Sonera — H1 2002 Earnings Presentation
35 slides from Sonera's earnings presentation, Jul 30, 2002
Slide 1: Telia
TELU
Slide 2: Interim Report, January-June 2002
Interim Report, January-June 2002 Stockholm, 25 July, 2002
Slide 3: Anders Igel, President and Chief Executive Officer
Anders Igel President and Chief Executive Officer
Slide 4: Positive underlying earnings trend
Positive underlying earnings trend The Group Growth in core business +6% Underlying EBITDA margin reaches 25% Efficiency measures for continued improvement Reduced investments (CAPEX) Improved cash flow
Slide 5: Efficiency measures for enhanced profitability
The Group Improved margin in all core segments Streamlining Affecting over 1,000 employees Cost in Q2: MSEK 482 Intense focus on efficiency The first stage: distribution and sales Potential is still substantial Efficiency measures for enhanced profitability
Slide 6: Telia Mobile: Nordic customer base
Customer base, Nordic Region 5,128,000* (+117,000) Telia Mobile Increase in traffic per customer Improved underlying EBITDA Efficiency measures Pan-Nordic organization Redundancy over 500 employees * Excluding 179,000 SP customers Improvements for ARPU and MoU in all markets
Slide 7: Telia Mobile: Sweden
Customer base, Sweden 3,484,0001) (+25,000) Record-breaking MoU Improved ARPU despite drops in interconnection price New sales primarily of cash cards New, flexible subscription launched Telia Mobile Increased usage in Sweden 1) Excluding 87,000 SP customers
Slide 8: Telia Mobile: Norway
Customer base, Norway 996,0001) (+11,000) 1) Excluding 92,000 SP customers Higher sales and improved margin (44%) Underlying EBITDA +82% Simple and appealing offers to customers driving increased usage SMS growth still strong Lower customer acquisition costs Telia Mobile Earnings improvement in Norw
Slide 9: Telia Mobile: Denmark and Finland
Customer base, Denmark 413,000 (+91,000) Customer base, Finland 235,000 (-10,000) Customer growth paving the way towards the turning point Customer acquisition costs affecting Q2 results Higher sales in Finland Switch-over to proprietary network National roaming with Suomen 2G Efficiency measures an
Slide 10: Growth in the Baltic Region and Russia
Lithuania Omnitel (27.5%) 679,4001) +52,700 Latvia Latvijas Mobilais Telefons (24.5%) 413,4001) +24,500 Russia MegaFon (17.8%) 1,680,0002) +736,000 Estonia Eesti Mobiiltelefon (24.5%) 405,8001) +14,800 Improved earnings Growth and potential in Russia Market penetration 7% First pan-Russian operator
Slide 11: Telia Internet Services: focus on profitability
Focus on profitability and improved margins Telia Internet Services Lower costs Portfolio review Consultant phase-out Restructuring of the business Redundancy approx. 70 employees Higher sales +25% Strengthened market position in broadband Price increase Strong demand from the business segment Groun
Slide 12: Three times as many ADSL customers in one year
Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 ADSL/LAN 92 134 194 233 264 Sweden 38 42 48 52 55 Denmark 43 49 58 65 70 (thousands) High speed Internet via cable Skanova Three times as many ADSL customers in one year Telia Internet Services Strong potential in the business segment Partnership with TV4 470,000 househ
Slide 13: Telia International Carrier
Telia International Carrier Turbulent market Competitors in bankruptcy Telia has a strong market position Increased order inflow Efficiency measures Redundancies: consultants and employees Reduced leased capacity Lower operating and maintenance costs Improved underlying EBITDA for the third consecut
Slide 14: Telia Networks
Stable underlying EBITDA margin despite lower sales Telia Networks Local preselection implemented. Compensated for by: Redundancies approx. 400 employees, mainly in distribution Lower interconnection fees Continued efficiency measures Market trends are forging new opportunities A strengthened Telia
Slide 15: The Telia Group - medium term
Sales growth 8% Underlying EBITDA margin 25-30% CAPEX GSEK 10-15 Comments on earlier financial targets Telia International Carrier Positive EBITDA on a monthly basis, year end 2002 CEO's comments: Too high in current market situation 25% reached in Q2 Realistic Not likely Possible, but will be affec
Slide 16: Telia Sonera: approval by the EU
Approval of the EU Commission on July 10 conditional upon certain measures Bid period should begin in about two weeks The deal should be finalized in early September Comprehensive planning undertaken Telia Sonera Approval by the EU
Slide 17: Market outlook
Market outlook The Group Overcrowded telecom market Several players in trouble Weakening trend in the wholesale market Market position is critical Leading players getting stronger
Slide 18: Telia's opportunities
Telia's opportunities The Group Take advantage of Telia's strength Strengthen Telia's position on the domestic market Continue the efficiency measures Resolve problem areas International Carrier Telia Mobile Denmark Finalize the merger with Sonera Sharpen Telia's customer- and earnings-focus
Slide 19: Bo Jacobsson, Chief Financial Officer
Bo Jacobsson Chief Financial Officer
Slide 20: Net sales
Net sales Q2 00 Q2 01 Q2 02 The Group Growth +1% Core Business +6% MSEK Rolling 12- months (MSEK)
Slide 21: Telia Mobile sales
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 3985 4372 4786 4714 4654 5110 Sales Telia Mobile Growth +17% - - Customer growth - - Increased MoU Norway +28% Reduced interconnect fees in Sweden MSEK
Slide 22: Telia Mobile underlying EBITDA
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 1167 1074 1375 1089 1234 1357 0.258 0.218 0.262 0.212 0.244 0.251 Telia Mobile Underlying EBITDA Growth +26% Margin 25% Sweden: Reduced inter- connect fees Norway: Efficiency measures MSEK Margin
Slide 23: Telia Internet Services sales
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 715 813 797 963 975 1018 Telia Internet Services Sales Growth +25% Continued customer growth Increased prices MSEK
Slide 24: Telia Internet Services underlying EBITDA
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) -350 -168 -229 -223 -170 -144 -0.4875 -0.197 -0.299 -0.23 -0.173 -0.14 MSEK Telia Internet Services Underlying EBITDA Improvement +14% Increased prices Decreased development costs Improved profitability in the cable TV business Margin
Slide 25: Telia International Carrier sales
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 750 877 1003 1022 1014 1074 Telia International Carrier Sales Growth +22% IP-traffic growth Telephony is 60% of revenues Increase in orders MSEK
Slide 26: Telia International Carrier underlying EBITDA
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) -265 -302 -614 -388 -331 -287 -0.269 -0.276 -0.479 -0.305 -0.277 -0.222 Telia International Carrier Underlying EBITDA Improvement 44 MSEK, compared with Q1 2002 Increased sales Efficiency measures Less leased capacity New operating agreements Reduct
Slide 27: Telia Networks sales
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 7027 7262 7183 7687 6909 6879 Telia Networks Sales Sales decrease 5%; Comparable units -4% Local preselection Weakened wholesale market MSEK
Slide 28: Telia Networks underlying EBITDA
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) 2837 2793 3129 2951 2814 2794 0.352 0.33 0.38 0.317 0.339 0.335 Telia Networks Underlying EBITDA EBITDA unchanged Slightly strengthened margin Efficiency measures MSEK Margin
Slide 29: Share of earnings in associated companies and capital gains
Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Kvartal (MSEK) -157 208 2339 3746 12 363 Share of earnings in associated companies The Group Capital gains MSEK 335 Units divested in 2001 MSEK
Slide 30: Review of earnings
Review of earnings The Group Apr-Jun Apr-Jun Apr-Jun Apr-Jun 2002 2001 2002 2001 Net sales 14,346 14,203 28,231 27,795 Underlying EBITDA 3,587 3,014 6,968 6,362 Operating income 119 988 828 1,799 Income after financial items -78 909 457 1,411 Net income 30 250 157 541 Earnings per share (SEK) 0,01 0
Slide 31: Investments and CAPEX reduction
Q2 00 Q3 00 Q4 00 Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Varav capex 3841 3369 7185 3568 3666 5965 4849 2022 2091 Investments 12201 13376 3126 91 2288 335 308 31 546 The Group Of which CAPEX 16,042 5,954 2,637 Q2 00 Q2 01 Q2 02 Investments Reduction 56% Fixed network in Sweden International carrier net
Slide 32: Strong financial position
Justerat eget kapital Rantebarande nettoskuld 60.8 10.336 Strong financial position Adjusted equity The Group Net interest-bearing liability Low debt/equity ratio: 0.17 Small decrease in total assets GSEK
Slide 33: Cash flow
The Group Q2 01 Q2 02 Q1 02 Q4 01 Q3 01 Q1 01 Improved operating cash flow from operating activities Reduced investments MSEK Cash flow Q1 01 Q2 01 Q3 01 Q4 01 Q1 02 Q2 02 Operating cash flow -3026 3158 4745 9171 -865 1472 Operating cash flow excl. acquisitions and divestments of shares, participati
Slide 34: Summary
The Group Growth Net sales in core business +6% Margin improvement Underlying EBITDA margin 25% Improved free cash flow adjusted for divestments Strong balance sheet Summary
Slide 35: Forward-Looking Statements
Forward-Looking Statements This document contains forward-looking statements regarding the timing of certain regulatory approvals relating to the planned merger between Telia and Sonera and the timing of Telia’s exchange offer to Sonera’s shareholders and warrantholders. Statements that are not stri