Elisa Oyj Class A · OMXHEX:ELISA
Elisa Oyj Class A — Investor Day (November 2002)
50 slides from Elisa Oyj Class A's investor day presentation, Nov 28, 2002
Slide 1: View on Strategy and Outlook 2003
View on Strategy and Outlook 2003 Matti Mattheiszen CEO and President Elisa Communications’ Capital Markets Day 28 November 2002
Slide 2: View on Strategy and Outlook for 2003
View on Strategy and Outlook for 2003 Underlying Elisa’s Strategy Status Report of Strategy Execution Strategy Focus 2003 Growth Trends of the Finnish Market Outlook for 2003 2
Slide 3: Underlying Elisa's Strategy
Underlying Elisa’s Strategy Elisa as the leading national Elisa as the national telecommunication challenger in the service provider Helsinki domestic market Telephone as the local market leader Revenue level Revenue EUR 2bn EUR 1.6bn Revenue EUR 0.4bn Leader in Investment Domestic the domestic mark
Slide 4: Status Report of Strategy Execution (1) Domestically
Status Report of Strategy Execution (1) Domestically Announced strategy Strategy executed Mobile services Radiolinja in full control Nationwide backbone Datatie’s network merged to Elisa Networks, strong synergy benefits Access and presence in key markets SoonCom, Kestel, Lounet, RPO, TikkaCom Scale
Slide 5: Status Report of Strategy Execution (2) Internationally
Status Report of Strategy Execution (2) Internationally Announced strategy Solution delivered Global reach of services to Elisa’s Vodafone cooperation ensures global customers scope and quality of mobile services to Elisa’s customers Profitable growth from neighbour countries Profitable business in
Slide 6: Strategy Focus in 2003
Strategy Focus in 2003 Elisa will strengthen further its core businesses and thus increase the shareholder value by focusing in telecommunication business, integrating domestic businesses further, turning the German-based businesses profitable, and divesting remaining non-core businesses. 6
Slide 7: Growth Trends of the Finnish Market
Growth Trends of the Finnish Market 7 Settling back to long-term 6 The market growth trend Total market size EUR billion doubled in . 5 five years 3 % p.a Market Trend .a. p Growth boosted . p .a 4 % 7 by Consumer % Mobile Services 20 3 p.a. GNP Trend 3 % 2 1 0 2002 7
Slide 8: Outlook 2003
Outlook 2003 Objective Execution Management continues to Group synergy effects facilitate more competition power. focus on long term share Business Areas concentrate on improving their margins by holder value … leveraging existing infrastructure assets. Strong customer intake in H1 2002 partly compe
Slide 9: Outlook 2003
Outlook 2003 Objective Execution … positive cash flow, EBITDA / CAPEX ratio is stable, financial expenses are decreasing. … and decreasing net debt. Further non-core businesses and assets will be divested. Net debt will be further reduced to the level of 2 x EBITDA, and the stable financial position
Slide 10: Outlook 2003
Outlook 2003 Objective Execution Growth potential Domestic telecom market annual growth 1…3%. Elisa leverages its broadband market leadership in fixed, MNP* is seen as an opportunity in mobile. CAPEX control Operative investments of the Group are targeted to level of 15% of revenue, excluding target
Slide 11: Financial Figures
Financial Figures Vesa-Pekka Silaskivi CFO Elisa Communications’ Capital Markets Day 28 November 2002
Slide 12: Financial Figures, Key Topics
Financial Figures, Key Topics Financial Objectives Cash Flow Earnings Development Balance Sheet Policy Elisa’s Equity Policy 2
Slide 13: Financial Objectives
Financial Objectives Improving profitability Synergy benefits, cost cutting programmes (2002 onwards) EBITDA-% more than 25%, EBIT-% above 10% (2004 onwards) Solid financial position Positive operative cash flow (2002 onwards) Decreasing net debt, net debt / EBITDA ≤ 2x (remains as targe
Slide 14: Cash Flow from Operations is Positive
Cash Flow from Operations is Positive 40 EBITDA 30 Germany, Mobile, Fixed 20 CAPEX E U R m illio n 10 Controlled level 0 -10 Financial expenses -20 Lower net debt and interest rates -30 Working capital management -40 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Receivables, procurement,
Slide 15: Earnings Development
Earnings Development Estimated synergy benefits EUR 20 – 25 million in 2003 Market growth Change in 0% 1% 2% 3% 4% 5% prices EURm 4% 30 40 50 60 60 70 3% 20 30 40 50 60 60 2% 20 20 30 40 50 60 1% 10 20 20 30 40 50 0% 0 10 20 20 30 40 -1 % -10 0 10 20 20 30 -2 % -20 -10 0 10 20 20 -3 % -20 -20 -10
Slide 16: Balance Sheet Policy
Balance Sheet Policy Healthy balance sheet No “soft points”, no need for exceptional write downs in tangible assets Prudent depreciation schedules (e.g. mobile network 6-8 years, fixed network nodes 8-10 years) Lighter balance sheet Sale of non-core assets Working capital management Eq
Slide 17: Elisa's Equity Policy
Elisa’s Equity Policy No share issues considered for raising equity Use of share issuance rights for share exchange deals unlikely in 2003, but the rights are expected to be applied from AGM Application for share buy-back authorisation of the AGM in April 2003 is under consideration 7
Slide 18: Investor's Appendix
Investor’s Appendix Balance Sheet Structure Fixed Assets and Goodwill Net Debt Key Figures 8
Slide 19: Balance Sheet Structure
Balance Sheet Structure Divestments Interest bearing Tangible assets 944 897 debt Non interest 456 Goodwill bearing debt 624 Improving 79 Appropriations Other assets net working 111 Minority 114 capital Inventory 21 Improving Equity Receivables 424 profitability 664 Cash 80 Total assets, EUR 2207m E
Slide 20: Fixed Assets and Goodwill
Fixed Assets and Goodwill Fixed Depr. from Goodwill Gw depr. assets fixed assets Goodwill depr. time, EURm 9M 2002 9M 2002* 9M 2002 9M 2002* years Mobile business 365 71 474 29 15 Fixed network business 444 85 32 2 15 Germany-based business 160 17 105 9 10 Other companies 54 17 13 3 5 Total 1023 190
Slide 21: Net Debt Reduction in Progress
Net Debt Reduction in Progress Consolidation of Tropolys companies Sale of Instalia and change in debt business 900 reserving Sale of Elisa Management 850 directory target for the business year-end 800 (incl. sale of Soon and 750 Yomi directories) 700 650 600 550 500 Q1/01 Q2/01 Q3/01 Q4/01 Q1/02 Q2
Slide 22: Key Figures of Elisa Communications
Key Figures of Elisa Communications Elisa Group Q3/02 Q2/02 Q1/02 Q4/01 Q3/01 Q2/01 Q1/01 EURm Revenue 388 406 384 386 389 331 333 EBITDA 51 86 78 183 91 75 76 EBITDA-% 13 % 21 % 20 % 47 % 23 % 23 % 23 % Clean EBITDA 84 86 86 97 91 77 68 Clean EBITDA-% 22 % 21 % 22 % 25 % 23 % 23 % 20 % EBIT -43 -32
Slide 23: Key Figures (cont.)
Key Figures (cont.) Business Areas Q3/02 Q2/02 Q1/02 Q4/01 Q3/01 Q2/01 Q1/01 Elisa Mobile Revenue 188 192 174 180 185 170 152 ARPU, EUR 43,0 43,5 41,4 42,7 44,2 45,3 42,2 Churn, % 14,0 12,7 18,2 14,4 15,5 13,9 13,9 Subscriptions 1 301 621 1 289 016 1 348 710 1 356 204 1 295 280 1 281 577 1 392 000 C
Slide 24: Werner Kühne, CFO of TROPOLYS GmbH
Werner Kühne, CFO of TROPOLYS GmbH
Slide 25: TROPOLYS – Structure
TROPOLYS – Structure Elisa Kommunikation GmbH 65,9% * *planned as of 2003-01-01 Date: 11/2002 TROPOLYS GmbH Page 2
Slide 26: Executive Summary and Company Overview
Executive Summary and Company Overview TROPOLYS is a company group of 14 local telecommunication operators (city carriers) in Saarland, North Rhine Westphalia, in the Rhine Main region and in the Eastern Germany The group will be successfully enlarged by a phased consolidation of new carriers
Slide 27: Facts
Facts Market potential today Customers - 8,8 Mio. citizens - approx. 13.000 business customers - 4,4 Mio. households - strong increase in business customers - 252.000 SME continues 640 employees year end Network 2002 - approx. 11.000 route kilometres of fibre network - at present 243 develop
Slide 28: Strategy
Strategy Date: 11/2002 TROPOLYS GmbH Page 5
Slide 29: The Consolidating City Carrier Market
The Consolidating City Carrier Market The consolidation opportunity is to integrate City Carriers to overcome their scale deficiencies while maintaining their inherent strengths City Carriers’ Consolidated Company’s Advantages/Deficiencies Advantages 9 Local market knowledge 9 Local market knowled
Slide 30: Products Description
Products Description A dedicated array of products for the SME/corporate customer base Narrow band Broadband Advanced services Carrier and services services ISP products (ISDN / IP) (DSL / IP) (IN / UMS) Provision of broadband Product bundle products to Intelligent alternative of Voice and mailbox
Slide 31: Marketing and Sales
Marketing and Sales Focused sales channels for each target customer base Sales channels Target Market Key Account Management Key Account Manager Carriers, projects Direct Sales Corporate Account Manager SME Indirect Sales SOHO & Sales Partner Residential (high spenders) Date: 11/2002 TROPOLYS GmbH
Slide 32: Management
Management Date: 11/2002 TROPOLYS GmbH Page 9
Slide 33: TROPOLYS Management Structure
TROPOLYS Management Structure CEO Peer Knauer Corporate Development M&A Public Relations Human Resources CTO CFO COO Dr. Hai Cheng Werner Kühne Detlef Wientgen Network Planning Accounting Sales Network Operations Controlling Marketing IT / Billing Finances Product Managemen
Slide 34: Summary
Summary Date: 11/2002 TROPOLYS GmbH Page 11
Slide 35: Summary
Summary TROPOLYS is one of the largest local access network carriers in Germany TROPOLYS aims to become the leading alternative local access network carrier after Deutsche Telekom AG in its respective regions TROPOLYS has a clear strategy for achieving growth through strategic acquisitions and
Slide 36: Multimedia Messaging – Radiolinja Picture Messages
Multimedia Messaging – Radiolinja Picture Messages › Jouko Lintunen › Elisa Capital Market Day, November 28, 2002
Slide 37: Multimedia Messaging – Radiolinja Picture Messages
Multimedia Messaging – Radiolinja Picture Messages Jouko Lintunen / SVä 26.11.2002 2
Slide 38: Agenda
Agenda Multimedia Messaging Services Radiolinja Picture Messaging First Impressions on Take-up Conclusions Jouko Lintunen / SVä 26.11.2002 3
Slide 39: MMS Is the Next Generation Messaging Standard for Mobile Phones
MMS Is the Next Generation Messaging Standard for Mobile Phones › MMS can consist of text, pictures, sound and their combinations. The messages can be composed as slideshows timed with SMIL (Synchronized Multimedia Integration Language. › Composing, sending and receiving a MMS with a mobile phone is
Slide 40: Radiolinja Strongly Believes in MMS…
Radiolinja Strongly Believes in MMS… Pike 3.44 kg, ice 10 cm, Consumers intuitively understand the benefits of MMS depth 1 m. › Findings from concept testing and pilot very promising › Increasing digital photography supports MMS Rare opportunity to leverage existing investments › Use of existing GPR
Slide 41: …Yet Certain Challenges Still Exist
…Yet Certain Challenges Still Exist Terminals › Terminal interoperability: common ground still quite narrow › Finland possibly less affected due to a very high share of Nokia terminals Premium Content › Digital Rights Management (DRM) solution required for premium entertainment and sports multimedia
Slide 42: MMS Must Succeed for the Need for 3G to Arise
MMS Must Succeed for the Need for 3G to Arise STARS WWW.FIREVISION.NU The value proposition of 3G is based on improved data and multimedia › Current cellular usage is almost entirely voice and SMS messaging MMS improve user experience of messaging and mobile content › With current bandwidth requirem
Slide 43: MMS Expected to Bring 17–36% of Messaging Revenues in 2005
MMS Expected to Bring 17–36% of Messaging Revenues in 2005 Messaging revenue forecasts for Western Europe 50 000 40 000 MMS 36% 30 000 MEUR MMS 17% MMS SMS & 20 000 other messaging 10 000 - Ovum Ovum Forrester Forrester 2002 2005 2002 2005 Sources (exchange rate: 1€ = 1$) • Ovum: MMS and SMS: Multim
Slide 44: The Finnish Mobile Ground Is Ready!
The Finnish Mobile Ground Is Ready! Very high penetration of mobile subscriptions, 80% › Almost entirely post-paid Low churn, 14% High ARPU, 43 EUR/mo/subscriber High usage, 27 SMS/mo/subscriber › 67% of Radiolinja subscribers use SMS Illegal to bundle handsets with subscriptions Finnish Finnishmark
Slide 45: Radiolinja MMS Strategy
Radiolinja MMS Strategy Multimedia messaging as evolution to text messaging › Similar pricing: sender pays an event based charge, no monthly fees Mitigation of the “first user’s challenge” › Legacy phone support, free of charge picture album with message composer for legacy users – bigger pool of MM
Slide 46: About Radiolinja MMS Services
About Radiolinja MMS Services The most versatile MMS offering in Finland First services launched in mid- September › Event based billing 0.58 EUR per message (up to 100 kB) › No activation or monthly charges › Dedicated MMS Access Point, GPRS service not visible to subscribers › Service provider int
Slide 47: Most Versatile MMS Offering in Finland – Radiolinja Picture Messages
Most Versatile MMS Offering in Finland – Radiolinja Picture Messages Person to person MMS messaging Message album on the web MMS legacy support › SMS notification and web page › Message album also for registered legacy users Content services › Postcard service › Animations › Polyphonic ringing tones
Slide 48: First Impressions on Take-up
First Impressions on Take-up Radiolinja has commissioned a research as part of doctoral thesis on the picture messaging strategies of its pilot customers in summer 2002 › A pre-launch pilot in the summer of 2002 consisting of 96 Radiolinja subscribers in sixteen groups of friends, family and co-work
Slide 49: Conclusions
Conclusions MMS technology is by large ready for deployment; terminal interoperability challenge less pronounced in Finland due to high Nokia share of market Finnish market ready for MMS and among the first to offer national interconnection in MMS Radiolinja has the most versatile MMS offering in Fi
Slide 50: Thank You!
Thank You! Jouko Lintunen / SVä 26.11.2002 15