Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q2 2013 Earnings Presentation
21 slides from Telia Company AB's earnings presentation, July 2013
Slide 1: Interim Report January-June 2013
Interim Report January-June, 2013 Per-Arne Blomquist President and CEO 1 Highlights second quarter 2013 • Positive organic growth and improved margins • Further reduction in addressable cost base from efficiency measures • New pricing models launched in additional markets to monetize on mobile data
Slide 2: Improved balance between net sales and OPEX; Stronger margin development
Improved balance between net sales and OPEX Net sales and addressable cost base* 8% 6% 4% 2% 0% -2% -4% -6% -8% Net sales Addressable cost base 2007 2008 2009 2010 2011 2012 Q1 13 Q2 13 * In local currencies , excluding acquisitions and disposals 3 Stronger margin development EBITDA margin, change Y
Slide 3: Easing pressure on billed revenues in Mobility; New price models
Easing pressure on billed revenues in Mobility Volume Revenue Billed revenues*, change y/y (%) Q2 2013 y/y** y/y** 6% Voice 5% -11% 4% Messaging -9% -6% 2% Mobile data 64% 22% 0% Billed revenues -1.1% -2% -4% -6% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Mobility Services, excl. Sp
Slide 4: Significant expansion of 4G network in Sweden; 4G across the group
Significant expansion of 4G network in Sweden • Our target for 4G is 99 percent population coverage by 2014 and 92 percent geographic coverage by 2015 • Further expansion of 3G network • Existing 2G/3G infrastructure utilized to ensure cost efficient 4G roll-out 2 / 3 / 4G coverage by 2015 7 High am
Slide 5: Strong consumer demand for fiber; High speed data networks
Strong consumer demand for fiber Fiber subscriptions* (‘000) • Regained momentum 800 for fiber deployment 700 600 • In Sweden, demand currently 500 exceeds our ability to deliver 400 300 • Selective acquisitions of fiber 200 networks in our home markets 100 0 Q2 08 Q2 09 Q2 10 Q2 11 Q2 12 Q2 13 Grou
Slide 6: Data important contributor to growth in Eurasia; Efficiency measures
Data important contributor to growth in Eurasia • Data revenue growth of 57 percent, explaining more than one third of total revenue growth of 14 percent • Average smartphone penetration around 13 percent • Usage-based pricing Data revenue growth* Data share of revenue Tcell 119% Kcell 14% Ucell 106
Slide 7: Further progress within sustainability; Summary
Further progress within sustainability • Continued focus on key priorities – Freedom of expression and privacy, anti-corruption and sustainable supply chain management • Implementation of Industry Dialogue principles • Anti-corruption work continues by further developing instructions and controls •
Slide 8: Outlook for 2013 – Unchanged
Outlook for 2013 – Unchanged Outlook 6M 2013 Net sales* Flat -0.3% Increase slightly EBITDA margin** 35.0% (34.5% 2012) CAPEX-to-sales Around 14% 11.9% ratio*** * In local currencies, excluding acquisitions and disposals ** Excluding non-recurring items *** Excluding license and spectrum fees 15 Int
Slide 9: Second quarter summary; Continued currency headwind
Second quarter summary • Net sales SEK 25,274 million (26,294) – Increase of 0.4 percent in local FX, excl. acquisitions and disposals • EBITDA* SEK 8,928 million (9,034) – Increase of 3.3 percent in local FX • EBITDA margin* 35.3 percent (34.4) • Earnings per share SEK 0.93 (1.12) • Free cash flow
Slide 10: All areas contribute to sequential improvement; Reduced interconnect in Mobility
All areas contribute to sequential improvement Net sales split and Net sales growth* y-o-y +0.4% -0.9% +14.3% +13.6% -5.1% -3.6% -2.7% -1.8% Q1 2012 Q1 2013 Q2 2012 Q2 2013 Mobility Broadband Eurasia * In local currencies, excluding acquisitions and disposals 19 Major impact from reduced interconnec
Slide 11: Revenue pressure in Broadband Services; Strong growth in Eurasia
Revenue pressure in Broadband Services Broadband Services – net sales growth* y-o-y • Continued decline in traditional fixed line revenues Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 • Sequential improvement -0.3% explained by International -0.8% Carrier and fiber deployment • Challenging conditions in -2.4
Slide 12: Stable gross margin; Lowering the cost base by SEK 2 billion
Stable gross margin Gross margin* % 66 65 64 63 62 61 60 59 58 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 10 11 11 11 11 12 12 12 12 13 13 Gross margin, quarter Gross margin, 4 quarter rolling * Excluding non-recurring items 23 Lowering the cost base by SEK 2 billion Addressable cost base target* • Savings of
Slide 13: Better balance between sales and OPEX growth; Stronger margins
Better balance between sales and OPEX growth • All areas delivered improved performance in the quarter • Mobility Services and Eurasia continue to have a positive balance • The cost base in Broadband Services declined Mobility* Broadband* Eurasia* 10% 5% 25% 5% 20% 0% 15% 0% -5% 10% -5% 5% -10% -10%
Slide 14: Reduced CAPEX-to-sales in all areas; Improved Free Cash Flow
Reduced CAPEX-to-sales in all areas • Improved control and more active planning CAPEX-to-sales ratio* CAPEX-to-sales ratio* 40% 20% 16.2% 35% 13.2% 14.6% 14.0% 30% 15% 11.9% 25% 18.4% 10% 20% 13.2% 15% 8.3% 5% 10% 5% 0% 0% Q2 12 Q2 13 2012 2013 6M 2013e Mobility Services Broadband Services Eurasia Q
Slide 15: Higher net debt following dividend payment; Net debt to EBITDA
Higher net debt following dividend payment Net debt • Net debt increased to SEK billion SEK 66.2 billion +2.8 66.2 +12.3 +0.6 • SEK 2.8 billion increase in ‘FX & other’ mainly explained 55.3 by currency impact on EUR +3.3 denominated debt due to -0.4 depreciation of SEK during -7.8 the second quarte
Slide 16: Outlook for 2013 – Unchanged
Outlook for 2013 – Unchanged Outlook 6M 2013 Net sales* Flat -0.3% Increase slightly EBITDA margin** 35.0% (34.5% 2012) CAPEX-to-sales Around 14% 11.9% ratio*** * In local currencies, excluding acquisitions and disposals** Excluding non-recurring items *** Exclluding license and spectrum fees 31 32
Slide 17: Earnings per share; Debt maturity schedule
Earnings per share EPS, SEK +0.04 1.12 +0.02 +0.05 0.00 0.93 -0.24 -0.04 -0.03 Q2 Operat. Ass Non- FX Net fin Taxes Min int Q2 2012 comp rec 2013 items 33 MMO Debt maturity schedule Debt Maturing next 12 months – June 30, 2013 SEK billion 6 5 4 Debt per Q2 2013 3 • Gross debt SEK 86.5 bn 2 • Net deb
Slide 18: Organic revenue growth Q2 2013; Statement of cash flows
Organic revenue growth Q2 2013 of which Revenue growth (%) Reported of which acquisitions of which Q2 2013 growth currency and organic disposals Mobility Services -4.5 -2.7 - -1.8 Broadband Services -8.1 -1.6 -2.9 -3.6 Eurasia +5.4 -9.3 +0.4 +14.3 The Group -3.9 -3.4 -0.9 +0.4 35 Statement of cash f
Slide 19: Financial key ratios; Liquidity position
Financial key ratios Jun 30, 2013 Dec 31, 2012 Return on equity* 20.1 20.5% Return on capital employed* 15.3 14.9% Equity/assets ratio 41.2 38.2% Net debt/equity ratio 66.0 61.4% Net Debt/EBITDA rate* multiple 1.85 1.64 Net Debt/assets ratio 27.2 23.5 * Rolling 12 months 37 Liquidity position TeliaS
Slide 20: Credit ratings (A3/A-); Dividend policy
TeliaSonera AB credit ratings (A3/A-) TeliaSonera AB long-term ratings migration history 2002-to-today 5 AA 4 AA- A+3 A2 A- 1 0 Q1-02 Q4-04 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4- 12 Moody’s (A3/P-2) Standard & Poor’s (A-/A-2) • January 8, 2003, lowered long-term • February 5, 2003, lowered long-term debt
Slide 21: 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