Slide 1: Second Quarter Results 2008
Second Quarter Results 2008 1 August 2008
Slide 2: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 2 1.8.2008 Second Quarter Results 2008
Slide 3: CEO’s review
CEO’s review Financial and operational highlights Review of the mobile and fixed network businesses Execution of the strategy Progress of 3G services Outlook for 2008 3 1.8.2008 Second Quarter Results 2008
Slide 4: Financial highlights
Financial highlights Q2 2008 HIGHLIGHTS Q2 2008 Q2 2007 Revenue € 372m € 393m EBITDA* € 109m € 116m Earnings per share € 0.20 € 0.31 Cash flow € 59m € 37m Net debt / EBITDA 2.1x 1.4x CAPEX € 41m € 49m * Excluding one-off items 4 1.8.2008 Second Quarter Results 2008
Slide 5: Profitability impacted by decreasing temporary items
Profitability impacted by decreasing temporary items Q2 2008 FINANCIAL HIGHLIGHTS Revenue €372m (393) Revenue adjustment, effect € -4m Effect of lower interconnection and roaming fees approx. € -14m compared to Q2 2007 EBITDA excluding one-offs € 109m (116) Effect of revenue adjustment of € -4m and
Slide 6: Operational highlights
Operational highlights Q2 2008 HIGHLIGHTS Change Q2 2008 in Q2 2008 Mobile subscriptions 2,772,800 77,700 Fixed broadband 523,000 -3,000 subscriptions Mobile ARPU €26.8 +3% Mobile Churn 13.3% -2.3%-unit Mobile network usage, min* 1,540m +75m Active 3G data users 373,800 +47,500 * Outgoing minutes 6
Slide 7: Share buy-back will start
Share buy-back will start Q2 2008 FINANCIAL HIGHLIGHTS Board of directors decided to initiate max. 3 million share buy-back Approximately EUR 40 million at the 30.7.2008 closing price Approximately 1.9% of outstanding shares Capital structure targets unchanged Net debt / EBITDA 1.5 – 2x Gearing 50 –
Slide 8: Strong growth in subscription base
Strong growth in subscription base Q2 2008 SEGMENT REVIEW, MOBILE BUSINESS Growth in customer base ARPU* and non-voice services Good progress in 3G, mobile broadband 30,2 29,9 30,1 and prepaid subscriptions continued Elisa’s market share in 3G about 50% 25,9 26,8 Subscription base increased by 70,40
Slide 9: Profitability impacted by decreasing temporary items
Profitability impacted by decreasing temporary items Q2 2008 SEGMENT REVIEW, MOBILE BUSINESS Revenue EUR 229m (246) Revenue and EBITDA-% Increase in usage and subscriptions 252 253 Decrease in interconnection fee, roaming 246 fee and handset sales 223 229 Revenue adjustment EBITDA* EUR 61m (72), 27%
Slide 10: Growth in usage, churn at normal level
Growth in usage, churn at normal level Q2 2008 SEGMENT REVIEW, MOBILE BUSINESS ARPU Churn Usage 50 ARPU (€) and annualised churn (%) Outgoing traffic (million minutes) 1 600 45 1 400 40 35 1 200 30 25 1 000 20 800 15 10 600 5 0 400 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07
Slide 11: Half of active mobile data users use 3G
Half of active mobile data users use 3G Q2 2008 SEGMENT REVIEW, MOBILE BUSINESS Active 3G users Active GPRS users Number of active mobile data users in Elisa’s network (‘000) 790 740 703 701 668 627 595 526 490 398 374 326 282 249 198 173 153 112 72 19 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07
Slide 12: Broadband growth taken by mobile
Broadband growth taken by mobile Q2 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Slight decrease in fixed Broadband subscriptions (‘000) broadband subscriptions Decrease 3,000 in Q2 2008 514 518 522 526 523 – Seasonality – Growth taken by mobile business Elisa the market leader Decrease in analogue l
Slide 13: Cost efficiency improves profitability
Cost efficiency improves profitability Q2 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue EUR 155m (160) Revenue and EBITDA-% Stable revenue development 160 162 Growth in corporate customers 157 156 155 Decrease in traditional analogue EBITDA* EUR 49m (45), 32% of revenue (28) Efficiency program
Slide 14: Elisa strategy
Elisa strategy STRATEGY EXECUTION New services and new markets 2005 – Strengthening market position in core markets 2003 – Integration of One Elisa 14 1.8.2008 Second Quarter Results 2008
Slide 15: Productivity improvement
Productivity improvement STRATEGY EXECUTION – INTEGRATION OF ONE ELISA • Increased degree of • Mini-laptop bundle to the • Outsourcing of planning automation and overlap market and documentation in the functions reduced • Commercial launch of Production unit • Personnel reductions in Saunavisio IPTV
Slide 16: 3G services continue to grow
3G services continue to grow STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Sale of 3G services continued 3G subscriptions and services well, especially in broadband 3G subscription market 1265 (cumulative, '000), of which Significant amount of new subscriptions 1115 are 3G 3G service bundle mar
Slide 17: Strong demand for Mini-laptop service bundles
Strong demand for Mini-laptop service bundles Mini-laptop service bundle to the market in Q2 Elisa mobile broadband USB modem or USB stick Asus Eee PC 700 Fast and easy connection to the network Strong demand in several customer segments 17 1.8.2008 Second Quarter Results 2008
Slide 18: Corporate service portfolio enhanced
Corporate service portfolio enhanced STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Collaboration services Elisa Meeting Center, virtual web conferencing services Telepresence, experiential video conference services Collaboration services enable to decrease the customers’ carbon footprint Elisa
Slide 19: Unchanged outlook for 2008
Unchanged outlook for 2008 Competition remains challenging Focus on service competition Revenue at the 2007 level Lower interconnection revenue, more challenging market Higher customer billing (3G and broadband services) EBITDA and EBIT excluding non-recurring items at the 2007 level H2 profitabilit
Slide 20: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 20 1.8.2008 Second Quarter Results 2008
Slide 21: Profitability impacted by decreasing temporary items
Profitability impacted by decreasing temporary items EUR million Q2/08 Q2/07 2007 Change Revenue 372 393 1 568 -22 Other operating income 1 1 21 Operating expenses -268 -280 -1 090 -13 EBITDA 105 127 499 -22 EBITDA excluding one-offs 109 116 491 -7 EBITDA-% 28 % 32 % 32 % EBITDA-% excluding one-offs
Slide 22: Billing and CRM system implementation
Billing and CRM system implementation Extra EUR 4m expenses in Q2 IT costs External services Booked as ordinary expenses (not non-recurring) Discussions with suppliers ongoing Arbitration proceedings started with IBM In H2 extra expenses will continue to decrease 22 1.8.2008 Second Quarter Results 2
Slide 23: Underlying revenue growth in customer billing
Underlying revenue growth in customer billing Revenue, EUR million 5 5 5 Analogue lines 19 and volumes Equipment Broadband, 7 4 sales Corporate services Revenue Cable TV Termination, adjustment roaming and 393 handset sales Usage, subscriptions 372 Q2/07 Fixed Fixed Fixed Mobile Mobile Mobile Q2/08
Slide 24: Excluding interconnection and temporary items expenses decreased
Excluding interconnection and temporary items expenses decreased 285 Expenses, EUR million 280 Interconnection and termination cost EUR 14m lower y-o-y 275 14 270 Employee expenses continued 265 1 6 4 to decrease Inter- Personnel 2 260 connection expenses Temporary CRM 281 255 Other implementation c
Slide 25: 2008 outlook is reiterated due to strong H2
2008 outlook is reiterated due to strong H2 EBITDA Improvement needed approx. EUR 50m in H2 2008 Elisa’s competitiveness has improved markedly: customer service quality improved – lower churn and strong growth in customer intake Sources for EBITDA improvement EUR 45 – 60m Revenue adjusting items EUR
Slide 26: CAPEX decreased 16% to EUR 41m
CAPEX decreased 16% to EUR 41m CAPEX / Sales 11% in Q2/08 CAPEX, EURm CAPEX includes 1 3G networks’ capacity and coverage Access and backbone networks IT systems 31 11 6 Q2 CAPEX by segments 22 1 Mobile EUR 22m 21 17 % Fixed network EUR 19m 22 20 12 % 11 % 11 % Shares 38 10 % 3.5% of regional teleco
Slide 27: Cash Flow grew 59% to EUR 59m
Cash Flow grew 59% to EUR 59m EUR million Q2/2008 Q2/2007 2007 Change y-o-y EBITDA 105 127 499 -22 Change in receivables 43 -22 -116 65 Change in inventories 0 -2 10 2 Change in payables -13 9 7 -22 Change in NWC 30 -15 -100 45 Sale of Comptel shares 0 0 13 0 Interest paid and received -6 -2 -32 -4
Slide 28: Cash flow improved in Q2
Cash flow improved in Q2 Cash flow EUR 59m in Q2 Cash flow and operative cash flow*, EURm Change in net working capital 88 EUR 30m 83 70 Decrease in receivables 70 70 EUR 43 m 66 56 – Normal seasonality in fixed line billing 60 59 59 – Invoicing of the delayed bills 50 53 46 Decrease in payables EUR
Slide 29: Continued solid performance in Elisa Estonia
Continued solid performance in Elisa Estonia Change in termination fees decreased revenue 39 % Sale of overdue receivables 31 % 33 % 32 % 36 % improved profitability in Q2 Subscriptions grew 27,200 y-o-y EUR million Q2/08 Q2/07 2007 Revenue 26.4 29.4 113 323 327 335 306 313 EBITDA 10.4 9.1 36 EBITDA
Slide 30: Capital structure ratios above target level
Capital structure ratios above target level Capital structure ratios above Balance sheet KPIs 2,2 2,1 target level after the capital repayment Net debt / EBITDA 2.1* 1,5 Gearing 109% 1,4 H2 cash flow decrease the ratios to target 1,2 121 % range 109 % Target setting 71 % 65 % Net debt / EBITDA 1.5 –
Slide 31: High distributions during last few years
High distributions during last few years The Board has decided to start Distribution 304 % share buy back of max. 3.0 million shares Approximately EUR 40 million at the 86 30.7.2008 closing price 148 % Approximately 1.9% of the outstanding shares 111 % 40 Distributable equity EUR 372m 401 in the end
Slide 32: Second Quarter Results 2008
Second Quarter Results 2008 1 August 2008