Slide 1: Annual Results 2010
Slide 2: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO 2
Slide 3: CEO’s review
CEO’s review • 2010 overview • Q4 2010 financial and operational highlights • Segment review • Strategy execution • Progress of new services and smartphone market • Outlook for 2011 3
Slide 4: 2010 highlights
2010 highlights • Revenue growth above industry average • Profitability at good level • Strong mobile subscription growth • EBITDA was in line with guidance given in the beginning of 2010 • In 2010 profit distribution was EUR 1.42 per share, pay-out ratio 126% • Success of Elisa Viihde IPTV continue
Slide 5: 2010 financial highlights
2010 financial highlights Change in 2010 2010 Revenue € 1,463m +2% EBITDA € 485m 0% Earnings per share * € 1.15 +2% CAPEX € 184m +7% Cash flow * € 212m -16% Net debt € 776m + 8% * Excluding one-off items 5
Slide 6: 2010 operational highlights
2010 operational highlights Change in Change in 2010 2010 Q4/2010 Mobile subscriptions 3,796,900 +467,900 +144,400 Fixed broadband subs. 467,200 +100 +3,400 Mobile ARPU 1) € 21.6 € -2.0 € -0.5 4) Mobile churn 2) 16.1% +1.6%-units -3.1%-units 4) Mobile usage, min 3) 6,828m +483m +42m Active 3G data u
Slide 7: Q4 2010 highlights
Q4 2010 highlights • Revenue growth was stronger than in previous quarters • Profitability was at a good level, cash flow was affected by non-recurring CDO guarantee settlement • Mobile subscription base and usage continued to increase • Growth in 3G data services was good • Elisa Viihde IPTV servic
Slide 8: Revenue growth continued
Q4 2010 financial review Revenue growth continued • Revenue € 383m (365) – Growth in mobile services, especially 36 % data services and smartphones 35 % 33 % 33 % 33 % 33 % 33 % 35 % 32 % – Decrease in fixed line business – Growth in online and ICT service business • EBITDA € 123m (121) 383 372 • CA
Slide 9: Strong mobile subscription growth continued
Q4 2010 operational highlights Strong mobile subscription growth continued • 144,400 new subscriptions in Q4 3 652 3 797 3 550 – Growth in both customer segments 3 329 3 432 3 218 3 153 – Growth in mobile broadband and 3G 2 880 3 026 subscriptions – Estonia +36,400 subscriptions • Growth in fixed br
Slide 10: Churn decreased QoQ
Q4 2010 operational highlights Churn decreased QoQ • Growth in mobile services – Outgoing minutes growth +6% YoY – SMS growth +10% YoY 18,1 % • Mobile churn 15.0% (14.7) 15,4 % 15,9 % 14,7 % 14,5 % 14,7 % 15,0 % 14,0 % – Churn dropped from previous quarter 12,0 % 1 749 – Keen competition will contin
Slide 11: Business Segments
Business Segments 11
Slide 12: Q4 2010 Consumer Customers
Q4 2010 Consumer Customers Growth in mobile usage and handset sales • Revenue € 229m (217) 37 % 34 % 34 % – Growth in mobile customer billing, 33 % 33 % 33 % 32 % 31 % handset sales and online services 31 % – Decrease in fixed business • EBITDA € 71m (71), 31% of revenue – Decrease in SAC per subscr
Slide 13: Q4 2010 Corporate Customers
Q4 2010 Corporate Customers Solid performance in the fourth quarter • Revenue € 154m (148) 37 % 36 % 36 % 34 % 34 % – Growth in mobile customer billing and 33 % 34 % 34 % online services 31 % – Acquisitions increased revenue – Decrease in fixed business • EBITDA € 52m (50), 34% of revenue 155 154 –
Slide 14: Strategy execution
Strategy execution New services and new markets Strengthening market position in core markets Integration of One Elisa 14
Slide 15: More than one million 3G data users
More than one million 3G data users Number of active mobile data users in Elisa’s network, thousands 1308 1255 1221 1044 1051 1017 993 914 937 905 843 790 789 807 740 703 701 709 668 672 627 636 595 569 526 523 490 496 398 425 374 326 282 249 173 198 153 112 72 19 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07
Slide 16: Good growth in mobile broadband and smartphones
Good growth in mobile broadband and smartphones Penetration in Finland • Every fifth subscription includes mobile broadband service 19,0 % 17,5 % • Smartphone penetration more than 15,0 % doubled, still significant growth potential 11,5 % • Smartphones top the list of most sold phones 3,5 % – 45% of
Slide 17: Fast development in smartphone and application market
Fast development in smartphone and application market • Applications increasingly popular – Facebook and other social media – E-mail and navigation – Games, like Angry Birds • Smartphones use over 300 MB of data per month MB/month Smartphone data usage in January 2011 700 600 500 400 300 200 100 0 Z
Slide 18: Elisa Viihde IPTV developed further
Elisa Viihde IPTV developed further • Elisa Viihde application for Android phones – Scheduling programs – Recording the programs • World exclusive for unique NHL content – Summary of the Finnish players’ performance 18
Slide 19: IT outsourcing services added to Elisa’s offering
IT outsourcing services added to Elisa’s offering • Acquisition of Appelsiini Finland – Revenue EUR 13m – 150 employees • Elisa ICT services – Customised business solutions – Workstations – Server systems – Data center services and networks • SME as a target • Expanded to nationwide service 19
Slide 20: Telepresence video conference on tablets
Telepresence video conference on tablets • World’s first – Android application enabling video conference attendance irrespective of time or place – Technology provided by Vidyo, Inc • Smartphone or tablet as a terminal – For example Samsung Galaxy Tab 20
Slide 21: Outlook for 2011
Outlook for 2011 • Positive trends of the general economy have continued • Competition remains challenging • Revenue increase slightly • EBITDA excluding one-offs improve slightly • CAPEX maximum 12 per cent of revenue 21
Slide 22: Mid-term targets by end-2011
Mid-term targets by end-2011 Parameter Target Status 2010 Above industry Elisa +1,5% Revenue growth average Indstry -2,7%* EBITDA-margin Above 35% 33% CAPEX-to-sales 10 - 12% 12% Capital structure Net debt / EBITDA 1.5 - 2x 1.6x Equity ratio > 35% 43% * European operators’ YoY cumulative Q1-Q3/2010
Slide 23: Mid-term targets by end-2013
Mid-term targets by end-2013 Parameter Target Revenue growth Above industry average EBITDA-margin Above 35 % CAPEX-to-sales ≤ 12 % Capital structure Net debt / EBITDA 1.5 - 2x Equity ratio > 35 % 23
Slide 24: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO 24
Slide 25: Revenue and EBITDA in line with guidance
Revenue and EBITDA in line with guidance EUR million Q4/10 Q4/09 Δ 2010 2009 Δ Revenue 383 365 18 1463 1430 33 Other operating income 2 2 5 4 1 Operating expenses -262 -246 -16 -984 -951 -33 EBITDA 123 121 2 485 484 1 EBITDA-% 32% 33% 33% 34% Depreciation and amortisation -55 -57 2 -217 -216 EBIT 69
Slide 26: Full year revenue change
Full year revenue change 1463 5 7 18 1430 + Mobile + ICT services 3 + Online Services + Organic +/- Cable TV + M&A - PSTN + Mobile + Volume - Estonia + Estonia - MTR price - Broadband - PSTN 2009 Interconnection Equipment sales Consumer Corporate 2010 and roaming customers Customers 26
Slide 27: Equipment sales and acquisitions affected OPEX
Equipment sales and acquisitions affected OPEX Q4 Q1 Q2 Q3 Q4 • OPEX decreases EURm 09 10 10 10 10 – Network operating expenses Materials and 144 140 148 148 163 – Interconnections and roaming services – Credit losses lower Employee 51 55 52 46 55 benefit expenses – Productivity improvements Other o
Slide 28: CAPEX/Sales in line with guidance
CAPEX/Sales in line with guidance • Total CAPEX in Q4 EUR 56m (61) 17 % 17 % 20 % 15 % – CAPEX/Sales 15% (17%) 13 % 15 % 11 % 11 % 11 % 20 • Total CAPEX 2010 EUR 182m 1) (171) 2 10 % 10 % 10 % – CAPEX/Sales 12% (12%) 11 • Q4/10 by segments 28 28 5% 4 25 – Consumer EUR 31m (33) 0% 5 1 2 20 – Corporat
Slide 29: Cash flow
Cash flow EUR million Q4/10 Q4/09 Δ 2010 2009 Δ EBITDA 123 121 3 485 484 1 Change in receivables -2 10 -12 2 36 -34 Change in inventories -3 -7 -6 -9 3 Change in payables 23 23 11 10 1 Change in NWC 18 26 -8 7 37 -30 Finance income and expenses -1 -1 -28 -30 2 CDO Guarantee settlement 1) -40 -40 -40
Slide 30: Good subscription growth in Estonia
Good subscription growth in Estonia • Revenue flat, market share increased – Market share 26%, up 3 percentage units 39 % – Mobile broadband is picking up 36 % 36 % 35 % 34 % • EBITDA decreased 32 % 31 % – Strong growth in mobile 28 % – + 80 100 YoY, + 36 400 QoQ 24 % – Increased competition • CAPEX
Slide 31: Liquidity position is good
Liquidity position is good Bond and Bank loan maturities • Cash and undrawn committed facilities EUR 299m (324m) 10 • Revolving Credit Facilities – EUR 170m maturing Jun 2012 – EUR 130m maturing Nov 2014 – EUR 32m drawn Q4/10 300 • Commercial Paper Program 226 – EUR 102m in use • Credit ratings cons
Slide 32: Capital structure in line with targets
Capital structure in line with targets • Capital structure – Net debt / EBITDA 1.6 – Gearing 93%, Equity ratio 43% 1,8 1,7 1,7 1,6 1,6 • Target setting 1,5 1,5 1,5 1,5 – Net debt / EBITDA 1.5 – 2x – Equity ratio >35% 812 854 817 773 729 719 752 725 776 43 % 41 % 45 % 48 % 46 % 40 % 42 % 45 % 43 % Q4
Slide 33: Profit distribution proposal
Profit distribution proposal • EUR 0.90 dividend per share 302 % – Total amount EUR 141m – Pro Forma Net Debt/EBITDA after 86 payment 1.9 – Dividend yield 6% * – Payout ratio 94% 43 • Payment date 7.4.2011 149 % 126 % 136% • Record date 30.3.2011 110 %402 88 % • Authorisations proposals to AGM 77 %
Slide 34: Appendix
Slide 35: Consolidated Cash flow statement
APPENDIX SLIDE Consolidated Cash flow statement EUR million Q4 2010 Q3 2010 Q2 2010 Q1 2010 Q4 2009 Q3 2009 Q2 2009 Q1 2009 Q4 2008 Cash flow from operating activities Profit before tax 67 68 53 10 56 70 56 53 70 Adjustments to profit before tax 55 60 67 106 64 60 60 61 57 Change in working capital
Slide 36: Financial situation
APPENDIX SLIDE Financial situation EUR Million 31 Dec 2010 30 Sep 2010 30 Jun 2010 31 Mar 2010 31 Dec 2009 30 Sep 2009 30 Jun 2009 31 Mar 2009 31 Dec 2008 Interest-bearing debt Bonds and notes 599 598 598 597 572 572 570 606 606 Commercial Papers 102 68 110 118 74 62 119 101 56 Loans from financial