Slide 1: Annual Results 2008
Annual Results 2008 13 February 2009
Slide 2: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 2 13.2.2009 Annual 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 2009 3 13.2.2009 Annual Results 2008
Slide 4: Year 2008
Year 2008 Clear profitability improvement in H2 2008 Solid H2 2008 due to efficiency programs, good basis for the future Growth in mobile usage and subscriptions Change in fixed broadband strategy affected subscription base, focus on profitability Strengthening of the corporate customer business thr
Slide 5: 2008 financial highlights
2008 financial highlights Interconnection prices decreased revenue, EBITDA at previous year’s level Revenue € 1,485m -5% EBITDA * € 478m -2.7% Earnings per share € 1.12 -19% CAPEX € 184m -11% Cash flow € 260m +128% * excluding one-off items 5 13.2.2009 Annual Results 2008
Slide 6: 2008 operational highlights
2008 operational highlights Growth in mobile usage and subs, change in fixed broadband offering Mobile subscriptions 2,879,600 +222,300 Fixed broadband 501,500 -20,300 subscriptions Mobile ARPU * € 26.4 € -3.6 Mobile Churn 13.3% +1.1%unit Mobile usage, min. ** 6,03bn +370m * Revenue per subscription
Slide 7: Q4 2008 financial highlights
Q4 2008 financial highlights Solid quarter, EBITDA margin improved to 35% Q4 2008 Q4 2007 Revenue € 372m € 402m EBITDA * € 129m € 128m Earnings per share € 0.34 € 0.32 Cash flow € 84m € 53m Net debt / EBITDA 1.7x 1.5x CAPEX € 64m € 69m * 2007 excluding one-off items 7 13.2.2009 Annual Results 2008
Slide 8: Q4 2008 financial highlights
Q4 2008 financial highlights Excellent quarter due to efficiency programs Revenue € 372m (402) Lower interconnection and roaming prices, approx. € -14m Lower terminal sales volumes, approx. € -8m Revenue correction of 2007, approx. € -6m Decrease in traditional subscriptions and usage, approx. € -5m
Slide 9: Q4 2008 operational highlights
Q4 2008 operational highlights Growth in mobile usage and subscriptions, strengthened competitiveness Change in Q4 2008 Q4 2008 Mobile subscriptions 2,879,600 49,600 Fixed broadband 501,500 -18,300 Mobile ARPU * € 26.3 € -0.1 Mobile Churn ** 12.0% -2.1 %-units Mobile usage, min *** 1,527m +29m Activ
Slide 10: Q4 2008 Mobile business
Q4 2008 Mobile business Good growth in customer base, churn at normal level Growth in customer base ARPU* and non-voice services Growth in 2G, 3G and mobile broadband 30,1 subscriptions Subscription growth 54,200 in Finland 25,9 26,8 26,4 26,3 In Estonia subscription base decreased by 4,600 ARPU € 2
Slide 11: Q4 2008 Mobile business
Q4 2008 Mobile business Good profitability development in 2008 Revenue € 230m (253) Revenue and EBITDA-% Lower Interconnection and roaming prices 253 Lower terminal sales volumes 237 Revenue correction (2007) 223 229 230 Growth in customer billing EBITDA € 73m (81), 32% of revenue (32) Revenue corre
Slide 12: Q4 2008 Mobile business
Q4 2008 Mobile business Growth in usage continues, ARPU and Churn stable 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 Q 02 Q 2 Q 02 Q 03 Q 3 Q 03 Q 3 Q 04 Q 4 Q 04 Q 04 Q 5 Q 05 Q 5 Q 05 Q
Slide 13: Q4 2008 Mobile business
Q4 2008 Mobile business Elisa has already half a million active 3G users Active 3G users Active GPRS users Number of active mobile data users in Elisa’s network, thousands 914 790 789 740 703 701 668 627 595 526 490 496 425 398 374 326 282 249 198 173 153 112 72 19 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/0
Slide 14: Q4 2008 Fixed network business
Q4 2008 Fixed network business Broadband business focus on profitability Decrease in fixed broadband Broadband subscriptions (‘000) subscriptions Decrease of 18,300 in Q4 2008 522 526 523 520 501 Change in offering, withdrawing from less profitable areas 6,500 subscriptions were divested Decrease in
Slide 15: Q4 2008 Fixed network business
Q4 2008 Fixed network business Efficiency programs improved profitability Revenue € 154m (162) Revenue and EBITDA-% Growth in broadband and cable TV 162 services 156 155 154 150 Decrease in traditional analogue EBITDA € 57m (49), 37% of revenue (30) Efficiency programs 37 % EBIT € 33m (25), 21% of 3
Slide 16: Strategy execution
Strategy execution Elisa’s strategy New services and new markets 2005 – Strengthening market position in core markets 2003 – Integration of One Elisa 16 13.2.2009 Annual Results 2008
Slide 17: Strategy execution
Strategy execution Productivity improvement • H2 efficiency programs • New affordable Saunalahti • Consolidation of regional • Regional IT systems subscription with concrete fixed network billing consolidation benefits systems • Change in broadband • Shorter installation times • Kolumbus prepaid off
Slide 18: Strategy execution
Strategy execution 1.7 million 3G subscriptions in Finland Good growth in 3G services 3G subscriptions and services in Finland 1700 continued 3G subscription market (cumulative, '000), of which Significant amount of new subscriptions 1465 are 3G 3G service bundle market 1275 Strong growth in mobile
Slide 19: Strategy execution
Strategy execution Ad based subscription to consumers ”Saunalahti Edukas” to ad based market Offers concrete benefits to customers Free goods or lucrative savings Cooperation with among others Fanta, Leaf and Universal Music Affordable usage based pricing 19 13.2.2009 Annual Results 2008
Slide 20: Strategy execution
Strategy execution New ICT service platform to enterprises Elisa ”Online Infrastructure With Applications” ICT service platform for medium size enterprises Efficient way to manage the company’s basic services for communication and IT with flat monthly rate Service based on SaaS (Software as a Servic
Slide 21: Outlook for 2009
Outlook for 2009 Current economic environment creates uncertainty Elisa is not immune to the negative development of the economy Visibility of the development of the economic situation and its effects to business is limited Competition remains challenging Revenue at the same or slightly lower level
Slide 22: Mid-term targets by end-2011
Mid-term targets by end-2011 Parameter Target Revenue growth Above industry average EBITDA-margin Above 35% CAPEX-to-sales 10 - 12% Capital structure Net debt / EBITDA 1.5 - 2x Equity ratio > 35% 22 13.2.2009 Annual Results 2008
Slide 23: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 23 13.2.2009 Annual Results 2008
Slide 24: Profitability improved in Q4 2008
Profitability improved in Q4 2008 EUR million Q4/08 Q4/07 ∆ 2008 2007 ∆ 07-08 Revenue 372 402 -30 1485 1 568 -83 Other operating income 3 1 7 21 Operating expenses -246 -277 -1 020 -1 090 EBITDA 129 126 472 499 EBITDA excluding one-offs 129 128 +1 478 491 -13 EBITDA-% 35% 31% 32% 32% EBITDA-% exclud
Slide 25: 2008 EBITDA at 2007 level
2008 EBITDA at 2007 level Target range given in Q2 2008: H2 2008 EBITDA improvement Target EUR 45-60m EUR 38m achieved Sources for EBITDA improvement Revenue adjusting items No adjustments anymore Extra billing and CRM system costs Ended as guided Revenue growth Lower than expected New cost savings
Slide 26: Revenue change in 2008
Revenue change in 2008 EUR million Analogue lines Interconnection, and volumes roaming and 11 handset sales Broadband and cable TV Usage, 38 subscriptions, 10 3G services, prices 68 11 1 568 35 1 485 2007 Revenue Fixed Fixed Mobile Mobile growth Revenue 2008 reported correction decrease increase dec
Slide 27: Mobile revenue grew "like-on-like" bases
Mobile revenue grew “like-on-like” bases EUR million 2008 2007 ∆ ∆% Reported mobile revenue 919 980 -61 -6% Intra-segment sales -15 -20 External sales 905 960 Revenue correction +11 -11 Change in interconnection and roaming revenue, and handset -68 sales “Like-on-like” revenue 916 881 +35 +4% Report
Slide 28: Total expenses decreased
Total expenses decreased Other operating expenses Employee benefit expenses Materials and services Q1 Q2 Q3 Q4 FY FY EURm 08 08 08 08 08 07 Materials 159 169 166 159 652 707 and services 189 202 219 205 Employee 201 benefit 45 42 32 43 163 181 214 181 163 expenses 221 249 Other operating 56 57 49 44
Slide 29: Cash Flow improved clearly
Cash Flow improved clearly EUR million Q4/2008 Q4/2007 ∆ 2008 2007 ∆ 08-07 EBITDA 129 126 3 472 499 -27 Change in receivables 28 -17 132 -116 Change in inventories 3 -5 7 10 Change in payables 2 41 -56 7 Change in NWC 33 19 14 83 -100 183 Sale of Comptel shares 0 0 0 13 Interest paid and received -4
Slide 30: CAPEX decreased 11% in 2008
CAPEX decreased 11% in 2008 Total CAPEX EUR 184m (206) CAPEX, EURm CAPEX/Sales 12% (13) 1 2 Full year by segments Mobile EUR 105m (93) Fixed network EUR 79m (113) 31 11 Q4 by segments 38 1 Mobile EUR 38m (31) 17 % 17 % Fixed network EUR 26m (38) 22 25 21 CAPEX includes 38 10 % 11 % 11 % 3G networks
Slide 31: Improved margins in challenging environment in Estonia
Improved margins in challenging environment in Estonia Change in termination fees decreased revenue 39 % Subscriptions grew by 32 % 36 % 36 % 37 % 14,900 y-o-y EUR million Q4/08 Q4/07 2008 2007 Revenue 23 27 99 113 323 327 335 342 338 EBITDA 8 9 37 36 EBITDA-% 36 % 32 % 37 % 32 % EBIT 6 6 26 25 EBIT
Slide 32: Capital structure within target range
Capital structure within target range Capital structure Balance sheet KPIs 2,1 Net debt / EBITDA 1,7 Gearing 93% 2,2 1,7 1,7 Target setting 1,5 Net debt / EBITDA 1.5 – 2x 121 % Gearing 50 – 100% 109 % 107 % Proposals for AGM 93 % 71 % Ordinary dividend EUR 0.60 – 53% payout ratio 955 – Total dividen
Slide 33: No major refinancing needs in coming years
No major refinancing needs in coming years Cash and undrawn committed Bond and Bank loan maturities facilities EUR 258m (317) 500 Revolving Credit Facilities EUR 170m maturing June 2012 400 EUR 130m maturing November 2014 EUR 75m in use Q4/08 10 300 Commercial Paper Program EUR 56m in use, back up w
Slide 34: Focus on Cash flow in the current downturn
Focus on Cash flow in the current downturn Productivity programs Improved lead times Process improvements Cost control Suppliers and subcontractors G&A cost Focus on cash generation CAPEX control Net Working Capital Customer credit control 34 13.2.2009 Annual Results 2008
Slide 35: New segment reporting for 2009
New segment reporting for 2009 Change in IFRS 8 disclosure rules Reported segments = operating segments From Q1 2009 onwards Elisa will report new segments Corporate customers Consumer customers Pro-forma figures of the new segments will be published in the beginning of April Current segments data w
Slide 36: Annual Results 2008
Annual Results 2008 13 February 2009
Slide 37: Consolidated Cash flow statement
APPENDIX SLIDE Consolidated Cash flow statement EUR million Q4 2008 Q3 2008 Q2 2008 Q1 2008 Q4 2007 Q3 2007 Q2/2007 Q1/2007 Cash flow from operating activities Profit before tax 70 67 38 52 65 89 67 64 Adjustments to profit before tax 57 59 67 56 63 41 47 50 Change in working capital 33 -2 30 22 19
Slide 38: Financial situation
APPENDIX SLIDE Financial situation EUR Million 31 Dec 2008 30 Sep 2008 30 Jun 2008 31 Mar 2008 31 Dec 2007 Interest-bearing debt Bonds and notes 606 604 604 634 634 Commercial Paper 56 81 107 118 92 Loans from financial institutions 80 80 80 0 0 Financial leases 27 26 26 26 28 Committed credit line