Slide 1: 2nd Quarter Results 2014
Slide 2: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 3: CEO's review
CEO’s review • Q2 2014 financial and operational highlights • Segment review • Strategy execution • Outlook and guidance for 2014 3
Slide 4: Q2 2014 highlights
Q2 2014 highlights • Result improved • In spite of keen competition churn decreased • Mobile subscription base declined slightly due to discontinuation of one service operator • Strong mobile data growth, ARPU improved • Smartphone penetration already 54% • Independent research: Elisa’s 4G LTE netwo
Slide 5: Result improvement continued
Q2 2014 financial highlights Result improvement continued • Revenue €384m (390) • EBITDA €127m (122), 33% of revenue (31) 35% 35% 33% 33% 31% 31% 31% • EPS €0.35 (0.30) 30% 30% • CAPEX €52m (47), 14% of revenue • Net debt €1,075m (1,042) 401 • Cash flow €64m (-30, 54 excluding acquisitions) 389 396
Slide 6: Customer base intact
Q2 2014 operational highlights Customer base intact • Mobile subs decreased by 4,800 in Q2 4535 4557 4552 4427 4446 4470 4490 4497 • Excluding the discontinuation of one service operator 4337 the base would have grown • Growth in Corporate Customers • Estonia +9,600 subscriptions • Fixed broadband s
Slide 7: Growth in data, churn decreased further
Q2 2014 operational highlights Growth in data, churn decreased further • Mobile data YoY growth +78% 1 797 1 755 1 747 1 741 • 30.5bn megabytes (17.2) 1 707 1 695 1 688 1 662 1 638 • Outgoing minutes 1.7bn, slight decrease 19,3 %20,0 % 17,2 % 17,7 % 15,7 % • 569m SMS, at previous year’s level 14,1 %
Slide 8: Business Segments
Business Segments
Slide 9: Consumer Customers: EBITDA and profitability improved
Q2 2014 Consumer Customers EBITDA and profitability improved • Revenue €239m (239) • Growth through PPO consolidation, mobile services 34% 34% 33% 33% and equipment sales 31% 31% 31% 30% • Decrease in traditional fixed network, divestments 29% and interconnection revenue • EBITDA €80m (74), 33% of r
Slide 10: Corporate Customers: Revenue decreased
Q2 2014 Corporate Customers Revenue decreased • Revenue €144m (151) 36% 36% • Weak general economy 33% 33% 32% 32% 32% 32% • Decrease in traditional fixed network, ICT services, 31% interconnection and roaming revenue, and divestments of non-core business • Growth through PPO consolidation • EBITDA
Slide 11: Strategy execution
Strategy execution Build value on data Accelerate new services businesses Improve performance with customer intimacy and operational excellence 11
Slide 12: Strong growth in smartphone base
Strong growth in smartphone base Penetration in Elisa’s network in Finland • 54% of customers use smartphones 59,5 % 61,0 % 62,5 % • 14% of total device base is LTE-capable 57,0 % 58,0 % 55,0 % 54,0 % • 44% of voice subs are data bundles 52,5 % 52,0 % 50,0 % 48,0 % 46,0 % • Most-sold phones in June
Slide 13: Widest 4G LTE coverage in Finland
Widest 4G LTE coverage in Finland • Elisa #1 in 4G LTE network coverage • Based on independent research house European Communications Engineering Oy (ECE) • 4G speeds now in 280 localities • Elisa opened 2,500th 4G LTE base station on 14 July 2014 • 4G population coverage 93% • New speed category la
Slide 14: Elisa Perhe online service – security and care for families
Elisa Perhe online service – security and care for families • With the smartphone application parents can • Monitor child’s location • Check if the phone is muted • Turn the sounds on • Check the phone’s battery level • Available for Android phones • The service is available for all Finnish operator
Slide 15: New equipment and benefits for travelers
New equipment and benefits for travelers • Tablet sales grew by 70% YoY • Tablets boost mobility of video usage • New usage records are expected this summer • New roaming pricing • Data roaming even 97% less expensive • Biggest price changes for the US, Thailand and Turkey • Simplified pricing, only
Slide 16: Elisa Pilvi cloud service for SMEs
Elisa Pilvi cloud service for SMEs • Centralised and safe platform for testing, buying and managing applications and cloud services • Benefits for customers: • Easy to use • Safe • Aggregated license billing • Sales and marketing channel for start-up application developers 16
Slide 17: Outlook and guidance for 2014
Outlook and guidance for 2014 • Macroeconomic environment still weak in 2014 • Competition remains challenging • Revenue at the previous year’s level, or slightly above • EBITDA excluding one-offs at the same level as last year, or slightly higher • CAPEX maximum 12 per cent of revenue 17
Slide 18: Agenda
Agenda CEO’s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO
Slide 19: Growth in earnings continued
Growth in earnings continued EUR million Q2/14 Q2/13 Δ 1) Δ% H1/14 H1/13 Δ 1) Δ% 2013 Revenue 384 390 -7 -2 766 751 14 2 1,547 Other operating income 4 1 5 1 4 Operating expenses -261 -269 -518 -522 -1,061 EBITDA 127 122 5 4 253 231 22 10 491 EBITDA-% 33 31 33 31 32 EBITDA excl. one-offs 127 122 5 4
Slide 20: Revenue change, €m
Revenue change, €m 390 -3 1 1 -6 - Interconnection + Smartphones + Mobile in Finland and and other + Estonia 384 Estonia equipment + Fixed broadband - Roaming - PSTN - Divestments - ICT services - PSTN - Divestments Q2/13 Interconnection Equipment sales Consumer Corporate Q2/14 and roaming Customers
Slide 21: Efficiency measures decreased OPEX
Efficiency measures decreased OPEX Q2 Q3 Q4 Q1 Q2 • OPEX decreases in Q2/14 EURm 13 13 13 14 14 Productivity improvements and synergies, Materials and • 155 157 161 150 153 e.g. IT and personnel expenses services • Interconnection and roaming Employee • Equipment purchase costs benefit 66 62 78 65 6
Slide 22: Full year CAPEX guidance intact
Full year CAPEX guidance intact • Q2 CAPEX €52m (47) 20% 14% 14% • Consumer €28m (25) 13% 13% 13% 13% 12% 13% 13% 15% • Corporate €24m (22) 10% • FY 2014 CAPEX guidance 12 per 5% 39 cent from revenue 103 0% 33 -5% • Major CAPEX areas 6 2 5 0 -10% 25 21 21 21 23 24 • 4G/LTE networks 20 22 23 -15% • F
Slide 23: Cash flow improved
Cash flow improved EUR million Q2/14 Q2/13 Δ1) H1/14 H1/13 Δ1) 2013 EBITDA 127 122 5 253 231 22 491 Change in receivables -14 3 -17 -14 11 -25 -13 Change in inventories 1 3 -3 2 5 -2 6 Change in payables 12 -7 19 5 -7 11 2 Change in NWC -1 0 -1 -7 9 -16 -5 Financials (net) -2 -2 0 -14 -13 -1 -25 Tax
Slide 24: Stable revenue and EBITDA in Estonia
Stable revenue and EBITDA in Estonia 28% • Revenue €24m (24) 27% 27% 26% 27% 25% 26% 25% • Decrease in MTRs 23% • Growth in mobile data • EBITDA €7m (7) • CAPEX €1m (3) • 4G/LTE, 3G Coverage 30 29 28 • Change in mobile subs: 9,600 QoQ 24 25 25 22 24 21 Q2 Q2 Estonian MTRs 2013 2014 Q2/12 Q3/12 Q4/12
Slide 25: Solid liquidity position
Solid liquidity position Bond and bank loan maturities 30.6.2014 • Cash and undrawn committed facilities €281m (170) • Revolving Credit Facilities €70m drawn 130 • €130m RCF refinanced in June, 5 + 2 years • Average interest rate of interest bearing debt 2.1% at end of Q2 • Commercial paper programm
Slide 26: Dividend payment increased net debt
Dividend payment increased net debt 2,1 2,1 2,0 2,0 • Capital Structure 1,8 1,7 1,7 1,7 1,8 • Net debt / EBITDA 2.1x • Gearing 141% • Equity ratio 34.4% 1 042 995 971 933 1 075 909 874 839 807 • Dividend payment in Q2 38% 41% 42% 33% 36% 35% 37% 41% 34% Q2/12 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 Q4/13 Q1/1
Slide 27: Competitive remuneration continues
Competitive remuneration continues 149% 135% 126% • €1.30 per share paid in April 101% 104% 98% 88% • Dividend yield 6.7% 1) 1,80 • Payout ratio 104% 1,42 1,30 1,30 1,30 1,30 1,00 • Strong commitment to competitive 2008 2009 2010 2011 2012 2013 2014 shareholder remuneration Dividend * Buy-backs Pay-
Slide 28: Elisa IR App
Investor contacts: Mr. Vesa Sahivirta Download the vesa.sahivirta@elisa.fi +358 102 623 036 Elisa IR App
Slide 29: Consolidated cash flow statement
APPENDIX SLIDE Consolidated cash flow statement EUR million Q2 2014 Q1 2014 Q4 2013 Q3 2013 Q2 2013 Q1 2013 Q4 2012 Q3 2012 Q2 2012 Cash flow from operating activities Profit before tax 67 64 60 78 63 53 64 78 66 Adjustments to profit before tax 57 56 59 60 54 55 58 54 55 Change in working capital -
Slide 30: Financial situation
APPENDIX SLIDE Financial situation EUR million 30 Jun 14 31 Mar 14 31 Dec 13 30 Sep 13 30 Jun 13 31 Mar 13 31 Dec 12 30 Sep 12 30 Jun 12 Interest-bearing debt Bonds and notes 590 589 750 750 451 450 525 375 375 Commercial Papers 217 152 101 192 204 179 96 170 198 Loans from financial institutions 21