Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q2 2006 Earnings Presentation
26 slides from Telia Company AB's earnings presentation, July 2006
Slide 1: Interim report January-June 2006
Interim report January-June 2006
Slide 2: Interim report January-June 2006 - Anders Igel, President and CEO
Interim report January-June 2006 Anders Igel President and CEO
Slide 3: Record result SEK 6.3 billion in Q2
Record result SEK 6.3 billion in Q2 SEK million • Growth 4.5% 25,000 • EBITDA1 margin 22,737 35% (33) 20,000 Net Sales • EPS 0.94 (0.44) 15,000 10,000 6,316 5,000 Operating income excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03 03 03 03 04 04 04 04 05 05 05 05 06
Slide 4: 40% improvement of Operating income
40% improvement of Operating income SEK million +740 +104 +280 6,316 +184 +139 +286 +364 4,385 -166 Operating Sweden Finland Norway Denmark Baltic Eurasia Russia & Other Operating income excl. countries Turkey income excl. non- non- recurring recurring Q2 2005 Q2 2006 4
Slide 5: Sweden - Continued strong mobile and broadband volume growth
Sweden - Continued strong mobile and broadband volume growth but earnings in fixed lower as restructuring did not compensate sales decline SEK million + Customer intake 14,000 + Reasonable margins - Not yet sales increase 12,000 10,000 9,208 8,000 Net Sales 6,000 4,000 2,392 2,000 Operating income e
Slide 6: Finland - Good margin development
Finland - Good margin development SEK million + Turn around progress 6,000 - Margin improvement takes time 5,000 4,171 4,000 Net Sales 3,000 2,000 418 1,000 Operating income excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03 03 03 03 04 04 04 04 05 05 05 05 06 06 20
Slide 7: Norway - Continued strong development
Norway - Continued strong development SEK million + Chess integration/ 3,000 synergies + NextGenTel acquisition 2,500 2,389 2,000 Net Sales 1,500 1,000 732 500 Operating income excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03 03 03 03 04 04 04 04 05 05 05 05 06 06
Slide 8: Denmark - Improved profitability
Denmark - Improved profitability SEK million + Orange integration/ 1,938 2,000 synergies - Margin improvement Net Sales 1,500 takes time 1,000 500 Operating income 115 excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -500 -1,000 2002 2003 2004 2005 2006 8
Slide 9: The Baltics - Continued good development and increased marketing
The Baltics - Continued good development and increased marketing activities SEK million + Sales increase 3,000 + Compensation for 2,507 fixed voice decline 2,500 Net Sales 2,000 1,500 1,000 765 500 Operating income excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 03
Slide 10: Spanish mobile opportunity
Spanish mobile opportunity Mobile market in Spain + Robust business case EUR million 5,000 + Benchmark low cost Total quarterly sales + Sharp business focus 4,000 + 3G license/2G roaming 3,000 2,000 • Yearly growth rate 10% 1,000 • Churn: ~20% (~8 million subs.) 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Slide 11: International Mobile – Continued strong growth and profitability
International Mobile – Continued strong growth and profitability + Profit development SEK million 2,500 2,010 2,000 1,500 1,000 Operating income 500 excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 -500 -1,000 2002 2003 2004 2005 2006 11
Slide 12: Summary
Summary Strong performance continued in Q2 • Close to 5% growth • Result from operations increased more than 40% to new record of SEK 6.3 billion • Two acquisitions utilizing strengths of current operations – NextGenTel – Spanish mobile 12
Slide 13: Interim report January-June 2006 - Kim Ignatius, CFO
Interim report January-June 2006 Kim Ignatius Executive Vice President and Chief Financial Officer
Slide 14: Key financials – Income statement and Cash flow
Key financials – Income statement and Cash flow SEK million Apr - Jun 2006 Apr − Jun 2005 Net sales 22,737 21,752 EBITDA excl. non-recurring items 7,928 7,200 Margin (%) 34.9 33.1 Operating income excl. non-recurring items 6,316 4,385 Margin (%) 27.8 20.2 Net income1 4,213 2,023 Earnings per share2
Slide 15: Q2 2006 Net sales +4.5%
Q2 2006 Net sales +4.5% SEK million • Acquisition of Chess approx. +330 • Strong growth in mobile +170 MSEK MSEK and NextGenTel +74 MSEK and broadband +40 MSEK • Customer base and usage increased +583 +84 +215 +221 +604 22,737 -125 21,752 -597 • Mobile customer base Strong customer growth, and usage
Slide 16: Q2 2006 Operating income year-on-year
Q2 2006 Operating income year-on-year SEK million • Net sales • Russia - strong sales and growth earnings growth, non operative • Lower net sales -597 MSEK • Lower gains 342 MSEK • OPEX development depreciation − Restructuring effects +500 MSEK • Turkey – strong earnings growth − Lower storm costs +
Slide 17: Q2 2006 Net sales compared to Q1 2006
Q2 2006 Net sales compared to Q1 2006 SEK million Increased usage in mobile Customer growth +64 +170 +177 +158 +260 -48 -23 Customer base and 21,979 usage increased 22,737 • Higher ARPU and seasonality • Acquisition of NextGenTel • Mobile sales +110 MSEK (handsets and price increases) • Equipment sa
Slide 18: Q2 2006 Operating income vs Q1 2006
Q2 2006 Operating income vs Q1 2006 SEK million Sales growth Higher results in minor holdings Higher sales and higher Higher sales but EBITDA margin lower margins Mainly restructuring costs in Sweden and Finland +116 +13 +156 +52 +125 +151 +183 6,316 -137 6,129 • Russia – non 6,179 -609 Higher sales
Slide 19: Competitive Cost Level programs
Competitive Cost Level programs Sweden • Program proceeds as planned – Realized cost savings est. 600 MSEK in Q2 2006 est. to reduce – Est. annual savings effect 2.4 GSEK as of Q2 2006 from measures taken annual costs by by end of Q1 2006 SEK 4-5 billion – 1,651 employees of approx. 3,000 in transit
Slide 20: Statement of cash flows
Statement of cash flows Apr-Jun 2006 Apr-Jun 2005 SEK million EBITDA excluding non-recurring items 7,928 7,200 Dividends received from associated companies 447 456 Income taxes paid -1,096 -300 Payment of restructuring provisions -395 -145 Difference between paid/recorded pensions 170 662 Changes in
Slide 21: Strong financial position
Strong financial position SEK billion Jun 30, 2006 Dec 31, 2005 4.1 23.6 1.3 Return on equity* 13.0% 10.3% 15.7 Return on capital employed* 15.0% 12.6% 8.9 8.4 Equity/asset ratio 61.0% 58.9% 0.5 Net debt/equity 3.5 ratio 20.0% 7.0% * Rolling 12 months Net debt Free Net cash Net debt in Net debt Dec
Slide 22: Q2 effect of Xfera acquisition
Q2 effect of Xfera acquisition • In line with strategy to exploit opportunities where strengths of current operations can be profitably utilized • An earn-out model has been agreed with the selling shareholders and put/calls options between the existing shareholders • Consolidated as of June 14 (fai
Slide 23: Q2 effect of NextGenTel acquisition
Q2 effect of NextGenTel acquisition • Strengthens our Nordic offering and broadens our presence in Norway • Consolidated as of June 1 – With no minority interest, as TeliaSonera effectively controls 100% after announcing the compulsory acquisition of remaining shares – Net sales contribution SEK 74
Slide 24: Group outlook 2006 – unchanged
Group outlook 2006 – unchanged • Group net sales expected to grow • Results before tax expected to grow • CAPEX to Sales ratio - somewhat higher than for 2005 • Free cash flow expected to remain strong Home markets • Continued migration from fixed voice to mobile and IP • Continued strong competitio
Slide 25: 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 26: The Nordic and Baltic telecommunications Seals TeliaSonera
The Nordic and Baltic telecommunications Seals TeliaSonera