Telia Company AB · OMXSTO:TELIA
Telia Company AB — Investor Presentation (September 2000)
145 slides from Telia Company AB's investor presentation, Sep 1, 2000
Slide 1: Analyst presentation 1 September, 2000
Analyst presentation 1 September, 2000
Slide 2: Agenda
Agenda Overview Jan-Åke Kark Carrier & Networks and Enterprises Marianne Nivert Mobile Kenneth Karlberg People Solutions Jan Rudberg Business Solutions Anders Gylder Regulation Claes-Göran Sundelius R&D Claes Nycander Financial update Reinhold Geijer Summary Jan-Åke Kark Non Syndic
Slide 3: Overview
Overview SECTION 1
Slide 4: Key investment attractions
Key investment attractions Telia is the Internet communications company Structured for the new economy Leader in mobile communications Attractive home base providing a platform for international growth High penetration of PC, mobile and Internet Early adoption rates Ideal market for broa
Slide 5: Sweden - on top of the world
Sweden - on top of the world IT Maturity Ranking R&D as a % of GDP 1 Sweden 5,062 1 Sweden 3,9% 2 US 5,041 2 Japan 2,9% 3 Finland 4,577 3 US 2,7% 4 Norway 4,481 5 Denmark 4,336 Source: IDC, December 1999 Source: OECD High penetration Early adoption rates - PC, mobile, Internet Fully competitiv
Slide 6: Telia's strategy
Telia’s strategy Enhance and leverage home market position Maintain leadership in the Internet communications market New services Rapid roll-out of broadband local loop and broadband services Exploit core capabilities in home market for international growth Particular international focus o
Slide 7: Organisation for growth
Organisation for growth CUSTOMERS PEOPLE BUSINESS ENTERPRISES MOBILE SOLUTIONS SOLUTIONS CARRIER & NETWORKS Non Syndicate Briefing 000901/ IR 7
Slide 8: Internet is the glue...
Internet is the glue... The Internet is a key strategic component of our business and is an integral part of everything we do Examples Mobile portals Mobile MyDOF MISP - Speedy Tomato ISP subscriber growth of 35% in 1999 People Solutions Broadband services with Zone (broadband portal) T
Slide 9: Strategy by geography
Strategy by geography Sweden Nordic and Baltic Region Europe and US “Expand leadership by new “Duplicate Swedish “Leverage service and business growth” market model” applications know-how” Network operator Network operator Establish premier MISP Establish premier MISP Establish service pro
Slide 10: Telia - 2003
Telia - 2003 A world leading IP carrier The largest Nordic mobile operator with significant European presence Operates a leading mobile portal in Europe Dominant provider of residential broadband and Internet services Most advanced provider of communications solutions to corporate customer
Slide 11: Delivering the strategy
Delivering the strategy Mobile Acquisition of NetCom ASA Added 533,000 GSM subscribers in Sweden, Denmark and Finland during H1 2000 Pilots of mobile portal Speedy Tomato launched in Finland, Denmark and the UK International Carrier Swap agreements with Global Crossing and Colt Acquisi
Slide 12: Carrier & Networks
Carrier & Networks SECTION 2
Slide 13: Introduction
Introduction Carrier & Networks Telia International Carrier Skanova The leading Swedish Leading IP-based, network company - pan-European and North backbone and local American carriers’ carrier access Smart build, low cost Foothold in network positioned for the neighbouring markets data marke
Slide 14: Carrier & Networks: Networks
Carrier & Networks SECTION 2 A:NETWORKS
Slide 15: Skanova - 2003
Skanova - 2003 Skanova will be the leader in Swedish broadband networks delivering best of breed network services to all its customers More than a quarter of total network revenue will come from external wholesale customers Non Syndicate Briefing 000901/ IR 15
Slide 16: Strategy
Strategy Rapid transition to integrated domestic IP network Rapid roll-out of broadband local loop Rapid expansion of third party customer base Exploit telephony “cash cow” Non Syndicate Briefing 000901/ IR 16
Slide 17: Skanova network
Skanova network One of the most technologically advanced fixed line networks in the world Fully digital local, trunk and international switching Fully digital transmission Wide access to ISDN National network featuring SDH Developing new integrated domestic IP network Broadband Interne
Slide 18: Skanova network in Sweden 1999/2000
Skanova network in Sweden 1999/2000 7,000 nodes 46,000 km of cable 1.6 million km of fibre, increasing by 400,000 km each year Fully redundant network K L Non Syndicate Briefing 000901/ IR 18
Slide 19: Local access market going broadband
Local access market going broadband Today, 91% of households are connected to an exchange which is connected by fibre Broadband online access will be available to all households in Sweden The government will subsidise end customer broadband access in rural areas at point of use Forefront of broa
Slide 20: Broadband initiative to date
Broadband initiative to date During year 2000 the broadband roll-out has accelerated. From Q4 2000 our capacity to deliver is upscaled. Installed and operational - 24.000 individual broadband accesses (Aug 2000) Planned installation - In line with demand capacity Q4 2000 (operational accesses) N
Slide 21: Skanova third party customer base
Skanova third party customer base Operators and service providers new customer base A handful Local Loop Unbundling (LLUB) contracts with both new and established Service providers Capacity wholesale: biggest customer is Tele1 Europe, a lot of other Wholesale telephony services for pre- selectio
Slide 22: Traffic growth - Sweden
Traffic growth - Sweden (Minutes, m) 60,000 56,000 50,000 47,500 40,000 37,000 34,100 31,000 32,000 30,000 20,000 10,000 0 1995 1996 1997 1998 1999 H1 2000 Peak traffic has moved from midday to the evening as a result of residential Internet Non Syndicate Briefing 000901/ IR 22
Slide 23: Revenue development
Revenue development Skanova wholesale Sweden (SEKm) 25 000 20,924 20,871 20 000 15 000 10,791 10,364 10 000 5 000 2,332 1,775 843 1,357 0 1998 1999 H1 1999 H1 2000 Total net sales External net sales Non Syndicate Briefing 000901/ IR 23
Slide 24: Revenue development
Revenue development Network wholesale Denmark, Finland, Norway (SEKm) 1 800 1 589 2) 1 200 929 3) 701 2) 538 1) 600 416 3) 121 122 97 1) 0 1998 1999 H1 1999 H1 2000 Total net External 1) The Norwegian business was sold in January 2000 2) Norway total net sales 453 SEKm ; external net sales 43 SEKm 3
Slide 25: Capital expenditure by service and technology
Capital expenditure - analysis by service and by technology1) (SEKm) (SEKm) 5,000 5,000 150 177 4,000 4,000 776 685 1,735 1,855 3,000 3,000 3,285 3,462 2,000 2,000 1,385 1,345 1,000 1,000 791 770 0 0 1999 2000 1999 2000 Data Telephony New Traditional Transmission Other 1) Analysis between “New” and
Slide 26: Carrier: Creating a strategic asset
Carrier & Networks SECTION 2 B: CARRIER – CREATING A STRATEGIC ASSET
Slide 27: International Carrier - global reach
International Carrier - global reach • 24,815 route km • 2,750 duct km • 39 POPs AC-1 TAT-14 Existing or decided PoPs Planned PoPs Existing network Network under construction Decided network build out Planned network Non Syndicate Briefing 000901/ IR 27
Slide 28: Strategy
Strategy Initially focusing on the wholesale market Early establishment of local sales force, local companies and creation of POP:s based on leased lines to start production of network services near customers Lowest production cost and rapid payback of investment by selling off capacity and in
Slide 29: Market initiatives year 2000-2001
Market initiatives year 2000-2001 Prepare for a position as the leading provider of transatlantic capacity Become a Tier 1 - Internet operator on the European and US market Develop/Expand the business scope (e.g. Telehousing, web server co-location and access networks) Continue ongoing marke
Slide 30: Network initiatives 2000-2001
Network initiatives 2000-2001 Increase the fibre network in Europe and US from 4,000 route km 1999 to 40,000 route km end of 2001 Increase the duct network in Europe from 1,900 km 1999 to 17,000 km end of 2001 Installation of 100 POPs in 50 cities in 25 countries in Europe and US Furbish the
Slide 31: A wide range of services
A wide range of services IP-services IP-infrastructure; Traditional Voice Services; Ducts International voice termination Optical fibre IP-traffic; Value added services; IP Transit (256k - 155Mbps) Co-location VoIP Server Co-location Clearinghouse Services Maintenance IP-capacity;
Slide 32: International Carrier Revenue 2000 (External)
International Carrier Revenue 2000 (External) SEKm 2000 1999 Growth Price development Jan -Jun Jan-Jun 99/00 2000 Voice 1,054 729 +45% -10% IP-Capacity,lease 114 114 - less than-10% IP-Infrastructure 6 n/a - -”- IP-traffic 62 17 +265% -30% Total Revenue 1,236 860 +44% IP- capacity, IRU - 2421) - Tot
Slide 33: Contracted infrastructure deals
Contracted infrastructure deals Contracted value Contracted value for fiber and ducts for co-lo and O&M Contract signed Jan-July 2000 with upfront payment 20 years not discounted Storm Fiber 1,200 1,127 GTS Fiber 600 83 Tele 1 Europe Fiber 225 87 Telia Networks Fiber 180 73 LD Com Ducts 46 86 Others
Slide 34: New accounting principles - revenues retained for years
New accounting principles - revenues retained for 20 years Annual revenue emerging from Contracted Infrastructure sales (SEKm) contracted infrastructure sales 4,500 1,600 4,000 1,400 3,500 1,200 3,000 1,000 (SEKm) 2,500 2,000 800 1,500 600 1,000 400 500 200 0 0 Y 2000 Y 2002 Y2004 Y 2006 Y 2008 Y 20
Slide 35: Sustainable advantage
Sustainable advantage A powerful “dimensioned” IP-network built in highly cost efficient manner Free-peering agreements with other major carriers Strong presence in Europe, the US and across the Atlantic Bilateral international voice agreements with 100 operators worldwide A strong portfol
Slide 36: Carrier & Networks - key figures
Carrier & Networks - key figures Jan-Jun Jan-Jun Full Year SEKm 2000 1999 1999 TOTAL Net sales 12,71413,178 25,927 of which external 2,6902,067 4,328 Underlying EBITDA 3,9964,318 7,925 Operating income 2,0572,059 3,084 Investments 4,0431,954 4,845 SWEDEN Net sales 12,53012,439 23,982 of which extern
Slide 37: Enterprises
Enterprises SECTION 3
Slide 38: Enterprises - mission
Enterprises - mission Create value for the Telia group through business development and active ownership by Fostering an independent, entrepreneurial culture in the portfolio companies Restructuring portfolio companies to become competitive in external markets Managing the portfolio for finan
Slide 39: Enterprises - actions within the Group
Enterprises - actions within the Group Divested SVEFO Telia Kompetens SOL (IPO) Altitun Transferred from the Group IT Services Non Syndicate Briefing 000901/ IR 39
Slide 40: Investment management areas
Investment management areas Infomedia Network Construction & Support Administrative Services & Trade Enterprises IT & Innovation Telia Overseas Financial Services Non Syndicate Briefing 000901/ IR 40
Slide 41: Enterprises - competitive businesses
Enterprises - competitive businesses Swedia Networks A billion SEK-worth contract with Telia-competitor B2 (Svenska Bredbandsbolaget AB) involving; expansion of B2’s broadband network in Sweden, Norway and Denmark a total amount of 1/2 million broadband connections for B2 Non Syndicate Briefing
Slide 42: com hem
com hem Key Facts Q2 2000 1,35 million households connected All major cities covered 61% share of the Swedish cable-TV market 3 types of services: - Analogue Cable TV - Digital Pay TV and On Demand Services - Internet access Pay-Per-View service since January 1996 Digital TV since Novemb
Slide 43: Telia Infomedia - Directories
Telia Infomedia - Directories Key Facts Q2 2000 Operations in 9 countries Market leader in targeted segments Strong usage development of both Internet and print directories 75% market share in Sweden of printed directories 11% share of Swedish traditional advertising market 34% share of
Slide 44: Financial services
Financial services Mission To provide financial services that support Telia’s core business and enhance the group’s competitiveness Key Facts Q2 2000 (Q4-99) Contracted financing volume SEK 3,312m (7,218m) ROE 23% (22%) Operations in all Nordic countries 30% estimated market share in finan
Slide 45: International presence - Telia Overseas
International presence - Telia Overseas Owner: Telia Overseas AB Telia AB (65%), Ratos (9%) Skandia (13%), Orkla (13%) Owner: Telia AB Si.Mobil, Slovenia (25%) PTC, HongKong (11%) MTN, Uganda (33%) JTM, India (26%) PPS, India (49%) Tess, Brazil (24%)* Suntel, Sri Lanka (55%) Tess, Brazil (27%)* Digi
Slide 46: Mobile
Mobile SECTION 4
Slide 47: Agenda Mobile
Agenda Mobile 10.15-10.25 Introduction (Kenneth Karlberg) Telia´s Mobile Strategy The Development of the Mobile Internet Market Technologies enabling Mobile Internet Telia´s Mobile Internet Services 10.25-10.30 Presentation Speedy Tomato (Zeth Nyström) Present status Presentation of
Slide 48: Telia Mobile - delivering our strategy
Telia Mobile - delivering our strategy Nordic growth strategy Norway Acquisition of NetCom ASA Denmark and Finland Growing market shares Subscriber growth Total net growth 1.2 million new subscr Sweden Adding 61% of net adds in GSM Finland and Denmark Adding 342% (Fin) and 22% (D
Slide 49: Telia Mobile
Telia Mobile Largest mobile operator in Scandinavia Present position Mobile Internet portals MyDOF and Speedy Tomato launched … mobile data and Keeping leading Internet Sweden position with ... … migration from fixed telephony Full service operator Nordic … mobile data and Strategy and Gro
Slide 50: Strategy
Strategy Increase ARPU through innovative pricing and Personal increased usage telephony Promote fixed line substitution Continue margin development in existing business Leverage voice subscriber base into mobile Internet services Mobile data Transform DOF and MyDOF platforms into next gen
Slide 51: Telia's mobile footprint
Telia’s mobile footprint European assets(1) Sweden Telia Sweden Norway 100% Finland NetCom ASA Telia Finland 99% 100% Russia Denmark North West GSM Telia Denmark 12.7% + 9.5% through 100% Telecominvest Latvia Lithuania Latvijas Estonia Omnitel Mobilais 27.5% 24.5% Eesti Mobililtelefon Total 5.1 mill
Slide 52: Convergence
Convergence Mobile GSM Transactions Internet WAP Communication GPRS Entertainment UMTS Information Content Internet in the pocket Non Syndicate Briefing 000901/ IR 52
Slide 53: Key drivers
Key drivers The “Pull” of the market Highly sophisticated users with changing needs Fixed - mobile convergence (voice and data) Market growth fuelled by early market liberalisation New opportunities opened by proposed new European regulatory framework (e.g. MVNO) Increasing demand for In
Slide 54: Wireless data technology from 2G to 3G
Wireless data techn. from 2G -> 3G UMTS R00 UMTS R99 (JAPAN) EDGE ps kb GPRS N LA 6 s 9, WAP eles Wir at Da HSCSD 94-95 2000 2001 2002 2003 2004 Circuit switched Packet switched Non Syndicate Briefing 000901/ IR 54
Slide 55: Telia's Mobile Portal proposition
Telia’s Mobile Portal proposition Access Portal Content Mobile access Handles customer Determines provided to the relation attractiveness of portal portal by Specifically designed for Own networks mobile users (Finland / Simple and Denmark) personalised Time sensitive Partnerships
Slide 56: Telia's Mobile Portal - business model
Telia’s Mobile Portal - business model Illustrative revenue stream Access Advertising Total mobile Traffic share 15%–50% and fixed line Network 0-10% of total voice and of total Advertisers operator monthly data monthly revenues spending revenues Mobile portal Content Commerce / content / Monthly su
Slide 57: The world's first mobile portal - MyDOF
The world’s first mobile portal - MyDOF Launched September 1999 MyDOF Voted No.1 WAP portal in Sweden 14 500 of users H1 2000 Source: Mobil, April 2000 Non Syndicate Briefing 000901/ IR 57
Slide 58: MyDOF features
MyDOF features What we already have ... Unified messaging M-travel Address book Mobile banking and SMS alerts of e-mail, read brokerage e-mail via SMS send SMS SMS to e-mail WAP SMS to group of people Voice recognition SMS news (financial, Selecting menus business, entertainmen
Slide 59: Yellow Pages positioning service
Yellow Pages positioning service Banks Flowers Pharmacies etc Also available via SMS Non Syndicate Briefing 000901/ IR 59
Slide 60: Speedy Tomato
speedytomatc Zeth Nystrom CEO
Slide 61: What is Speedy Tomato?
What is Speedy Tomato?
Slide 62: Pan-European Mobile Portal
Pan-European Mobile Portal
Slide 63: Speedy Tomato AB
Speedy Tomato AB
Slide 64: The Plan
The Plan
Slide 65: Objectives
Objectives
Slide 66: Mobile - strong operating performance
Mobile - strong operating performance Market share (by customer) H1 2000 Telia 52,0% Comviq 31,6% Europolitan 16,4% Penetration (% ) (%) 65 70 58 70 60 60 46 50 50 36 40 40 30 56.4 30 20 42.5 20 28.1 28.8 10 10 0 0 1997 1998 1999 H1 2000 Market share of net additions Penetration Non Syndicate Briefi
Slide 67: Strong usage growth
Strong usage growth Sweden GSM minutes of use SMS growth 240 16,000,000 196 14,000,000 200 12,000,000 160 133 10,000,000 110 114 120 8,000,000 80 57 58 6,000,000 53 4,000,000 40 2,000,000 0 1997 1998 1999 H1 2000 January June 1997 2000 Contract Pre-paid (1) Minutes per customer per month, incoming a
Slide 68: Total churn rate
Total churn rate Sweden (%) 18 16.4 15.0 15.4 16 13.4 13.2 14 11.7 12 11.0 9.7 10 8.8 9.0 7.8 8.0 8 5.7 6 4 2 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 1997 1998 1999 2000 Non Syndicate Briefing 000901/ IR 68
Slide 69: ARPU, Mobile telephony Sweden
ARPU, Mobile telephony Sweden ARPU (SEK) Penetration (%) 500 426 70 388 407 60 400 65 345 58 50 300 40 46 200 36 30 109 112 109 20 100 10 0 0 1997 1998 1999 Q2 2000 Contact ARPU Prepaid ARPU Penetration Non Syndicate Briefing 000901/ IR 69
Slide 70: Mobile - strong financial performance
Mobile - strong financial performance Sweden Revenue growth Underlying EBITDA (SEKm) (SEKm) % margin 12,000 40 +8% 5,000 36 40 10,009 36 10,000 9,305 4,030 30 35 Internal 4,000 revenues 8,000 3,328 30 +24% 3,000 25 6,000 5,473 +57% 4,818 20 2,000 1,738 1,651 4,000 7,971 15 External 7,181 -5% revenue
Slide 71: Acquisition of NetCom ASA
Acquisition of NetCom ASA Currently control 99% of the Company Second largest mobile operator in Norway with 775,254 (Q2) subscribers Telia becomes the largest operator in the Nordic region Telia will be the only operator with operations in all four Nordic countries Cost savings in billing, pro
Slide 72: Telia Mobile Finland
Telia Mobile Finland Launch of pilot Revenues and EBITDA (SEKm) Mobile portal mid-summer 2000 348 291 279 Service provider agreement with Radiolinja Acquisition of retail chain (148 shops) during 1999 UMTS licence received in 1999 112,500 subscribers with a 3% market share (187) (251) (256
Slide 73: Telia Mobile Denmark
Telia Mobile Denmark Launch of pilot Revenues and EBITDA (SEKm) Mobile portal 357 mid-summer 2000 187 176 Turnaround in profitability Seamless roaming between Sweden and Denmark (Öresund) (160) (262) Nordic subscription 207,800 subscribers with a (517) 7% market share 1998 1999 H1 2000 Rev
Slide 74: Mobile - innovation for growth & expansion
Mobile - innovation for growth & expansion Mobile Portals Broadband Access MyDOF - mobile Internet portal HomeRun - 2 Mbps access Halebop.com - joint venture Globalcast - wireless Internet with Oracle backbone Speedy Tomato Compression Technology Device to Device Internet Turbo and HSCSD Wireless Ma
Slide 75: Telia Mobile - delivering our strategy
Telia Mobile - delivering our strategy Nordic growth strategy Norway Acquisition of NetCom ASA Denmark and Finland Growing market shares Subscriber growth Total net growth 1.2 million new subscr Sweden Adding 61% of net adds in GSM Finland and Denmark Adding 342% (Fin) and 22% (D
Slide 76: People Solutions
People Solutions SECTION 5
Slide 77: Leadership 2003
Leadership 2003 Leadership position in Sweden: Number 1 player in consumer communication services Number 1 customer base Number 1 access independent broadband portal Number 1 ISP Number 1 broadband access provider Non Syndicate Briefing 000901/ IR 77
Slide 78: Overall strategy
Overall strategy Broadband zone a th - interactive TV p - multi access on i broadband r at portal ig m Narrowband zone- application on er demand - e-subscriptions t om - “My Pages” s Cu - narrowband portal Internet access Web-only services Traditional fixed telephony incl. VAS Non Syndicate Briefing
Slide 79: Telia Classic strategy
“Telia Classic” strategy Protect market leadership in Sweden through customer focus and segmentation Maintain high level of cash generation by focus on efficiency and cost rationalisation Increase share of customer wallet through cross selling Improve cutting edge marketing capability Non Syndic
Slide 80: Telia's web-based customer retention initiative
Telia’s web-based customer retention initiative Promote sales on the Internet by Strengthen customer increasing knowledge about the customer loyalty and by making it easy for the customer Create a common supply of products and services via www Strengthen Telia company Internet profile, and by brand
Slide 81: Telia e-company strategy
Telia e-company strategy Provide the means enabling customers to move up the migration path Develop leading position as a consumer portal Rapidly build leading position in broadband access Non Syndicate Briefing 000901/ IR 81
Slide 82: Portal development
Portal development eTelia Telia.se Mina Sidor BroadbandMitt portal Komcenter Telia.se Mina Sidor Mitt Komcenter Broadband Telia Internet (ISP) Non Syndicate Briefing 000901/ IR 82
Slide 83: Telia's portal credentials
Telia’s portal credentials (12/99 vs 06/00) Unique visitors (‘000) 708 598 343 365 1999 2000 Startsidan.telia.se Telia.se Reach 06/00: 9,4% 18,2% Non Syndicate Briefing 000901/ IR 83
Slide 84: Broadband portal
Broadband portal Non Syndicate Briefing 000901/ IR 84
Slide 85: SOL expansion
SOL expansion SOL Revenue (SEKm) N° 1 portal in Sweden 110 109,2 2.1m unique visitors(1) N° 1 portal in Norway 0.8m unique visitors(2) 105 Top 3 portal in Denmark 102 0.3m unique visitors(2) 100 Top 10 in Finland 0.1m unique visitors(2) 50 1999 H1 2000 (1) Monthly measurement (March
Slide 86: Market share development - residential ISP (Sweden)
Market share development - residential ISP (Sweden) Traffic volume (%) 39 38.0 38.0 36.9 37 35 32.3 33 31 29 27 25 1997 1998 1999 H1 2000 Sweden’s largest ISP with 607,000 subscribers within People Solutions Non Syndicate Briefing 000901/ IR 86
Slide 87: Revenue development
Revenue development(1) People Solutions ISP (SEKm) (SEKm) 25,000 1,000 19,511 830 20,000 19,150 800 619 15,000 600 479 9,670 9,072 426 10,000 400 5,000 200 0 0 1998 1999 H1 1999 H1 2000 1998 1999 H1 1999 H1 2000 (1) Total net revenues Non Syndicate Briefing 000901/ IR 87
Slide 88: EBITDA development
EBITDA development (SEKm) 1,800 1,636 1,600 1,400 1,254 1,200 1,000 823 800 600 437 400 200 0 1998 1999 H1 1999 H1 2000 Non Syndicate Briefing 000901/ IR 88
Slide 89: Conclusion
Conclusion Telia e-company “Telia Classic” • Telia.se • Strong profitable and • Broadband services loyal customer base • e-commerce/ • Bundling potential broadband • Sophisticated users • portal through strong partnerships The new economy service provider – cash AND growth Non Syndicate Briefing 000
Slide 90: Business Solutions
Business Solutions SECTION 6
Slide 91: Business Solutions
Business Solutions Target Leading provider in Sweden for telephony services, CRM (including CallCenter/ContactCenter), Internet-based services, broadband and telecom related IT-services One of the leading providers for outsourcing, hosting and ASP Building on our strong home market position, w
Slide 92: The Business Solutions' strategy
The Business Solutions’ strategy T elia ’s n etwork A pplic ation W ebpo rta l serv er E-c o m merc e U m e å-o ffi ce Fron t-Offic e W A P IP-s e rv ic es IP-te lep ho n y Databa s e F unc tio ns S ecu rity Arch ive S u pe rvisio n E-mail D rift In tra ne t F irew all A cce ss LA N W A N M alm ö-o
Slide 93: Underlying EBITDA development
Underlying EBITDA development 1999 2000 Jan-Jun Jan-Jun EBITDA total 531 262 EBITDA Sweden only 694 458 Price reductions in fixed telephony Decreased volumes in fixed telephony Investments in new IP based services International expansion Non Syndicate Briefing 000901/ IR 93
Slide 94: Fixed telephony - revenue development
Fixed telephony - revenue development External sales, Sweden (SEKm) 9,000 6,599 6,788 6,609 6,000 3,442 3,079 3,000 0 1997 1998 1999 H1 1999 H1 2000 Prices down due to very competitive situation Fixed telephony volumes transfer to mobile and Internet Market share down to 76% (80% 1999) Non Syn
Slide 95: New and integrated services
New and integrated services MSEK 1998 2000 2002 1998 2000 2002 1998 2000 2002 Datacom /broadband Centrex Consulting 1998 2000 2002 99 2000 2001 2002 1998 2000 2002 Internet IT-Services E-commerce Non Syndicate Briefing 000901/ IR 95
Slide 96: News and actions
News and actions Partnership for e-commerce Procurement - 50/50% owned company with Föreningssparbanken. In operation October (letter of intent) Improved distribution strategy - standardised and volume through “Business Online” - integrated solutions through “Integration&Application” Major program -
Slide 97: Conclusions
Conclusions Revenue and profitability temporary decreased due to “year 2000”, investments in future areas and price reductions. Cost reduction programs are implemented Well positioned to benefit from rapid growth in new business segments by exploiting strong customer base and customer relationsh
Slide 98: Business Solutions' International companies
Business Solutions’ International companies Company Shares Revenues (100%) Lietuvos Telekomas, Lithuania 30,0% 1 139,449 Netia (32,6% per 30/6), Poland 48,2% 407,469 Unisource/AUCS, Holland 33,3% 1 362,065 Eesti Telephone Comp., Estonia 24,5% 671,944 Infonet Services Corp., USA 20,1% 2 697
Slide 99: Regulation
Regulation SECTION 7
Slide 100: Current themes - Mobile
Current themes - Mobile 3G Applications due by 1 September 2000 and licences are expected to be awarded end November 2000 Mobile virtual network operators Obligation to provide available mobile network capacity on market terms National roaming Obligation to offer roaming on the GSM netwo
Slide 101: Current themes - Local loop unbundling
Current themes - Local loop unbundling Proposal from NPTA on local loop unbundling currently being reviewed by the Swedish government EU Commission initiatives Recommendation in May 2000 Proposal for a Regulation in July 2000 Sector enquiry in July 2000 Telia’s position: Carrier & Networks l
Slide 102: Current themes - Number portability
Current themes - Number portability Number portability for fixed telephony was completed in December 1999 The NPTA issued regulations for mobile number portability on 14 April 2000 Implementation of mobile number portability in Q3 2001 EU: provisions on mobile number portability are included in
Slide 103: Current themes - Carrier pre-selection
Current themes - Carrier pre-selection CPS implemented in fixed networks 1999 Revised regulation on fixed CPS on 1 May, 2000, in line with Telia’s viewpoints Simplified procedures for “local call CPS” on NPTA agenda No decision on Mobile CPS (but in the Act) Telia’s position: Implemented on sche
Slide 104: Research & Development
Research & Development SECTION 8
Slide 105: Group business renewal strategy
Group business renewal strategy Secure fast, sustainable development and long term survival in the new economy Use R&D and venture capital to create, find, evaluate and develop ideas and innovations Focus on identified target areas to create a leading position Develop areas of cutting edge exper
Slide 106: Telia has a proven track record of R&D Innovation
Telia has a proven track record of R&D Innovation Passagen partners Created PayIT, the Advanced games-on- WirelessCar with with CNN Interactive Internet micro- demand platform, with Volvo & Ericsson payment solution Microsoft IP and Broadband Connected Home Services with Sun & Oracle Established lea
Slide 107: Group spending and focus
Group spending and focus Telia Group R&D spending R&D funding 2000 (SEKm) Enterprises Corporate 11% 10% 2,000 2000 1,709 1,540 1,570 People Solutions 12% 1000 Mobile 29% Business Solutions 0 21% 1997 1998 1999 2000 Carrier & Networks Focus areas for 2000 17% Mobile Internet (GPRS, UMTS and Persona
Slide 108: Telia Research R&D for the new economy
Telia Research R&D for the new economy New business concepts based on new business models, technologies, social trends and design “One third” – new business concept flow model shaping Telia Group strategies and stimulating business area partnership Telia Research is measured on business area p
Slide 109: R&D - the key that unlocks the future
R&D - the key that unlocks the future Mobile and Personal Communication - Mobile broadband Internet and e-business services - Personalised services - where, what, when and how - System interworking for office performance on the move IP and Broadband Services - Personal TV, combining the potential
Slide 110: Financial Summary
Financial Summary SECTION 9
Slide 111: Telia - key figures
Telia - key figures SEKm 1998 1999 H1 1999 H1 2000 Net revenues 49,569 52,121 25,463 26,037 EBITDA 14,366 13,598 6,009 7,566 Adjustments One-offs (1,761) 781 904 (1,507) Associates 704 (723) 337 68 Capital gains in associates 403 Underlying EBITDA 13,309 14,059 7,250 6,117 Margin (%) 26.8 27.0 28.5
Slide 112: Business areas
Business areas Enterprises Mobile 16.4% 18.8% Carrier & Networks 10.4% People Solutions Business Solutions 32.5% 21.9% External revenues H1 SEK 26.0bn Non Syndicate Briefing 000901/ IR 112
Slide 113: Reconciliation of business area underlying EBITDA to group EBITDA
Reconciliation of business area underlying EBITDA to group EBITDA SEKm 1998 1999 H1 1999 H1 2000 Mobile 2,525 3,497 1,385 1,233 Business Solutions 689 866 531 262 People Solutions 1,254 1,636 823 437 Carrier & Networks 8,541 7,925 4,318 3,996 Enterprises 2,760 2,947 1,316 983 Total BA EBITDA 15,769
Slide 114: Capital expenditure and investments
Capital expenditure and investments SEKm 1998 1999 H1 2000 Capex Mobile 1,854 1,293 11,996(1) People Solutions 193 245 7 Business Solutions 401 294 228 Carrier & Networks 3,874 5,049 4,043 Enterprises 1,510 1,254 1,186 Telia Group 54 (99) (38) Total capex 7,886 8,036 17,422 Investments Lietuvos Tele
Slide 115: International presence - listed holdings
International presence - listed holdings Associated Companies June 30 June 30 Aug 29 2000 2000 2000 Telia’s Book Market Change Market SEKm holding (%) value value Q2 vs Q1 (%) Value AS Eesti Telekom 24.5 467 1,966 - 1,959 (Estonia) Netia Holdings SA 32.6 755 2,486 28 3,191 1) (Poland) Eircom plc 14.
Slide 116: Impact of NetCom ASA acquisition
Impact of NetCom ASA acquisition(1) Projection Projection Netcom additional SEKm July-Dec 2000 July-Dec 2000 Turnover 1,321 EBITDA 434 Goodwill (543) Financing cost (400) Earnings before taxes 263 1) 100% ownership for six months Non Syndicate Briefing 000901/ IR 116
Slide 117: Consolidated cash flow
Consolidated cash flow SEKm 1998 1999 H1 1999 H1 2000 Cash flow from operating activities 10,397 10,398 4,521 4,823 Cash flow from investing activities (8,925) (10,930) (5,860) (9,355) Operating cash flow 1,472 (532) (1,339) (4,532) Cash flow from financing activities (2,439) 1,551 1,899 8,382 Cash
Slide 118: Telia balance sheet
Telia balance sheet SEKm 1998 1999 H1 2000 Intangible fixed assets 1,844 2,146 13,878 Tangible fixed assets 34,801 33,318 37,270 Financial fixed assets 12,553 18,023 22,407 Inventories etc. 946 971 1,172 Current receivables 16,451 20,369 26,520 Short-term investments 202 1,264 3,937 Cash and bank de
Slide 119: Rating
Rating Rating as per 28 August Standard & Poor’s long term AA short term A-1+ local/domestic AA/K1 Moody’s long term Aa3 short term P-1 local/domestic/no rating Non Syndicate Briefing 000901/ IR 119
Slide 120: Tariff and traffic development
Tariff and traffic development National PSTN tariffs1) February 2000 Sweden Denmark Norway Fixed costs Finland Variable costs Netherlands UK France Germany Switzerland Austria Spain Belgium Ireland Italy Portugal 0 100 200 300 400 500 600 1) Residential; purchasing power parity Source: Eurodata/Teli
Slide 121: Personnel and personnel cost evolution
Personnel and personnel cost evolution Employees Personnel costs (FTE ‘000s) (SEKbn) 50 44,254 14 12 40 10 29,923 30 8 20 6 4 10 2 0 0 90 91 92 93 94 95 96 97 98 99 0 0 19 19 19 19 19 19 19 19 19 19 20 1 H Sweden International Personnel costs Non Syndicate Briefing 000901/ IR 121
Slide 122: Efficiency
REK: programme for Telia’s repositioning Focus and Efficiency rationalisation Target 2003 Growth and renewal Growth and new business logic Non Syndicate Briefing 000901/ IR 122
Slide 123: Price Trends for Telecom Stocks
Price Trends for Telecom Stocks 150 140 130 120 110 100 90 80 70 60 50 Dec-99 Jan-00 Feb-00 Mar-00 Apr-00 May-00 Jun-00 Jul-00 Aug-00 Mothercom Babycom Hippie.com Non Syndicate Briefing 000901/ IR 123
Slide 124: Price Trends for Telecom Stocks
Price Trends for Telecom Stocks 110 105 100 95 90 85 80 75 70 Jun-00 Jul-00 Aug-00 Mothercom Babycom Hippie.com Telia Non Syndicate Briefing 000901/ IR 124
Slide 125: Conclusions
Conclusions SECTION 10
Slide 126: Conclusions
Conclusions Strong cash flow from traditional business Declining replacement capex in traditional CASH businesses Cash flow resulting from strategic focus + New economy activities Internationalisation GROWTH Strategic acquisitions = SHAREHOLDER VALUE CREATION Non Syndicate Briefing 00090
Slide 127: Telia – 2003
Telia – 2003 World leading IP Carrier Largest Nordic mobile operator Leading European mobile portal Dominant provider of broadband services Most advanced provider of corporate communications solutions Telia – Leading European Internet communications company Non Syndicate Briefing 000901/ IR 127
Slide 128: Biographies
Biographies SECTION 11
Slide 129: Jan-Åke Kark
Jan-Åke Kark Jan-Åke Kark is the President and Chief Executive Officer. Mr. Kark had been appointed as the Chairman of the Board for the Company that would have been formed by the merger of Telia and Telenor. Before joining Telia, Mr. Kark was President of Ericsson Microwave Systems AB. He has also
Slide 130: Reinhold Geijer
Reinhold Geijer Reinhold Geijer is a Senior Executive Vice President and the CFO. In the Executive Management Board he is also responsible for the Business Solutions Business area. He was previously Managing Director and Group President at FöreningsSparbanken. Mr. Geijer has been a CEO at a number o
Slide 131: Marianne Nivert
Marianne Nivert Marianne Nivert is First Senior Executive Vice President. Since 1997, she has been the head of the Carrier and Networks business area. In the Executive Management Board she is also responsible for the Enterprises business area. She joined Televerket, now Telia, in 1961 where she earn
Slide 132: Kenneth Karlberg
Kenneth Karlberg Kenneth Karlberg is a Senior Executive Vice President and head of the Mobile business area. Mr. Karlberg has been with the company since 1987. He has held many positions in Telia AB including regional sales leader, both in the private and business sector, manager of Human Resources,
Slide 133: Jan Rudberg
Jan Rudberg Jan Rudberg is an Executive Vice President and head of the People Solutions business area. He joined the Telia group in 1994. Before Mr Rudberg joined Telia he was president and CEO of Tele 2, the first competing fixed- line telecom company in Sweden. Previously, Jan Rudberg held a numbe
Slide 134: Anders Gylder
Anders Gylder Anders Gylder is the head of the Business Solutions business area and is a Senior Vice President of Telia AB. Prior to April 2000, he was CEO of Travelbusiness, a Swedish rail company. Anders Gylder originally joined Telia in 1984 as a regional head of sales, and moved to Telelarm, ini
Slide 135: Claes Nycander
Claes Nycander Claes Nycander is the President and CEO of Telia Research AB. He joined Telia in 1987 and has acquired a broad experience in telecommunications and datacoms. After conducting research work and managing research projects, he has, since 1991, been heading different research units within
Slide 136: Claes-Göran Sundelius
Claes-Göran Sundelius Since November 1994, Mr Claes-Göran Sundelius is in charge of Regulatory Matters at the Telia Group Head Office. He joined the Head Office in January 1993 where he initially dealt with international strategy matters. Before holding this position he was for three years Vice Pres
Slide 137: Tobias Lennér
Tobias Lennér Tobias Lennér is the Director of Investor Relations at Telia AB. He joined the Telia Group in January 2000. Prior to that he was a business journalist for seven years. During the last five years he served as a executive producer and reporter at A-ekonomi, the daily financial news progr
Slide 138: Carrier & Networks - Appendix A
Carrier & Networks APPENDIX A
Slide 139: International presence - strategic assets
International presence - strategic assets As at 16 August 2000 Entity Country Interest Telia A/S Denmark 100% Telia Finland Finland 100% Telia UK UK 100% Eesti Telekom Estonia 24.5% Latvijas Mobilais Telefons Latvia 24.5% Lietuvos Telekomas Lithuania 30% UAB Omnitel Lithuania 27.5% Unisource NV Neth
Slide 140: People Solutions - Appendix B
People Solutions APPENDIX B
Slide 141: ISP expansion (Sweden)
ISP expansion (Sweden) Number of subscribers within People Solution (‘000s) 600 500 400 607 300 550 200 409 100 207 0 1997 1998 1999 H1 2000 Non Syndicate Briefing 000901/ IR 141
Slide 142: Mobile - Appendix C
_ Mobile — APPENDIX C
Slide 143: Internet / broadband revenue development
Internet / broadband revenue development (SEKm) 750 663 600 71.2% 446 CAGR 450 336317 (97-99) 299 300 245 150 0 1998 1999 H1 2000 Non Syndicate Briefing 000901/ IR 143
Slide 144: Financials - Appendix D
Financials APPENDIX D
Slide 145: Pension liabilities
Pension liabilities As at 31 December 1999 (SEKm) Fully funded under Swedish law 16,703 15,784 5,352 Fully funded under IAS 11,351 Fully funded under US GAAP Funding level Benefit obligation Investment return on pension fund assets Net contributions 1996-99 Non Syndicate Briefing 000901/