Slide 1: Interim Report
Interim Report 1 January 2007 – 31 March 2007
Slide 2: Q1 2007 Report
Q1 2007 Report President and CEO Veli-Matti Mattila
Slide 3: Elisa Q1 2007
Elisa Q1 2007 Q1 2007 and financial highlights Review of the mobile and fixed network businesses Execution of the strategy Progress of mobile services and 3G Outlook for 2007 3 24 April 2007 Elisa Interim Report January-March 2007
Slide 4: Elisa Q1 2007 highlights
Elisa Q1 2007 highlights Sales of 3G service bundles progressed as expected, good growth in broadband subscriptions Use of new mobile value-added services has increased 17,000 new broadband customers Mobile ARPU slightly down from Q4 2006 due to lower interconnection fees, Churn at the same level Mo
Slide 5: Revenue up 9%, EBITDA 12%
Revenue up 9%, EBITDA* 12% Q1 2007 AND FINANCIAL HIGHLIGHTS Revenue and EBITDA-% Revenue EUR 378m (348) growth from sales of 3G terminals and increased usage of mobile services 401 382 387 378 down from Q4 due to lower interconnection fees 348 and seasonality EBITDA EUR 115m (99, excluding one-offs
Slide 6: More efficient capital structure
More efficient capital structure Q1 2007 AND FINANCIAL HIGHLIGHTS Net debt and cash flow Cash flow EUR 18m (13) 578 Net debt EUR 578m (293) development of capital structure dividend payment EUR 243m 381 377 336 CAPEX EUR 45m (43), 12% of 293 revenue (12) Net debt / EBITDA 1.3 (0.9) Equity ratio 51%
Slide 7: Growth in subs, ARPU improved slightly
Growth in subs, ARPU improved slightly SEGMENT REVIEW, MOBILE BUSINESS ARPU and value-added services Active sales in 3G service bundles Elisa’s market share > 50% customer base increased 41,000 31,3 30,5 30,8 29,7 ARPU EUR 29.7 (28.0) 28,0 lower interconnection fee Churn 14.2% (19.0) Growth in usage
Slide 8: 3G bundles increase mobile internet usage
3G bundles increase mobile internet usage SEGMENT REVIEW, MOBILE BUSINESS Number of Internet sessions 1 800 000 1 600 000 Usage of mobile internet almost quadrupled 1 400 000 1 200 000 1 000 000 800 000 600 000 400 000 200 000 0 1/06 2/06 3/06 4/06 5/06 6/06 7/06 8/06 9/06 10/06 11/06 12/06 1/07 2/0
Slide 9: 3G terminals and services brought growth
3G terminals and services brought growth SEGMENT REVIEW, MOBILE BUSINESS Revenue and EBITDA-% Revenue EUR 229m (192) growth from sales of 3G terminals and increased usage of mobile services 253 246 239 229 EBITDA EUR 67m (53), 29% of revenue (28) 192 cost efficiency, volume growth, growth in 3G usag
Slide 10: ARPU and Churn stable, growth in usage
ARPU and Churn stable, growth in usage SEGMENT REVIEW, MOBILE BUSINESS MoU (min/sub/month) ARPU (€) and annualised churn (%) outgoing traffic 40 240 220 35 200 30 180 25 160 20 140 120 15 100 10 80 5 60 0 40 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 ARPU Churn Usage 10 24 April 2007 Elis
Slide 11: Stable growth in broadband subscriptions
Stable growth in broadband subscriptions SEGMENT REVIEW, FIXED NETWORK BUSINESS Broadband subscriptions 600 000 Broadband subscriptions growth continued, y-o-y growth 12% 496 300 513 400 net adds 17,000 in Q1 500 000 472 500 479 600 459 800 Elisa market leader 400 000 Decrease in analogue lines slow
Slide 12: Stable revenue development…
Stable revenue development… Q1 2007 SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue and EBITDA-% Revenue EUR 163m (180) EBITDA EUR 49m (46), 30% of revenue (26) 180 changes in broadband pricing and growth in 166 162 163 subscriptions improved profitability 156 EBIT EUR 26m (15), 16% of revenue (8) 33
Slide 13: … and stable subscription development
… and stable subscription development SEGMENT REVIEW, FIXED NETWORK BUSINESS 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 Q2/06 Q3/06 Q4/06 Q1/07 Traditional analogue ISDN Cable TV Broadband 13 24 April 2007 Elisa Interim Report January-Ma
Slide 14: Elisa strategy
Elisa strategy STRATEGY EXECUTION New services and new markets 2005– Strengthening market position in core markets 2003– Integration of One Elisa 14 24 April 2007 Elisa Interim Report January-March 2007
Slide 15: Productivity improvement
Productivity improvement STRATEGY EXECUTION – INTEGRATION OF ONE ELISA Significant profitability • Outsourcing of billing and order processing • Changes in mobile pricing improvement • Reduction in personnel costs • Intranet and internal applications to mobile phone • Electronic service network for
Slide 16: 3G service bundles success story
3G service bundles success story STRATEGY EXECUTION – STRENGTHENING MARKET POSITION 3G subscriptions and services Active sales of 3G service 3G service bundle market bundles continued (cumulative, ‘000) 650 significant amount of new subscriptions 3G subscription market are 3G service bundles (50%) (
Slide 17: Strong commitment to 3G services continues
Strong commitment to 3G services continues STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Coverage of Elisa’s 3G network 50% of population at the end of September, total about 100 cities network will be expanded to more than 30 new cities Elisa’s 1 Mb/s (HSDPA) 3G network the most rapid, with th
Slide 18: 3G phone in high demand price category
3G phone in high demand price category STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Elisa expand its Vodafone product range to include mobile phones for the first time Elisa introduces the Vodafone 710 3G phone, very popular in the under EUR 100 price category, to the market Vodafone 710 compl
Slide 19: Customer driven services for corporate clients strengthened
Customer driven services for corporate clients strengthened STRATEGY EXECUTION – STRENGTHENING MARKET SHARE Competence in customer service solutions strengthened Elisa strengthened its market leader position by acquiring the entire share capital of the contact centre system supplier First Orange Con
Slide 20: Outlook for 2007
Outlook for 2007 Challenging market Competition remains challenging Focus on services Result will improve from 2006 Revenue will grow EBITDA and EBIT excluding non-recurring items will improve Q2 EBITDA and EBIT at the same level with Q1 – will improve clearly in H2 Stable CAPEX and cash flow CAPEX
Slide 21: Financial performance
Financial performance CFO Jari Kinnunen
Slide 22: Clear earnings improvement
Clear earnings improvement EUR million Q1 2007 Q1 2006 change 2006 Revenue 378 348 9% 1 518 Other operating income 1 3 9 Operating expenses -265 -253 5% -1 093 EBITDA 115 99 16% 434 EBITDA excluding one-offs 115 103 12% 445 EBITDA-% 30 % 28 % 29 % EBITDA-% excluding one-offs 30 % 30 % 29 % Depreciat
Slide 23: Mobile business increased revenue
Mobile business increased revenue EUR million 400 10 -17 37 300 Growth in usage and subscriber base 200 Decrease in 3G bundling 378 348 analogue lines Growth in Estonia 100 New pricing schemes 0 Q1 2006 Fixed line Mobile Other and group Q1 2007 elimination 23 24 April 2007 Elisa Interim Report Janua
Slide 24: Cost structure improved
Cost structure improved Operating expenses, EURm Decrease in personnel expenses Number of personnel decreased by 1 009 year on year 26 -13 -1 Increases in materials and services Bundling 250 Outsourcing Interconnection through increased usage 265 253 150 Q1 2006 Materials Employee Other Q1 2007 and
Slide 25: Steady profitability development
Steady profitability development Revenue EURm, EPS EUR In spite of lower q-o-q revenue 450 0,50 margins at the same level 382 387 401 400 378 348 Clear improvement in EPS y-o-y 350 0,40 Cost efficiency 0,32 300 0,31 0,30 Lower depreciation 0,30 32 % 250 30 % 30 % 30 % Q1 2007 revenue down from Q4 20
Slide 26: More efficient capital structure
More efficient capital structure Balance sheet KPIs 1 500 150 % Balance sheet structure improved 1,3 towards company´s mid term targets 1 250 125 % Net debt/EBITDA 1.3 1,0 Gearing 51% 1 000 0,9 100 % 0,8 Dividend EUR 243m 750 0,7 64 % 66 % 75 % 63 % 51 % 63 % 500 29 % 50 % 25 % 52 % 29 % 30 % 250 25
Slide 27: CAPEX to sales according to targets
CAPEX to sales according to targets CAPEX, EURm CAPEX includes 80 40 % New broadband infrastructure 70 1 3G capacity and coverage increase 32 % Billing and customer care system 60 1 26 Investments in fixed assets 50 4 24 % Mobile EUR 20m 22 7 40 Fixed network EUR 25m 17 20 14 17 % 16 % 30 Shares EUR
Slide 28: Cash flow positive
Cash flow positive Cash flow and operative cash flow, EURm Positive cash flow EUR 18m in 100 Q1 90 83 80 Increase in net working capital 70 EUR 45m 70 60 decrease in accounts payable 60 50 decrease in inventories 46 50 40 30 20 31 41 36 10 18 13 0 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Q1 2007 Cash Flow af
Slide 29: Net debt increased to EUR 578m
Net debt increased to EUR 578m Net debt and Net debt/EBITDA Cash flow EUR 18m in Q4 Dividend EUR 220m in Q1 578 withholding tax EUR 23m payable in Q2 381 1,30 336 293 293 1,02 0,80 0,66 0,65 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Q4 2006 Net Debt, EURm Net debt/EBITDA 29 24 April 2007 Elisa Interim Report
Slide 30: Mobile termination fees
Mobile termination fees Termination fees were agreed by Mobile termination fees, eurocents per minute the operators in February Operator 1.1.2006 1.1.2007 1.1.2008 Changes in interconnection fees Elisa 8,4 7,0 5,1 has negative effect on ARPU TeliaSonera 6,8 6,6 5,1 DNA 10,0 8,2 6,0 Customer billing
Slide 31: Share buy-back will be started
Share buy-back will be started The board of directors have decided to start the purchase of maximum 4 million Elisa shares purchases to start earliest on 25th April 2007 about 2.5% of shares (excluding treasury shares) The share buy-back may be used to improve financial structure for cancelling the
Slide 32: Interim Report
Interim Report 1 January 2007 – 31 March 2007
Slide 33: Consolidated Cash flow statement
Consolidated Cash flow statement APPENDIX SLIDE EUR million Q1 2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Q4 2005 Q3 2005 Q2 2005 Q1 2005 Q4 2004 Q3 2004 Q2 2004 Cash flow from operating activities Profit before tax 64 69 69 34 39 33 28 113 39 65 50 41 Adjustments to profit before tax 50 46 50 63 59 57 53
Slide 34: Financial situation
Financial situation APPENDIX SLIDE Financial situation (million euros) 31 March 2007 31 December 2006 30 September 2006 30 June 2006 31 March 2006 Interest-bearing debt Bonds and notes 677 327 327 326 326 Commercial Paper 0 25 0 35 0 Loans from financial institutions 0 0 0 0 0 Financial leases 45 46