Slide 1: Annual Results
ANNUAL RESULTS 7th February 2014
Slide 2: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 3: CEO's review
CEO’s review • 2013 overview • Q4 2013 financial and operational highlights • Segment review • Strategy execution • Outlook for 2014 3
Slide 4: 2013 highlights
2013 highlights • Revenue at last year’s level • EBITDA excluding one-offs improved • 2013 dividend payment €1.30 per share, yield 7.8% • Strong growth in New Services continued • Mobile and fixed broadband subscriptions developed favourably • Strong growth in mobile data continued, boosted by 4G se
Slide 5: Profitability improved
2013 financial highlights –excluding one-offs Profitability improved Change in 2013 2013 Revenue €1,547m -0.4% EBITDA €508m +1.4% EBITDA-% 32.8% +0.5% unit Earnings per share €1.33 -1.5% CAPEX €202m +4.3% Cash flow €177m +14.5% Net debt €971m +15.8% EBITDA and EPS excluding one-offs, CAPEX excluding
Slide 6: Growth in subscription bases
2013 operational highlights Growth in subscription bases Change in 2013 2013 Mobile subscriptions 4,535,200 +89,000 Fixed broadband subscriptions 565,700 +60,600 Cable TV subscriptions 312,600 +53,300 Mobile ARPU 1) €15.9 -€1.6 Mobile churn 18.3% +1.8% unit Mobile usage, minutes 2) 6,831m -272m SMS,
Slide 7: Q4 2013 highlights
Q4 2013 highlights • Operating environment remained challenging • Price campaigns less intensive than at the beginning of the year • Mobile subscription base continued to grow • Growth in smartphone market accelerated, penetration almost 50% • Elisa Viihde IPTV success continued • Fixed broadband ba
Slide 8: Growth in revenue and clean EBITDA
Q4 2013 financial highlights Growth in revenue and clean EBITDA • Revenue €401m (396) • EBITDA €122m (124), 30% of revenue (31) 33% 32% 35% 35% 31% 31% 31% • Excluding one-offs €134m (124), 33% of revenue (31) 30% 30% • EPS €0.32 (0.32) • Excluding one-offs €0.37 (0.34) • CAPEX €90m (50), excluding
Slide 9: Subscription growth continued
Q4 2013 operational highlights Subscription growth continued • 37,900 new mobile subscriptions in Q4 4535 4427 4446 4470 4490 4497 • Growth in both customer segments 4244 4337 4158 • Estonia +7,900 subscriptions • Fixed broadband subscriptions at the previous quarter’s level • Approx. 2,700 subs div
Slide 10: Growth in data, minutes slightly down
Q4 2013 operational highlights Growth in data, minutes slightly down • Mobile data YoY growth +62% 1 790 1 804 1 797 • 23.2m Giga bytes (14.3) 1 755 1 747 1 741 1 707 1 695 1 688 • Outgoing minutes 1.7bn, slight 19,3 % decrease 17,2 % 20,0 % 17,6 % 15,3 % 18,0 % 14,1 % 17,7 % 13,4 % • 598m SMS, YoY
Slide 11: Business Segments
Business Segments
Slide 12: Q4 2013 Consumer Customers: Clean EBITDA improved
Q4 2013 Consumer Customers Clean EBITDA improved • Revenue €244m (247) • Growth through new services, PPO acquisition and 34% 34% 33% mobile services 32% 31% 31% 31% 30% • Decrease in equipment sales and interconnection 29% revenue • EBITDA €73m (77), 30% of revenue (31) 245 239 244 247 239 247 244
Slide 13: Q4 2013 Corporate Customers: Growth in revenue and clean EBITDA
Q4 2013 Corporate Customers Growth in revenue and clean EBITDA • Revenue €157m (148) 36% 36% • Growth through ICT services and PPO acquisition 33% 32% 32% 32% 32% 32% • Decrease in traditional fixed voice, as well as 31% interconnection and roaming revenue • • EBITDA €48m (47), 31% of revenue (32) 1
Slide 14: Strategy execution
Strategy execution Build value on data Accelerate new services businesses Improve performance with customer intimacy and operational excellence 14
Slide 15: Growth in smartphones accelerated
Growth in smartphones accelerated Penetrations in Elisa’s network in Finland • Almost half of customers use a new 59,5 % type of smartphone 55,0 % 57,0 % 58,0 % 52,5 % • Strong Christmas sales with lower- 50,0 % 48,0 % speed data subscriptions 46,0 % 43,5 % 40,0 % • Smartphones top the list of most
Slide 16: One-million e-books downloaded from Elisa eBook service
One-million e-books downloaded from Elisa eBook service • More than 170,000 applications downloaded to smartphones and tablets • Elisa eBook service gives all Finns the opportunity to publish their own book • Elisa and Gummerus arranged a novel-writing competition • Over 700 manuscripts were entered
Slide 17: Omaguru
Omaguru • A new era of home advisory service for use of technical equipment • In 2013 Omaguru resolved 140,000 customer cases • Customer satisfaction at very high level 17
Slide 18: Elisa tested new generation LTE as first in the Nordic countries
Elisa tested new generation LTE as first in the Nordic countries • New technology (Carrier Aggregation) enables up to 300 Mbps speed • More speed and new capacity for customers • Two times faster connection than the current LTE • Two combined 20 MHz channels were tested in 1,800 MHz and 2,600 MHz co
Slide 19: Outlook and guidance for 2014
Outlook and guidance for 2014 • Macroeconomic environment still weak in 2014 • Competition remains challenging • Revenue at the previous year’s level, or slightly above • EBITDA excluding one-offs at the same level as last year, or slightly higher • CAPEX maximum 12 per cent of revenue 19
Slide 20: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 21: Revenue and EBITDA as guided
Revenue and EBITDA as guided EUR million Q4/13 Q4/12 Δ 1) Δ% 2013 2012 Δ 1) Δ% Revenue 401 396 5 1 1,547 1,553 -6 -0 Other operating income 2 1 4 5 Operating expenses -282 -273 -1,061 -1,057 EBITDA 122 124 -2 -2 491 501 -10 -2 EBITDA-% 30 31 32 32 EBITDA excl. one-offs 134 124 10 8 508 501 7 1 EBITD
Slide 22: Efficiency measures continued
Efficiency measures continued Cost efficiency measures contributed to EBITDA improvement • Streamlining product portfolio • Increasing efficiency in customer service • Improving sales efficiency • Simplification of IT • Decreasing costs in general administration • In Q4/2013 €12m in restructuring ch
Slide 23: Revenue change, €m
Revenue change, €m 401 396 13 -14 -11 17 - MTR reduction + Online services + ICT services + Estonia + PSTN + Mobile + Estonia +/- Cable TV - Mobile + Fixed broadband + PSTN Q4/12 Interconnection Equipment Consumer Corporate Q4/13 and roaming sales Customers Customers 1 553 1 547 20 -61 33 2 2012 Int
Slide 24: OPEX affected by one-offs
OPEX affected by one-offs Q4 Q1 Q2 Q3 Q4 • OPEX decreases in Q4/13 EURm 12 13 13 13 13 • Interconnection and roaming Materials and 171 146 155 157 161 • Equipment purchase costs services • Productivity improvements Employee benefit 62 64 66 62 78 • OPEX increases in Q4/13 expenses 1) • Acquired comp
Slide 25: CAPEX according to guidance
CAPEX according to guidance • FY CAPEX excl. licence €202m 20% 14% 14% • CAPEX/sales 13% (12) 13% 13% 13% 13% 12% 13% 15% 11% • Q4 CAPEX excl. licence €57m (50) 10% • Consumer €32m (29) 5% • Corporate €25m (21) 39 • 800 MHz license fee in Finland €33m 103 0% • Five annual installments 33 -5% • Major
Slide 26: Cash flow
Cash flow EUR million Q4/13 Q4/12 Δ1) 2013 2012 Δ1) EBITDA 122 124 -2 491 501 -10 Change in receivables -17 -7 -10 -13 -14 1 Change in inventories 1 -5 6 6 -19 26 Change in payables 12 -6 17 2 -16 18 Change in NWC -4 -17 13 -5 -50 45 Financials (net) -9 -7 -2 -25 -30 5 Taxes for the year -17 -15 -2
Slide 27: MTR cuts lowered Estonian revenue
MTR cuts lowered Estonian revenue 28% • Revenue €25m (29) 27% 27% 27% 27% 26% 25% 26% • Decrease in MTRs 23% • Growth in mobile data • EBITDA €7m (8) • CAPEX €3m (5) • LTE, 3G Coverage 30 29 28 • Nationwide LTE network was opened in August 26 25 25 25 24 21 • Growth in mobile subs: +7,900 QoQ Q4 Q4
Slide 28: Solid liquidity position
Solid liquidity position Bond and bank loan maturities • Cash and undrawn committed facilities €438m (340) • Revolving Credit Facilities €300m fully undrawn • Commercial paper programme 130 • €101m in use as 31 December 2013 11 • Solid credit ratings since 2003 300 300 170 • S&P BBB Stable outlook •
Slide 29: Capital structure at target level
Capital structure at target level 2,1 2,0 2,0 • Target setting 1,6 1,8 1,7 1,7 1,7 1,5 • Net debt / EBITDA 1.5–2x • Equity ratio > 35% 1 042 995 971 909 874 839 807 788 754 • Capital structure 42% 45% 38% 41% 42% 33% 36% 35% 37% • Net debt / EBITDA 2.0x Q4/11 Q1/12 Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/1
Slide 30: Competitive remuneration continues
Competitive remuneration continues 149% 135% 126% 1,4 • EUR €1.30 per share proposal 101% 98% 104% • Total amount €207m 88% • Pro Forma Net Debt/EBITDA 2.1 0,9 • ex-dividend date 3 April 2014 • Payment date 15 April 2014 1,80 1,42 0,4 1,30 1,30 1,30 1,30 1,00 • Dividend yield 6.7% 1) -0,1 • Payout r
Slide 31: Annual Results
ANNUAL RESULTS 7th February 2014
Slide 32: Consolidated cash flow statement
APPENDIX SLIDE Consolidated cash flow statement EUR million Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Q1 2012 Q4 2011 Cash flow from operating activities Profit before tax 60 78 63 53 64 78 66 61 72 Adjustments to profit before tax 59 60 54 55 58 54 55 59 58 Change in working capital -
Slide 33: Financial situation
APPENDIX SLIDE Financial situation EUR million 31 Dec 13 30 Sep 13 30 Jun 13 31 Mar 13 31 Dec 12 30 Sep 12 30 Jun 12 31 Mar 12 31 Dec 11 Interest-bearing debt Bonds and notes 750 750 451 450 525 375 375 375 375 Commercial papers 101 192 204 179 96 170 198 184 189 Loans from financial institutions 22