Elisa Oyj Class A · OMXHEX:ELISA
Elisa Oyj Class A — Investor Day (2018)
20 slides from Elisa Oyj Class A's investor day presentation, 2018
Slide 1: Financial overview
Financial overview Jari Kinnunen CFO
Slide 2: Elisa's unique strategy generates profit and growth
1 Performance update 2 Profit and growth generation 3 Capital allocation 4 CFO priorities Elisa’s unique strategy generates profit and growth
Slide 3: Strong track record of high growth…
Performance update Strong track record of high growth… 2016 – LTM1) CAGR Revenue 6.7% EBITDA 7.0% EBIT 7.9% EPS 9.3% 1) Last twelve months, comparable figures 3
Slide 4: …industry-leading performance…
Performance update …industry-leading performance… Revenue growth CAGR Operating cash flow conversion LTM ROCE 2018 estimate 2016 – LTM Elisa 7% Elisa 63% Elisa 27% DNA 3% Telenor 61% Swisscom 11% Telekom Austria 3% KPN 53% Telecom Austria 10% Telecom Italia 1% Tele2 52% KPN 10% Swisscom 1% BT 52% Pr
Slide 5: …and long-term track record in medium-term financial targets
Performance update …and long-term track record in medium-term financial targets In target Below target Revenue growth above industry1) average EBITDA margin 15% 38% Target area 10% Target area 36% 5% 34% 0% 32% -5% 30% -10% 28% 2011 2012 2013 2015 2016 2017 LTM 2011 2012 2013 2014 2015 2016 2017 LTM
Slide 6: ¾ of revenue in growing digital and mobile services
Profit and growth generation ¾ of revenue in growing digital and mobile services Share of revenue Organic LTM CAGR 2016 – LTM Mobile service revenue 44% 4% Interconnection & roaming 4% -2% Equipment sales 12% 10% Mobile revenue 60% 4% Fixed revenue 24% -5% Domestic digital services 13% 8% Internatio
Slide 7: Strong performance in Estonian business
Profit and growth generation Strong performance in Estonian business Solid revenue growth continues… Total revenue market shares in Estonia1) 14% 167 31% 151 CAGR 6.0% 158 Reported Elisa Pro Forma Telia CAGR 34.9% Tele2 99 144 167 54% 2016 2017 LTM …with improving EBITDA Elisa revenue split €167
Slide 8: Drivers to achieve medium-term EBITDA margin target
Profit and growth generation Drivers to achieve medium-term EBITDA margin target LTM 35% By end of 2021 >37% • Upselling to higher speeds and monetising 5G Increase mobile and fixed service revenues • Add-on services • Product changes • Growth in domestic and international markets Grow digital servi
Slide 9: Disciplined 12% CAPEX-to-sales policy continues…
Capital allocation Disciplined 12% CAPEX-to-sales policy continues… CAPEX vs. peers1) CAPEX allocated efficiently 18% • Mobile data usage LTM CAGR: 39%3) 16% • FTTx household coverage: 72% 14% Peers 12% Elisa • Mobile network peak hour utilisation: 27% 10% • 5G-ready connections to 4G base stations:
Slide 10: …excellent frequency position in Finland, all main frequencies secured until the end of 2033
Capital allocation …excellent frequency position in Finland, all main frequencies secured until the end of 2033 • Renewal of 900 MHz, 1,800 MHZ and 2,100 MHz in 2019 – Beauty contest renewal until end of 2033 • 3.5 GHz licence granted for 15 years - 5G network rollout starts in the beginning of 2019
Slide 11: Value-driving M&A continues…
Capital allocation Value-driving M&A continues… Focus areas M&A activities 2012–2017 • Domestic telecom services Company Year Acquisition price, €m Valuation EV/EBITDA Santa Monica 2017 32 8.2 • Domestic IT services Starman 2017 151 8.8 Anvia 2016 107 7.2 • International digital services PPO 2012 14
Slide 12: …as well as solid capital structure and efficient funding
Capital allocation …as well as solid capital structure and efficient funding Diversified maturity profile 30 Sep 2018, EURm • Medium-term target reiterated – Net debt / EBITDA 1.5–2× – Equity ratio >35% 130 • Average interest rate 1.7% 300 300 180 170 – Fixed/variable 80/20% 50 150 2018 2019 2020 20
Slide 13: Strong cash flow growth…
Capital allocation Strong cash flow growth… Operating cash flow, EURm Operating cash flow margin1) 24% 401 22% CAGR +6.3% 373 360 20% 18% 16% 14% 12% 2016 2017 LTM 2016 2017 LTM Elisa Peers 1) (EBITDA–CAPEX) / sales Peer group: BT, DNA, KPN, Proximus, Swisscom; Tele2, Telecom Italia, Telekom Austria
Slide 14: …and high cash flow conversion…
Capital allocation …and high cash flow conversion… • Focused business model Industry’s best equity-free cash flow conversion Average 30% • Continuous earnings improvement Elisa 50% Telia 44% • Industry’s lowest CAPEX-to-sales DNA 41% Vodafone 37% • Disciplined M&A policy Telenor 36% KPN 35% • Low ef
Slide 15: …lead to reliable growing dividend
Capital allocation …lead to reliable growing dividend Distribution policy reiterated Dividend history • Commitment to high profit distribution CAGR 6.1% – Policy: payout ratio 80–100% 104% 94% 91% 93% 89% Payout • LTM EPS EUR 1.94, 7.2% YoY growth ratio Dividend • Consensus estimates lead to und
Slide 16: IFRS 16 effects 2019 onwards – no effect on cash flow
IFRS 16 effects 2019 onwards – no effect on cash flow • Mainly office premises, network-related real P&L effects estate and cars Revenue • Debt and fixed assets to increase Other operating income by approx. EUR 60m Materials and services -13 • EBITDA to improve by approx. EUR 13m Employee expenses O
Slide 17: Elisa's unique strategy generates profit and growth
CFO priorities Elisa’s unique strategy generates profit and growth Elisa’s strategy Profit and growth generation Increase mobile and fixed service • Improve operational leverage revenues • CAPEX efficiency • Disciplined M&A Grow digital service businesses • Growth and profitability improvement • Pro
Slide 18: Thank you
elise CMD2018 THANK YOU.
Slide 19: many of which are outside of Elisa’s control.
Statements made in this document relating to the future, including future performance and other trend projections, are forward-looking statements. By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in
Slide 20: Appendix
Appendix Disclaimer Slide 17: Dividend/sales Reprinted by permission. Copyright © 2018 Merrill Lynch, Pierce, Fenner & Smith Incorporated. The use of the above in no way implies that Merrill Lynch endorses the views or interpretation or the use of such information or acts as any endorsement of [the