Telia Company AB · OMXSTO:TELIA
Telia Company AB — TeliaSonera — Corporate Update (December 2006)
32 slides from Telia Company AB's corporate update, December 2006
Slide 1: The smart mobile choice in Spain
the smart mobile choice in Spain
Slide 2: Why Spain and why TeliaSonera?
Why Spain and why TeliaSonera? 1. Good and timely business opportunity to invest in profitable growth based on the strengths of our home market operations 2. Price for 3G-network equipment has fallen significantly and turnkey contracts possible 3. The availability of 3G terminals at commercial viabl
Slide 3: Road to success
Road to success 1. Low fixed costs ensure long term competitiveness 2. Flexible and cost efficient organization 3. Own high quality 3G network creating sustainable contribution to margin over time 4. Easy-to-use services at transparent and attractive prices 5. Experience & know-how 6. High market po
Slide 4: Yoigo slashes prices in the mobile telephony sector (press quotes)
Expansión, 30 November 2006 ”Yoigo slashes prices in the mobile telephony sector” ”The fourth operator revolutionizes the market with 0.12 Euro for any call to fixed or mobile” ”Yoigo launches with the cheapest fare” ”The fourth operator has an aggressive commercial plan with calls at 0.12 Euro per
Slide 5: History of Xfera/Yoigo
History of Xfera/Yoigo Xfera abandons Ministerial Order: its plan for an Modification of Xfera Launch of UMTS anticipated license conditions, TeliaSonera mobile Founding GSM/GPRS operations license commitments and majority of Xfera launch in Q1’02 award related guarantees shareholder 4 Jan’00 10 Mar
Slide 6: History of Xfera/Yoigo - new licence conditions
History of Xfera/Yoigo - New licence conditions vs. initial offer Population Covered (%) Investment (€ MM) 5 200 Performance 95% 95% 90% Guarantees 4 000 70% EUR 3 bn 63% EUR 176 mn 50% 40% 1 762* 1 393* 25% Inicial offer New license (June'04) New license Inicial offer L L+1 L+2 L+5 L+10 L+15 L L+1
Slide 7: Shareholder structure
Shareholder structure Shareholder structure New Shareholder prior to June 15, 2006 Structure Others TeliaSonera Telvent 3.0% FCC 3.4% Abengoa 12% Group 16%* 6% ACS 17% FCC 8% Abertis 9% 38% ACS 76.6% 11% TeliaSonera Alba: March Group * 16.55% with an additional share of shareholder capital commitmen
Slide 8: Yoigo milestones post acquisition
Yoigo milestones post acquisition TeliaSonera Agreement with Distribution Launch First call increases Ericsson on 3G radio, agreement ownership network and on with The of 3G network services to 76.6% service equipment Phone House 15 Jun 29 Jun 2 Aug 19 Sep 10 Oct 26 Oct 31 Oct 11 Nov 1 Dec 2G roamin
Slide 9: Yoigo set-up
Yoigo set-up Lean, flexible and capable… • Streamlined organization geared towards low fixed internal costs – Start-up organization fully staffed, 70 employees (50 local employees + 20 expats) • Management with experience from mobile start-ups • Owners providing industrial knowledge (TeliaSonera) as
Slide 10: Yoigo set-up: outsourced functions
Yoigo set-up …with outsourced functions, including • Managed service contract with Ericsson including – Network operations, optimization, system support, field maintenance, contract management • Customer care outsourced to Emergia including – 1:st and second line support, telesales, credit scoring a
Slide 11: Spanish mobile market: General
Spanish mobile market: General One of the most dynamic With high potential… markets in Europe… • Cumulative growth rate >7% • Customer generally consider (2003-05) – highest growth in Europe mobile prices to be high – Yearly growth 04-05 ~10% • Price, network quality and • ~20 million handsets sold
Slide 12: MVNO/SPs on the Spanish market
MVNO/SPs on the Spanish market MVNO negotiation status in Spain, November 2006 MNO Operations M launched V Agreement N reached O Source : Arthur D. Little Analysis / Currently S negotiating P • At the moment, over 40 companies are reported to be interested in the MVNO/SP opportunity TeliaSonera expe
Slide 13: MVNO/SPs on the Spanish market
MVNO/SPs on the Spanish market 2 • MVNO/SPs expected to gain moderate market share in Spain by 2010 • Current development of MVNO/SPs in Spain in line with our expectations and forecast • The Yoigo Business Plan does not include MVNO/SP services • TeliaSonera has vast experience of MVNO/SP markets:
Slide 14: The Spanish interconnection regime
The Spanish interconnection regime CMT decision 28 September • Reduction by 41-47%, glide path to Sept 2009 with end-price EUR 0.07 • CMT decision in line with general development of tariffs in Europe Pre CMT Apr 09- Operator (EUR) Oct 06 Apr 07 Oct 07 Apr 08 Oct 08 decision Sep 09 0.1197 0.114 0.10
Slide 15: Yoigo strategy - Vision and Mission
Yoigo strategy - Vision and Mission VISION: Our market and what we want to be In the dynamic Spanish market… … Yoigo will be the European benchmark operator for SIMPLICITY and EFFICIENCY MISSION: How do we do it Zero broken promises One minute to get started Two times more cost effective 3G is an ev
Slide 16: Yoigo strategy - Positioning
Yoigo strategy - Positioning Yoigo is positioned as a Price no frills operator with own network focusing on Service quality SIMPLICITY, EFFICIENCY AND LOW COST High Simplicity Low Physical Channel Digital 16
Slide 17: Yoigo strategy - Values and principles
Yoigo strategy - Values and principles Simplicity - easy to be a Yoigo customer Fair - open to everyone with decent and transparent prices Witty - different, challenging and competitive Honest - clear, simple and understandable offerings Efficient - the fast & small challenger; roll-out in record ti
Slide 18: Yoigo strategy - Brand
Yoigo strategy - Brand Why Yoigo? We wanted: • Something fresh in the Spanish market that stands out • “Empty” brand without connotation • With available .com address We evaluated: • Continuing with Xfera • “Importing” a brand from TS group • Developing a new brand 18
Slide 19: Yoigo strategy - Brand
Yoigo strategy - Brand Brand Strategy • “Yo oigo” = “I hear” • Brand established initially through PR followed by commercial campaigns • Brand manifested in sales campaigns focused on direct response rather than lifestyle campaigns • Differentiate brand by using several colors • Around 500,000 hits
Slide 20: Yoigo strategy - Commercial strategy
Yoigo strategy - Commercial strategy Market Customer Care • Yoigo will be perceived as the provider of • Yoigo will strive for very high first call easy-to-use services at transparent and resolution rates, solving issues at first attractive prices point of contact • Yoigo will initially focus on mas
Slide 21: Yoigo strategy - Technical strategy
Yoigo strategy - Technical strategy Network VAS-services • Yoigo will build out in line with or faster than • Synergies with TS group - common license requirements platforms such as portal, MMS, OTA etc., • Site sharing will be used actively to limit complemented with VAS-platform in social impact a
Slide 22: Yoigo's network coverage at year end 2006
Yoigo’s network coverage at year end 2006 Yoigo 3G network with coverage of approx. 26% of population Vodafone 2G network with coverage of > 99% of population 22
Slide 23: National 2G roaming
National 2G roaming The Yoigo license conditions include the right to get GSM national roaming on reasonable commercial conditions Agreement re-signed with Vodafone on September 19 • Updates 2001-agreement to reflect market developments • Includes seamless 3G <-> 2G handover • > 99% of population co
Slide 24: Yoigo strategy - Launch offer
Yoigo strategy - Launch offer: Easy-to-use, transparent and attractive prices Existing market offers Target customers and profiling All figures excl Post and and tariffs VAT Pre-paid • Mass-market customers (Residential) • Same price for post and pre-paid Start-up fee €0.12 €0.12 (pre & post-paid) •
Slide 25: TeliaSonera investments in Xfera/Yoigo
TeliaSonera investments in Xfera/Yoigo • Investments pre-acquisition: approx. EUR 95 million – 1/3 acquisition of shares – 1/3 share capital increase – 1/3 shareholder loan and capital investment obligation – Book value of pre-acquisition investments: zero • Investments in relation to and post acqui
Slide 26: Earn-out model
Earn-out model • Valid 20 years from closing • TeliaSonera’s net share capped at approx. EUR 195 million • Earned out via dividends (30/70% to old/new shareholders) and/or if the company is sold, the proceedings of the sale • In addition, if the company is sold, TeliaSonera, ACS/Telvent and FCC will
Slide 27: Call-put option
Call-put option • TeliaSonera has a call option exercisable when the pre-agreed criteria are fulfilled – After 5 years and at least 50% of the earn-out has been paid and there has been at least 2 years of consecutive net profit – If call exercised, the exercise price of the call option will be deter
Slide 28: Yoigo financial goals
Yoigo financial goals Market share ARPU • Yoigo 2007 market share goal <1% • 2005 average ARPU EUR ~35/month • In 2007 11,000,000 gross adds • Initial Yoigo ARPU EUR ~30/month expected (outgoing & incoming traffic) • Yoigo 2007 goal 3% of gross adds • Over time ARPU will gradually decrease • Long-te
Slide 29: Yoigo financial goals
Yoigo financial goals EBITDA and Cash flow CAPEX • Operation expected to be cash flow • Average cost per site expected to positive and earnings accretive be between EUR 50–70,000 within 5 years • Rollout plan according to minimum • Long term goal to reach EBITDA* license requirements margin of ~30%
Slide 30: We have done one of Europe's fastest start-ups
We have done one of Europe’s fastest start-ups and… We succeeded in our goal to launch before the end of the year ROBUST BUSINESS CASE BENCHMARK LOW COST SHARP BUSINESS FOCUS 3G-LICENSE / 2G-ROAMING 30
Slide 31: 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
Slide 32: The Nordic and Baltic telecommunications - TeliaSonera
The Nordic and Baltic . telecommunications ° ak TeliaSonera