Telia Company Ab · OMXSTO:TELIA
Telia Company Ab — TeliaSonera — Investor Day (September 2009)
47 slides from Telia Company Ab's investor day presentation, Sep 7, 2009
Slide 1: TeliaSonera Investor Day 2009
1 TeliaSonera Investor Day 2009 September 7, Stockholm 1 Lars Nyberg President and CEO 2
Slide 2: Group Management
2 Group Management President & CEO Lars Nyberg CFO Legal Affairs Per-Arne Blomquist Jan Henrik Ahrnell HR Communications Karin Eliasson Cecilia Edström CIO Åke Södermark Mobility Broadband Eurasia Services Services Kenneth Karlberg Håkan Dahlström Tero Kivisaari Sales division Business Services Sver
Slide 3: From 1G to 4G in less than 30 years
3 From 1G to 4G in less than 30 years 4G 100Mbit/s ta Da IP – 3G up to 14.4 Mbit/s AP W Digital – GSM/GPRS from 9.6 kbps e ic Vo Analogue – NMT 5 Data traffic is increasing more than customers Mobile data traffic and customers TeliaSonera Mobility Services (Nordics and Baltics) Megabytes (‘000) 3,50
Slide 4: Appetite for bandwidth is unlimited
4 Appetite for bandwidth is unlimited • This has two consequences 7 Fixed network remains competitive Global MOBILE traffic Global FIXED traffic (ExaByte/month) (ExaByte/month) 2.5 100 Residential 2.0 80 Unicast TV Handheld data traffic 1.5 60 Residential Laptop Internet data traffic Business 1.0 40
Slide 5: Strong growth in new services
5 Strong growth in new services 532,000 134,000 video-on- 1/3 of revenues in IPTV subscribers demand movies* Broadband IP based Digital-TV * Sweden, July 2009 9 The second consequence is that… • The pricing model will evolve from voice based to capacity based pricing Heavy usage Medium usage Entry 1
Slide 6: Our focus areas
6 Our focus areas • World class service company • Quality in networks • Cost efficiency 11 Technological leadership • At the forefront of introducing new technology – 4G services in Stockholm and Oslo – 3G services in Eurasia – IPTV in the Nordics and Baltics 12
Slide 7: Different strategy in different markets
7 Different strategy in different markets Nordics and Baltics Eurasia • Strong growth in mobile data • Increasing mobile penetration • Migration to IP-based • Low fixed line penetration services • New value added services • Focus on margins and cash flow • Mobile broadband opportunity Net sales and
Slide 8: Strong performance despite weak macro
8 Strong performance despite weak macro Organic revenue growth OPEX development – H1 2009 SEK million – Group 0.5% 20,000 0.0% -4% 15,000 -0.5% 10,000 -1.0% -1.5% 5,000 -2.0% TeliaSonera European 0 average* H1 2008 H1 2009 • Organic revenue growth • From gross to net savings. above European average
Slide 9: Strong development in Turkey and Russia
9 Strong development in Turkey and Russia Turkcell (37.3%) – Turkey Megafon (43.8%) – Russia • Leading mobile operator • Third largest mobile operator • 36.3 million subscribers* • 45.6 million subscribers* • TeliaSonera owners since 1993 • TeliaSonera owners since 1994 • Ambition to control and the
Slide 10: Access - an attractive business
10 Access - an attractive business • Unlimited demand for bandwidth • TeliaSonera number one or two in each market • Deliver on our focus areas – World class service company – Quality in networks – Cost efficiency • At the forefront of introducing new technology • Develop our business model to meet
Slide 11: Different patterns in different markets
11 Different patterns in different markets Mobile revenue growth, Mobile revenue growth, local currency local currency 15% 9% 10% 7% 5% 5% 0% 3% -5% Sweden -10% 1% -15% -1% Estonia -20% Latvia -3% -25% Lithuania -5% -30% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 • In Sw
Slide 12: Key issues in the mobile industry
12 Key issues in the mobile industry • Mobile data • Applications • Business models 23 Data traffic increasing more than customers Mobile Broadband subscriptions Business Area Mobility 1,000 800 Thousands 600 400 200 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Mobility Services – data growth 3,500 3,000 2
Slide 13: A new world of competition
13 A new world of competition Software Manufacturers Manufacturer Internet players Mobile companies challenger operators Primary Equipment/ Advertise- Transactions Equipment Access revenue base Access ments Industry OS & Network Clicks Networks Hardware logic /driver Software Lower Device openness H
Slide 14: Regulation – a part of the industry
14 Regulation – a part of the industry EBITDA margin* and MTR level in Sweden 50% 1.0 40% 0.8 SEK per minute 30% 0.6 20% 0.4 10% 0.2 0% 0.0 2002 2003 2004 2005 2006 2007 2008 H109 • European International Roaming Regulation in force until July 1, 2012 • Mobile termination rates - new recommendation
Slide 15: Need for long term frequency strategy
15 Need for long term frequency strategy • Existing GSM licenses should be renewed to safeguard investments and innovation • Open tender procedure only if enough new spectrum for additional license, and demand exceeds supply • Technology neutrality vital for future development • Regulators should no
Slide 16: Financial Performance Yoigo 2008-2009
16 Financial Performance Yoigo 2008-2009 Subscribers (‘000) Revenue (MEUR) 1,200 120 1,000 100 800 80 600 60 400 40 200 20 0 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 EBITDA & EBITDA-SAC (MEUR) CAPEX (MEUR) 25 EBITDA EBITDA-SAC 0 20 -10 15 -20 10 -30 5 -40 -50 0 Q1 08
Slide 17: Our priorities
17 Our priorities • Defending profitability in the Nordic and Baltic markets • Yoigo EBITDA positive Q4 2010 • Mobile data explosion • Developing our business models • Launch of 4G services in 2010 33 Håkan Dahlström President Business Area Broadband Services 34
Slide 18: The fixed business is transforming
18 September 2005 “Only five years away, when telephony will be a free service…” The Economist 35 The fixed business is transforming ARPU Example Triple Play 600 SEK ~560 500 400 Example PSTN 300 SEK ~230 200 100 0 2008 2011 IP services IP services < 30% of net sales 50% of net sales Source: TeliaSo
Slide 19: Broadband Services – revenue breakdown
19 Broadband Services – revenue breakdown Wholesale 26% 36% Consumer 38% Business External net sales H1 2009 (excluding Baltics) 37 Consumers moving to IP based services Sweden – H1 2009 Finland – H1 2009 • IP based services further ahead in Finland than in Sweden 100% 100% • Strong growth in IP bas
Slide 20: The preferred choice for TV customers
20 Core of IT society Vision of the Digital Home of the future 39 The preferred choice for TV customers ’000 IPTV subscribers* 370 • Most satisfied current customers 360 350 • Strong growth of Premium TV packages 340 2008 and Video On Demand 330 2009 320 • ARPU on IPTV approx. EUR 10 310 300 t l ar
Slide 21: Next step is Quadruple Play
21 Next step is Quadruple Play • Launched in Sweden on August 26, 2009 • Broadband, Telephony, TV and Mobile bundles together • From SEK 349 per month 41 Price increase to maintain profitability • Price increase in Sweden for fixed telephony in April, 2009 • First price increase since 2001 – From SE
Slide 22: Controlled migration of PSTN subscriptions
22 Controlled migration of PSTN subscriptions VoIP/Substitute PSTN Stock 2,948’ Share of migration growing: 27% Q2/2009 - 80’ (-48’) 10% Q2/2008 171’ 54’ Cable/LAN/DSL 72’ –operators Share of migration Stock 959’ 28’ in decline: 73’ 36% Q2/2009 48% Q2/2008 TeliaSonera Wholesale Fixed to mobile migra
Slide 23: Core of IT society - The Digital Office
23 Core of IT society - The Digital Office Mobile Mobile Broadband Exchange LAN Security Videoconference Network Web-/Tele- Internet conference Unified Communications Telephony Contact Center 45 Selective build out of fiber • Focus on urban areas, case by case approach • 80% of Broadband Capex to fi
Slide 24: National wholesale necessary for high RoI
24 National wholesale necessary for high RoI • Promoting equal access • Commercial pricing • Requires regulatory stability RoI = Return on Investment 47 Fixed network remains competitive Global MOBILE traffic Global FIXED traffic (ExaByte/month) (ExaByte/month) 2.5 100 Residential 2.0 80 Unicast TV
Slide 25: Significant profitability improvement
25 Significant profitability improvement SEK million SEK million 14,000 32% 8,000 20% 13,000 18% 30% 6,000 12,000 16% 11,000 28% 4,000 14% 10,000 26% 2,000 12% 9,000 8,000 24% 0 10% Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 EBITDA* rolling 4 quarters Operating cash flow
Slide 26: Karin Eliasson, Head of Human Resources
26 Karin Eliasson Head of Human Resources 51 Our Efficiency program Our People agenda 52
Slide 27: Efficiency program
27 Efficiency program • Autumn 2007 - Preparations • February 2008 - Efficiency program announced Announced targets Q4 2007 • Annual gross savings of SEK 5 billion compared with 2007 • Reduction of approximately 2,900 employees • Related restructuring cost estimated to be around SEK 4 billion 53 Our
Slide 28: Results so far in Sweden and Finland
28 Results so far in Sweden and Finland Feb 2008 Sept 2009 Dec 2009 • Headcount reduction 16%* • Related restructuring costs lower than initially estimated (SEK 2.7 billion as of June 2009) • New way of working since autumn 2008 with conditions and practises in line with market * Sweden & Finland 55
Slide 29: Headcount reduction Nordics and Baltics
29 Headcount reduction Nordics and Baltics Employees 25,000 -13% 20,000 -19% 15,000 Sweden -11% Finland 10,000 -10% No & Dk 5,000 -6% Baltics 0 2007-12 2009-06 57 Some changes needed… Within 3 years 9 More of “One company approach” 9 Goals and targets clearly communicated, followed up and rewarded 9
Slide 30: Our People agenda
30 Our People agenda Timeline: Making sure Q1 2009 Q2 2009 Q3 2009 Q4 2009 Q1 2010 Q2 2010 TeliaSonera will: TS Employer Branding & EVP Attract International Trainee Program Recruitment Policy Recruit TS Competence Framework Develop TS Group wide Performance Management Process - Make It Happen! TS L
Slide 31: Our priorities
31 Our priorities • Deliver on our efficiency program • Talent management • Performance management 61 Tero Kivisaari President Business Area Eurasia 62
Slide 32: Sustained subscriber growth
32 Sustained subscriber growth Thousands ~114 125,000 million e rat wth 100,000 e gro rag ave 75,000 50,000 30% 25,000 0 -02 -03 -04 -05 -06 -07 -08 H1 09 Mobile penetration Population (millions) Azerbaijan Azerbaijan Georgia Georgia Kazakhstan Kazakhstan Moldova Moldova Tajikistan Tajikistan Uzbeki
Slide 33: Eurasia’s weight in TeliaSonera Group
33 Eurasia’s weight in TeliaSonera Group Mobile subscriptions Operating income* 100% 100% 80% 80% 60% 60% BA MS & BS BA MS & BS 40% Turkcell 40% Turkcell MegaFon Megafon 20% 20% Consolidated Consolidated Eurasia Eurasia 0% 0% -06 -07 -08 H1 09 -06 -07 -08 H1 09 * Excluding non-recurring items All op
Slide 34: Regional brand harmonization
34 Regional brand harmonization April 2009 May 2009 Remaining launches planned for this and next year 67 Leading operator in the two largest markets Kazakhstan Azerbaijan Population: 15.4 million Population: 8.2 million Penetration: ~95% Penetration: ~70% Market share: Just below 50% Market share: J
Slide 35: Kazakhstan – sustained high margin
35 Kazakhstan – sustained high margin Net sales and EBITDA margin Pop. coverage and CAPEX/Sales 140,000 65% 100% 90% 120,000 Local currency million 60% 80% 100,000 70% H2 55% 60% 80,000 50% 60,000 50% 40% 40,000 30% H1 20% 45% 20,000 10% 0 40% 0% -02 -03 -04 -05 -06 -07 -08 H109 -02 -03 -04 -05 -06
Slide 36: Successful integration of Uzbekistan and Tajikistan
36 Successful integration of Uzbekistan and Tajikistan Uzbekistan – Net sales Tajikistan – Net sales Tajikistan 125,000 60% 100 300 60% 60% Local currency million million 100,000 50% 250 50% 50% 75 million 40% 200 H2 40% 40% 75,000 currency H2 30% 50 150 30% 30% 50,000 LocalUSD 20% 100 20% 20% 25,00
Slide 37: The mobile broadband potential
37 The mobile broadband potential Revenue split Azerbaijan Georgia Kazakhstan Country 3G licence Moldova Tajikistan Georgia √ Uzbekistan Nepal Moldova √ Cambodia Tajikistan √ 0% 20% 40% 60% 80% 100% Data Other VAS Voice/Other Uzbekistan √ Moldcell – data growth Nepal √ 7,000 6,000 Cambodia √ 5,000 3
Slide 38: Priorities defined autumn 2008
38 Per-Arne Blomquist Executive Vice President and CFO 75 Priorities defined autumn 2008 Financial priorities • Cash flow • CAPEX From gross to net savings • Gross savings not good enough Fast close and quality • Group closing from 12 to 5 days • Improve routines and definitions 76
Slide 39: Shifting focus from this… … to this
39 Shifting focus from this… Jan-June Jan-June Change SEK million 2009 2008 % Net sales 54,682 49,672 10 EBITDA* 17,864 15,733 14 EBITDA margin* % 32.7 31.7 - * Excluding non-recurring items 77 … to this Jan-June Jan-June Change SEK million 2009 2008 % Net sales 54,682 49,672 10.1 Cost of goods sold
Slide 40: OPEX development – Group
40 OPEX development – Group SEK million SEK million 35,000 +5% -1% -1% 10,000 +7% 30,000 -6% 8,000 25,000 -1% 20,000 6,000 +3% 15,000 4,000 -8% 10,000 -11% 2,000 5,000 -6% 0 0 2006 2007 2008 Q1 09 Q2 09 Q2 08 Q2 09 Personnel Marketing IT Rents Other Personnel Marketing IT Rents Other • Rolling 4 qua
Slide 41: Cautious on CAPEX but still investing
41 Cautious on CAPEX but still investing SEK billion SEK billion 16.0 20% 5.0 20% 16% 4.0 16% 12.0 -34% 12% 3.0 12% 8.0 8% 2.0 8% 4.0 4% 1.0 4% 0.0 0% 0.0 0% 2006 2007 2008 Q1 09 Q2 09 Q2 2008 Q2 2009 CAPEX rolling 4 quarters CAPEX CAPEX-to-sales rolling 4 quarters CAPEX-to-sales • Strict prioritizi
Slide 42: Disciplined approach to M&A
42 Disciplined approach to M&A • Increasing ownership in core holdings – Cash offer for Eesti Telekom and TEO (August, 2009) – Total offer value of SEK 4.9 billion • Complementary acquisition within existing footprint – Broadband business from Tele2 in Norway (July, 2009) – Total deal value of NOK 1
Slide 43: Cash offer for Eesti Telekom and TEO
43 Cash offer for Eesti Telekom and TEO • TeliaSonera’s strategy is to increase holdings in its core holdings • Offers not conditional and with no minimum thresholds • Any outcome which leads to increased ownership is welcomed Benefits to Eesti Telekom and TEO • Enhanced access to TeliaSonera’s know
Slide 44: Solid financial position
44 Solid financial position SEK million 60,000 2.0 50,000 1.5 40,000 30,000 1.0 20,000 0.5 10,000 0 0.0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Net debt Net debt to EBITDA rolling 4 quarters 87 Debt maturity schedule (excl. lease and pension liabilities) Debt Maturing next 12 months (SEK million), June
Slide 45: SEK 82 billion paid out since 2002
45 SEK 82 billion paid out since 2002 SEK per share SEK million 7.00 35,000 6.00 30,000 5.00 25,000 4.00 20,000 3.00 15,000 2.00 10,000 1.00 5,000 0.00 0 -02 -03 -04 -05 -06 -07 -08 -02 -03 -04 -05 -06 -07 -08 Extraordinary dividend Dividend paid out to shareholders Ordinary dividend • TeliaSonera’s
Slide 46: Focusing on organic revenue growth
46 Focusing on organic revenue growth Revenue growth (%) Reported of which of which of which Q2 2009 growth currency acquisitions organic Mobility Services 7.9 8.7 0.6 -1.4 Broadband Services 1.7 6.4 0.0 -4.7 Eurasia 32.5 17.6 6.3 8.6 The group 8.7 8.3 1.1 -0.7 91 Organic revenue growth Q1 2009* Q2
Slide 47: Group outlook 2009
47 Group outlook 2009 Actual Outlook 2009 H1 2009 In line with or slightly Net sales below the level of 2008* -0.1% Below the SEK 33.8 billion Addressable cost base in 2008* -4.3% Exceed the margin level EBITDA margin** of 2008 (31.8%) 32.7% In the range 13-14% CAPEX-to-sales ratio (15.2%) 11.1% 30,