Slide 1: Interim Report 1 January 2006 – 31 March 2006
Interim Report 1 January 2006 – 31 March 2006 Elisa Corporation Interim report Q1 2006, 25 April 2006 1
Slide 2: Q1 2006 Report
Q1 2006 Report President and CEO Veli-Matti Mattila
Slide 3: Elisa Q1 2006
Elisa Q1 2006 • Q1 2006 and financial highlights • Review of the mobile and fixed network businesses • Execution of the strategy • Outlook for 2006 Elisa Corporation Interim report Q1 2006, 25 April 2006 3
Slide 4: Elisa Q1 2006 highlights
Q1 2006 financial highlights Elisa Q1 2006 highlights • Market moving towards service competition − operators focus increasingly on existing customers − Elisa launched 3G service bundles • Elisa strengthened its position in the broadband market. Position in the mobile business improved by the Saunal
Slide 5: Growth in revenue, profit met expectations
Q1 2006 and financial highlights Growth in revenue, profit met expectations Revenue and EBITDA-%* • Revenue EUR 348m (333) 343 348 336 • EBITDA EUR 99m (97) 333 326 − excluding one-offs EUR 103m (89) • EBIT EUR 43m (45) • Pre-tax profit EUR 39m (39) 30 % • EPS EUR 0.18 (0.23) 27 % 25 % 26 % 26 % Q1
Slide 6: Financial position stable
Q1 2006 and financial highlights Financial position stable Net debt and cash flow • Cash flow EUR 13m (26) • Net debt EUR 293m (489) 489 • CAPEX EUR 43m (42), 12% of 364 363 revenue (13) 293 293 • Equity ratio 62% (49) 145 136 • Gearing 23% (55) 26 13 1 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006 Net de
Slide 7: Lower churn and decrease in ARPU
Segment review, mobile business Lower churn and decrease in ARPU ARPU and value added services • Towards service competition − Churn 19.0% (33.5*) 34,6 33,8 31,2 30,4 • ARPU EUR 28.0 (34.6*) 28,0 − seasonality, elimination of Saunalahti 1 483 interconnection revenue • Subscription growth 22 000 in Q
Slide 8: Profitability improving
Segment review, mobile business Profitability improving Revenue and EBITDA-% • Revenue EUR 192m (179) − growth due to increased 197 192 Saunalahti traffic 179 180 183 • EBITDA EUR 53m (49), 28% of revenue (27) • EBIT EUR 30m (27), 16% of revenue (15) 27 % 26 % 26 % 28 % 25 % Q1 2005 Q2 2005 Q3 2005
Slide 9: No changes in recent trends
Segment review, mobile business No changes in recent trends ARPU (EUR) and churn (%) Usage (min/sub/month) 50 240 45 220 40 200 35 180 30 160 25 140 20 120 Three Saunalahti Several new Elisa acquired Three main started to players in the Saunalahti main players15 grow market players 100 in the Number
Slide 10: Market leadership in broadband strengthened
Segment review, fixed network business Market leadership in broadband strengthened Broadband subscriptions • ADSL subscriptions growth 71% 480 000 459 827 y-o-y 430 000 420 465 384 909 380 000 • Organic growth almost 40,000 345 898 384 909 subscriptions in Q1 330 000 308 183 280 000 269 232 • Elisa
Slide 11: Broadband sales increased revenue
Segment review, fixed network business Broadband sales increased revenue Revenue and EBITDA-% • Revenue EUR 180m (162) 180 • EBITDA EUR 46m (40), 26% of 170 166 173 162 revenue (25) − revenue growth − lower costs • EBIT EUR 15m (13), 8% of revenue (8) 25 % 25 % 24 % 26 % 21 % Q1 2005 Q2 2005 Q3 2005
Slide 12: Broadband and cable-TV account half of subs
Segment review, fixed network business Broadband and cable-TV account half of subs Thousands 1 600 1 400 1 200 1 000 800 600 400 200 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Traditional analogue ISDN Cable TV Broadband Elisa Corporation Interim report Q1 2006, 25 April 2006 12
Slide 13: Strategy execution
Strategy execution 2005 - 2003 - New markets and new services Strengthening market position Integration in core markets of One Elisa Elisa Corporation Interim report Q1 2006, 25 April 2006 13
Slide 14: Productivity improvement
Strategy execution Productivity improvement • Reduction in personnel costs • Outsourcing of outbound telemarketing activities Significant profitability • Outsourcing of order processing and invoicing activities improvement • Sale of real estate • 3G service bundles based on customer demand • Mobile
Slide 15: Good start for 3G
Strategy execution Good start for 3G • Good start for 3G service bundles • 3G terminals doubled in April in Finland • 3G service bundles enable easy adaptation of new services − video calls, high speed data, mobile TV, e-mail … Ad example: Nokia N70 including 400 minutes per month + data and SMS Eli
Slide 16: Elisa as a forerunner in service development
Strategy execution Elisa as a forerunner in service development • Accelerated renewal of the mobile terminal base due to well adopted 3G service bundles • Development of mobile value added services • Comprehensive managed services of mobile handset for corporate customers • In April, Elisa first to
Slide 17: Outlook for 2006
Outlook for 2006 • Market − Competition remains challenging − More focus on services • Financial position − Revenue will clearly grow − EBITDA and EBIT excluding non-recurring items will improve • CAPEX and cash flow − CAPEX 13-15 per cent of revenue − Cash flow clearly positive Elisa Corporation In
Slide 18: Financial performance
Financial performance CFO Jari Kinnunen
Slide 19: Income statement
Income statement EUR million Q1 2006 Q1 2005 2005 Revenue 348 333 1 337 Revenue growth, y-o-y 5% -1% Other income from operations 3 11 114 Operating expenses -253 -247 -1 005 EBITDA 99 97 446 EBITDA-% 28% 29% 33% EBITDA excluding one-offs 103 89 346 EBITDA-% excluding one-offs 30% 27% 26% Depreciati
Slide 20: CAPEX
CAPEX CAPEX, EURm • Q1 CAPEX includes 100 100 % 95 % − investments in new broadband 90 90 % 85 % infrastructure 80 80 % 15 − capacity increase 70 75 % 70 % − in mobile network 31 65 % 60 60 % − new billing, CRM and network 55 % 50 50 % management systems 5 45 % 3 0 • Investments in fixed assets 40 7
Slide 21: Cash flow
Cash flow Cash flow and operative cash flow*, EURm 160 • Positive cash flow EUR 13m in Q1 140 120 • Change in net working capital EUR -40m 100 − Front end pension payments 80 145 − Seasonality effect in fixed line 60 136 billing 60 47 − Inventories increased through 38 40 40 3G bundling 18 20 26 1 1
Slide 22: Net debt
Net debt Net debt, EURm • Cash flow EUR 13m in Q1 • Saunalahti’s squeeze out of EUR 489 9m becomes interest bearing liability 364 363 293 293 • Bond buybacks EUR 25m • EUR 98m bond redemption in January • Net debt after dividend payment in April 2006 EUR 409m Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q1 2006
Slide 23: Interim Report January 2006 – March 2006
Interim Report 1 January 2006 – 31 March 2006 Elisa Corporation Interim report Q1 2006, 25 April 2006 23
Slide 24: Consolidated Cash flow statement
Appendix slide Consolidated Cash flow statement EUR million Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Q1 2004 Cash flow from operating activities Profit before tax 39 33 28 113 39 65 50 41 56 Adjustments to profit before tax 59 57 53 -11 47 34 57 46 62 Change in working capital
Slide 25: Financial situation
Appendix slide Financial situation Financial situation (million euros) 31 March 2006 31 December 2005 30 September 2005 30 June 2005 31 March 2005 Interest-bearing debt Bonds and notes 326 446 455 458 463 Commercial Paper 0 0 64 Loans from financial institutions 0 1 0 Financial leases 51 56 59 63 61