Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Q3 2006 Earnings Presentation
26 slides from Telia Company AB's earnings presentation, October 2006
Slide 1: Interim report July-September 2006
Interim report July-September 2006
Slide 2: Interim report July-September 2006 - Anders Igel, President and CEO
Interim report July-September 2006 Anders Igel President and CEO
Slide 3: All-time high Sales, Earnings and EPS
All-time high Sales, Earnings and EPS • Growth 4% SEK million • EBITDA1 margin 25,000 23,157 38% (37) • EPS 1.13 (0.84) 20,000 Net Sales 15,000 10,000 7,802 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 Q3 03 03 03 03 04 04 04 04 05 05 05 05
Slide 4: Improvements in all operations
Improvements in all operations Operating income excl. non-recurring items SEK million +520 +305 +120 7,802 +145 +103 +363 +33 +51 6,162 Group Sweden Finland Norway Denmark Baltic Eurasia Russia & Other Group Q3 2005 countries Turkey Q3 2006 4
Slide 5: Dividend proposals for 2006
Dividend proposals for 2006 • Proposed dividend increased to reflect strong 2006 • Extraordinary dividends SEK 10+10 billion • Ordinary dividend at upper range 5
Slide 6: Sweden - Restructuring measures maintained profitability
Sweden - Restructuring measures maintained profitability in fixed but mobile volume growth did not offset price erosion SEK million + Customer intake 14,000 + Mobile volume growth – Not yet sales increase 12,000 10,000 9,205 8,000 Net Sales 6,000 4,000 3,033 2,000 Operating income excl. non-recurrin
Slide 7: Finland - Solid development
Finland - Solid development + Turnaround progress SEK million + Increase in underlying mobile sales 6,000 – Margin improvement takes time 5,000 4,212 4,000 Net Sales 3,000 2,000 642 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 Q3 2002 03 03
Slide 8: Norway - Increased sales activities increased the number of postpaid customers
Norway - Increased sales activities increased the number of postpaid customers but lowered the margin + Increased postpaid SEK million customers 3,000 – Expensive postpaid Net Sales 2,548 gain 2,500 2,000 1,500 1,000 478 500 Operating income excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
Slide 9: Denmark - Improved profitability
Denmark - Improved profitability + Additional actions SEK million initiated 2,000 1,889 – Margin improvement Net Sales takes time 1,500 1,000 500 Operating income 159 excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 06 -500 -1,000 2002 2003 2004 2005 2006 9
Slide 10: The Baltics - Continued good development within mobile and broadband
The Baltics - Continued good development within mobile and broadband SEK million + Sales increase 3,000 + Compensation for Net Sales 2,551 fixed voice decline 2,500 2,000 1,500 1,000 795 500 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 Q3 2002 03
Slide 11: Spanish mobile opportunity
Spanish mobile opportunity Commercial launch of mobile + Robust business case services at the end of the year + Benchmark low cost Ericsson selected as equipment supplier + Sharp business focus for the deployment of 3G network + 3G license/2G roaming Renewed national 2G-roaming agreement with Vo
Slide 12: International Mobile - Continued strong growth and profitability
International Mobile - Continued strong growth and profitability + Value creation SEK million + Eurasia business 2,500 2,298 + MegaFon development – Uncertainty in Turkey 2,000 – Liquidity in shareholding 1,500 1,000 Operating income 500 excl. non-recurring items 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q
Slide 13: In short
In short Q3 2006 All time high • Net Sales SEK 23,157 million • EBITDA1 SEK 8,756 million • Operating income SEK 7,802 million • Earnings per share SEK 1.13 Dividend proposals for 2006 • Proposed dividend increased to reflect strong 2006 • Extraordinary dividends SEK 10+10 billion • Ordinary dividen
Slide 14: Interim report - Kim Ignatius, CFO
Interim report July-September 2006 Kim Ignatius Executive Vice President and Chief Financial Officer
Slide 15: Key financials – Income statement and Cash flow
Key financials – Income statement and Cash flow SEK million Jul - Sep 2006 Jul − Sep 2005 Net sales 23,157 22,229 EBITDA excl. non-recurring items 8,756 8,224 Margin (%) 37.8 37.0 Operating income excl. non-recurring items 7,802 6,162 Margin (%) 33.7 27.7 Net income1 5,053 3,763 Earnings per share2
Slide 16: Net sales +4.2% Q3 2006 year-on-year
Net sales +4.2% Q3 2006 year-on-year SEK million Strong growth in mobile +117 MSEK Acquisition of Chess +348 MSEK and broadband +36 MSEK and NextGenTel +212 MSEK +485 +40 +557 +21 +135 -6 23,157 22,229 -304 • Increased mobile terminal sales Strong customer • Lower interconnect fees -30 MSEK growth,
Slide 17: Operating income Q3 2006 year-on-year
Operating income Q3 2006 year-on-year SEK million • Russia - strong sales and earnings growth • Lower net sales -304 MSEK • Net sales increased • Turkey – TS income impacted but price decline and • OPEX development equipment sales by depreciation of Turkish lira − Restructuring effects +300 MSEK imp
Slide 18: Net sales Q3 2006 versus Q2 2006
Net sales Q3 2006 versus Q2 2006 SEK million • Decrease in fixed wholesale Mobile volume growth • Lower interconnect fees +159 +44 +255 +41 -27 23,157 22,737 -3 -49 Mobile volume growth • Full quarterly impact from consolidation of NextGenTel • Lower interconnect fees • Mobile sales +85 MSEK (handse
Slide 19: Operating income Q3 2006 versus Q2 2006
Operating income Q3 2006 versus Q2 2006 SEK million Increased sales and Customer acquisition costs postponed sales and Mainly restructuring and some seasonality effects marketing activities costs in Sweden and Finland +513 +224 +242 +46 7,802 +641 +44 +30 -123 7,679 -254 6,316 • Efficiency measures
Slide 20: Competitive Cost Level programs
Competitive Cost Level programs Sweden • Realized cost savings est. 600 MSEK in Q3 2006 est. to reduce • Est. annual savings effect 2.55 BSEK as of Q4 2006 from measures taken annual gross costs by end of Q3 2006 by SEK 4-5 billion • 1,642 employees of approx. 3,000 in transition, of which 1,413 hav
Slide 21: Statement of cash flows
Statement of cash flows SEK million Jul-Sep 2006 Jul-Sep 2005 EBITDA excluding non-recurring items 8,756 8,224 Dividends received from associated companies 679 3 Income taxes refunded/paid 638 -670 Payment of restructuring provisions -107 -270 Difference between paid/recorded pensions 258 357 Change
Slide 22: Strong financial position and cash flow generation
Strong financial position and cash flow generation SEK billion 40.8 6.0 12.5 18.7 3.6 4.1 8.4 15.7 1.5 13.7 0.6 3.3 Net debt Free Net cash Sales Dividend Minority Net debt Net debt Pension Operating Contingencies, Adjusted Dec 31, cash paid for of dividends in acquired Sep 30, obligation leases* blo
Slide 23: Strong financial key ratios
Strong financial key ratios Sep 30, 2006 Dec 31, 2005 Return on equity* 13.6% 10.3% Return on capital employed* 16.0% 12.6% Equity/asset ratio 62.5% 58.9% Net debt/equity ratio 15.2% 7.0% * Rolling 12 months High yielding share 23
Slide 24: Group outlook 2006
Group outlook 2006 • Group net sales expected to grow • Results before tax expected to grow • CAPEX to sales ratio (incl. Xfera and NextGenTel) - lower than previously indicated and lower than the 2005 level • Free cash flow expected to remain strong Home markets • Continued migration from fixed voi
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
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