m (364) • Revolving Credit Facilities €300m • EUR 171m in use as 30 June 130 • EUR 170m RCF was extended by 2 years to 2018 • Commercial Paper Program 10 300 170 • €203.5m in use as 30 June • S
Slide 29: Net debt peaked in Q2
Net debt peaked in Q2 • Capital structure • Net debt / EBITDA 2.1 2,1 • Gearing 137% 1,8 • Equity ratio 36% 1,7 1,7 1,7 1,7 1,6 1,6 • Increase in net debt and net 1,5 debt/EBITDA in Q2 • Dividend payment EUR 203m • PPO Acquisition EUR 103m 1 042 • Target setting 845 793 788 754 909 874 839 807 • Net
Slide 30: Appendix
Slide 31: Consolidated cash flow statement
APPENDIX SLIDE Consolidated cash flow statement EUR million Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2011 Cash flow from operating activities Profit before tax 63 53 64 78 66 61 72 74 61 Adjustments to profit before tax 54 55 58 54 55 59 58 61 61 Change in working capital 0
Slide 32: Financial situation
APPENDIX SLIDE Financial situation EUR million 30 Jun 12 31 Mar 13 31 Dec 12 30 Sep 12 30 Jun 12 31 Mar 12 31 Dec 11 30 Sep 11 30 Jun 11 Interest-bearing debt Bonds and notes 451 450 525 375 375 375 375 375 600 Commercial Papers 204 179 96 170 198 184 189 160 160 Loans from financial institutions 22