Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — FY2005 Earnings Presentation
22 slides from Telia Company AB's earnings presentation, Feb 10, 2006
Slide 1: January-December 2005
February 10, 2006 1 January-December 2005 Anders Igel President and CEO
Slide 2: Strong results despite intense competition
2 Strong results despite intense competition 2005 • 7% sales growth • SEK 20 billion income from operations • More than SEK 15 billion free cash flow • SEK 5.6 + 10.1 billion dividend 2006 • Continued sales growth • Improved profits • Strong cash flow February 10, 2006
Slide 3: Strong achievements
3 Strong achievements - Leading market position confirmed • 2.7 + 14.8 million new customers • Significant volume growth in mobile and broadband • Many new services and offerings • Mobile margins maintained in Sweden despite price pressure • Strong growth in International mobile – close to 30% of gr
Slide 4: Achievements in Mobile
4 Achievements in Mobile • 17% volume increase, 144,000 new customers Sweden • Sales and margins maintained despite price pressure • 200,000 new customers – Highest since 2003 Finland • Huge price decrease - margin dropped • 390,000 new customers from Chess acquisition Norway • Strong sales and marg
Slide 5: Achievements in Fixed
5 Achievements in Fixed • 180,000 reduction in fixed voice customers in total market Sweden but Telia lost only 61,000 • 850,000 fixed voice subscriptions transformed to wholesale full year but only 85,000 in Q4 - major part already used other operators • 184,000 new broadband customers full year ‑
Slide 6: Higher level of market activities
6 Higher level of market activities Examples of new services and offerings launched Mobile • Connect data services • SurfPort Always - entertainment and information Best Connected • Mobile TV LAN • Mobile push email WLAN • Mobile over broadband • Wireless family GSM • Youth profile services GPRS EDG
Slide 7: Higher level of market activities
7 Higher level of market activities Examples of new services and offerings launched Fixed • IPTV • Competitive IP-VPN • Managed Services • Photo storage • Flat rate offers and bundles • Nordic price plans February 10, 2006
Slide 8: Dual opportunities
8 Dual opportunities Home markets International Mobile Strong growth Mature markets markets? Sales 100% mobile Earnings penetration Customers Create growth – Keep profitability Exploit growth – Enhance value Based on strengths in the regions, complementary acquisitions can be considered Februar
Slide 9: Group outlook 2006
9 Group outlook 2006 2005 provides a good platform for development in 2006 • Group net sales expected to grow • Results before tax expected to grow • CAPEX to Sales ratio - somewhat higher than for 2005 • Free cash flow expected to remain strong Home markets • Continued migration from fixed voice to
Slide 10: Outlook – Home markets
10 Outlook – Home markets • Continued decline in fixed voice sales. Mobile and Sweden broadband continued significant volume growth. Prices will be under pressure. Still 2006, total sales are expected to decline • The ongoing restructuring program will affect positively but not offset the impact on
Slide 11: Outlook – Home markets
11 Outlook – Home markets • Increased sales through continued organic growth and Norway consolidation of Chess • Margin impacted by lower margin level of Chess and synergies from Chess transaction, mainly related to increased utilization of NetCom´s network. Before implementation costs the transacti
Slide 12: Outlook – International mobile
12 Outlook – International mobile Eurasian • Continued strong sales growth operations • Tougher competitive environment estimated to impact sales and margins TeliaSonera’s view 2006 • Well positioned to meet the new challenges in the markets Turkcell • In light of the prevailing uncertainties regard
Slide 13: Kim Ignatius
February 10, 2006 13 Kim Ignatius Executive Vice President and Chief Financial Officer
Slide 14: Key financials - Income Statement and Cash Flow
14 Key financials - Income Statement and Cash Flow SEK million FY 2005 FY 2004 Q4 2005 Q4 2004 Net sales 87,661 81,937 22,876 21,252 EBITDA excl. non-recurring items 29,411 30,196 7,098 7,457 Margin (%) 33.6 36.9 31.0 35.1 Operating income excl. non-recurring items 20,107 20,859 4,890 5,076 Margin (
Slide 15: 2005 Net sales +7%
15 2005 Net sales +7% SEK million • Good organic growth in all operations • Acquisition of Orange in Denmark +98 • Customer base and usage increased +2,283 -500 87,661 • Acquisition of Chess +3,425 • Strong customer growth, 81,937 -1,488 +1,182 +2,683 +2.3 million during the year -1,959 • Continued
Slide 16: 2005 Operating income
16 2005 Operating income SEK million • Increased customer Very good sales and earnings growth Mainly restructuring base and usage in International Mobile operations costs in Sweden • Acquisition of Chess 20,859 -1,182 +127 +1,253 20,107 +400 +1,010 -2,558 -2,881 +528 -7 17,549 • Net sales SEK -1,959
Slide 17: CAPEX 2005
17 CAPEX 2005 Sweden Capex and Capex to Sales • Capacity expansion due to volume growth • Investments in EDGE SEK billion • Expansion of GSM coverage 14 50% Finland • CAPEX decreased Y-o-Y 12 40% Norway 10 • Investments in EDGE and 3G 8 30% • Renewal of the GSM license Denmark 6 17.0 20% • Expansion
Slide 18: Chess consolidated
18 Chess consolidated • Chess acquired for approx. SEK 2.2 billion, current ownership 100% • Consolidated as of November 7, 2005 • 390,000 additional mobile customers • Expected annual synergies, before implementation costs, from mid-2006 ‑ To EBITDA about SEK +0.8 billion ‑ To pre-tax cash flow ove
Slide 19: Competitive Cost Level programs
19 Competitive Cost Level programs Sweden • Program proceeding as planned est. to reduce ‑ Already realized cost savings approx. SEK 800 million in 2005 annual costs by ‑ Est. annual savings effect SEK 1.6 billion as of 2006 from measures SEK 4-5 billion taken 2005 as of 2008 ‑ Employees and hired p
Slide 20: Strong financial position and cash flow generation
20 Strong financial position and cash flow generation Dec 31, Dec 31, SEK billion 2005 2004 10.2 0.1 8.4 7.1 15.6 Return on equity* 10.3% 11.6% Return on capital employed* 12.5% 13.9% 1.1 Equity/asset 5.6 ratio 58.9% 63.8% Net debt/equity 1.8 1.9 ratio 7.0% 5.8% Net debt Free Net debt * Rolling 12 m
Slide 21: Forward-looking statements
21 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 a
Slide 22: Nordic and Baltic leader in telecommunications
February 10, 2006 22 Nordic and Baltic leader in telecommunications