Slide 1: First Quarter Results 2008
First Quarter Results 2008 25 April 2008
Slide 2: CEO's review
CEO’s review Financial and operational highlights Review of the mobile and fixed network businesses Execution of the strategy Progress of 3G services Outlook for 2008 2 25.4.2008 First Quarter Results 2008
Slide 3: Financial highlights
Financial highlights Q1 2008 HIGHLIGHTS Q1 2008 Q1 2007 Revenue € 367m € 378m EBITDA* € 111m € 115m Earnings per share € 0.25 € 0.30 Cash flow € 66m € 18m Net debt / EBITDA 2.2x 1.3x CAPEX € 38m € 45m * Excluding one-off items 3 25.4.2008 First Quarter Results 2008
Slide 4: Operational highlights
Operational highlights Q1 2008 HIGHLIGHTS Change Q1 2008 in Q1 2008 Mobile subscriptions 2,695,000 37,600 Fixed broadband 526,000 4,200 subscriptions Mobile ARPU €25.9 -14% Mobile Churn 15.6% +1.4%-unit Mobile network usage, min* 1,465m +18m Active 3G data users 326,300 +44,000 * Outgoing minutes 4
Slide 5: Revenue adjustment and IT costs
Revenue adjustment and IT costs Q1 2008 FINANCIAL HIGHLIGHTS Revenue €367m (378) Effect of revenue adjustment € -7m Effect of lower interconnection fees € -14m compared to Q4 2007 EBITDA excluding one-offs € 111m (115) Effect of revenue adjustment and implementation costs € -12m EBITDA margin 30% (3
Slide 6: Distribution possibilities good
Distribution possibilities good Q1 2008 FINANCIAL HIGHLIGHTS Capital structure targets unchanged Net debt / EBITDA 1.5 – 2x Gearing 50 – 100% Strong cash flow in H1 Net debt / EBITDA and gearing lower than in Q1 Authorisation from the shareholders Special dividend or capital repayment up to EUR 250m
Slide 7: Good progress in subscription base
Good progress in subscription base Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS Growth in customer base ARPU* and non-voice services Good progress in 3G subscriptions 29,7 30,2 29,9 30,1 continued Elisa’s market share about 50% 25,9 Customer base increased by 33,000 in Finland, 4,600 in Estonia ARPU* EUR
Slide 8: Performance was effected by temporary factors
Performance was effected by temporary factors Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS Revenue EUR 223m (229) Revenue and EBITDA-% Increase in usage and subscriptions 252 253 Decrease in interconnection fees, 246 roaming fees and handset sales 229 223 Revenue adjustment EBITDA* EUR 62m (67), 28% of r
Slide 9: Growth in network usage
Growth in network usage Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS ARPU Churn Usage 50 ARPU (€) and annualised churn (%) Outgoing traffic (million minutes) 1600 45 1400 40 35 1200 30 25 1000 20 800 15 10 600 5 0 400 02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05 06 06 06 06 07 07 07 07 08 1/ 2/ 3/ 4/
Slide 10: Growth in mobile data usage continues
Growth in mobile data usage continues Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS Active 3G users Active GPRS users Number of active mobile data users in Elisa’s network 739900 703200 700600 668200 626900 595400 526000 490000 397600 326300 282300 249200 198200 172500 152500 111800 72400 19000 Q1/06 Q2/0
Slide 11: Improved customer satisfaction, billing to normal
Improved customer satisfaction, billing to normal Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS Queuing time Customer satisfaction Call center queuing time (h:min:sec) and customer satisfaction (1-10) 8,22 8,16 0:10:41 0:10:44 8,16 0:10:17 8,13 8,11 0:08:37 0:08:20 0:08:21 8,07 8,04 8,02 8,03 0:06:41 0:06
Slide 12: Growth in broadband continued
Growth in broadband continued Q1 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Broadband market growth Broadband subscriptions continued Net additions 4,200 in Q1 2008 513 400 513 900 518 400 521 800 526 000 Elisa the market leader Decrease in analogue lines stable Analogue voice lines decreased by 8%
Slide 13: Cost efficiency improves profitability
Cost efficiency improves profitability Q1 2008 SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue EUR 156m (163) Revenue and EBITDA-% Growth through broadband and internet 163 160 162 services 157 156 EBITDA* EUR 51m (49), 33% of revenue (30) Efficiency programs EBIT* EUR 29m (26), 19% of 34 % revenue (
Slide 14: Growth in broadband and cable TV
Growth in broadband and cable TV Q1 2008 SEGMENT REVIEW, MOBILE BUSINESS Traditional analogue ISDN Cable TV Broadband 800 Thousands 700 600 500 400 300 200 100 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 Q2/07 Q3/07 Q4/07 Q1/08 14 25.4.2008 First Quarter Results 2
Slide 15: Elisa strategy
Elisa strategy STRATEGY EXECUTION New services and new markets 2005 – Strengthening market position in core markets 2003 – Integration of One Elisa 15 25.4.2008 First Quarter Results 2008
Slide 16: Productivity improvement
Productivity improvement STRATEGY EXECUTION – INTEGRATION OF ONE ELISA • Increase in degree of • Full triple-play service from • New organisation model automation and reducing Saunalahti with flat in the Production and overlap functions monthly rate Corporate Customer units • Personnel reductions in
Slide 17: 3G services continue to grow
3G services continue to grow STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Sale of 3G services continued 3G subscriptions and services 1115 well 3G subscription market, of which (cumulative, '000) 1015 Significant amount of new subscriptions are 3G service bundles 3G service bundle market 885 (
Slide 18: Corporate service portfolio enhanced
Corporate service portfolio enhanced STRATEGY EXECUTION – STRENGTHENING MARKET POSITION Elisa Mobile Working service enhanced with renewed international pricing International mobile data connection prices will be lowered by up to 50% from May 2008 Elisa award-winning with Cisco co- operation Elisa E
Slide 19: Outlook for 2008
Outlook for 2008 Competition remains challenging Focus on service competition Revenue at the 2007 level Lower interconnection revenue, more challenging market Higher customer billing (3G and broadband services) EBITDA and EBIT excluding non-recurring items at the 2007 level Stable CAPEX CAPEX 10-12
Slide 20: Financial targets – by end-2009
Financial targets – by end-2009 Parameter Target* Revenue growth in 2009 Mid single digit EBITDA-margin Above 35% Capex-to-sales (operative) 10 - 12% Capital structure • Net debt / EBITDA 1.5 - 2x • Gearing 50 - 100% ROCE Above 20% * All figures on a comparable basis 20 25.4.2008 First Quarter Resul
Slide 21: Agenda
Agenda CEO’s review Financial review Veli-Matti Mattila, Jari Kinnunen, CEO CFO 21 25.4.2008 First Quarter Results 2008
Slide 22: Results negatively effected by temporary items
Results negatively effected by temporary items EUR million Q1/08 Q1/07 2007 Change Revenue 367 378 1 568 -11 Other operating income 1 2 21 Operating expenses -260 -265 -1 090 EBITDA 108 115 499 -7 EBITDA excluding one-offs 111 115 491 -4 EBITDA-% 29 % 30 % 32 % EBITDA-% excluding one-offs 30 % 30 %
Slide 23: Underlying revenue growth in mobile
Underlying revenue growth in mobile EUR million 7 1 7 Analogue lines and volumes Broadband, 20 22 Corporate Correction of services 2007 accruals Termination, Usage, 378 roaming and subscriptions handset sales and 367 Estonia Q1/07 Fixed decrease Fixed growth Mobile Mobile growth Correction Q1/08 dec
Slide 24: Operating expenses decreased
Operating expenses decreased Other operating expenses Employee benefit expenses Materials and services 1Q 2Q 3Q 4Q 1Q Percentage of total expenses 07 07 07 07 08 17 % 18 % 22 % 22 % 22 % Materials and 175 180 175 177 159 services 20 % 17 % Employee 17 % 27 % 22 % benefit 44 48 38 51 45 expenses Othe
Slide 25: CAPEX decreased
CAPEX decreased CAPEX / Sales 10% in Q1/08 CAPEX, EURm CAPEX includes 1 3G networks and services IT systems Backbone network 31 4 6 Q1 CAPEX by segments 1 22 Mobile EUR 20m 20 21 17 % Fixed network EUR 17m 20 12 % 12 % 11 % 10 % 38 25 27 23 17 Q1/07 Q2/07 Q3/07 Q4/07 1Q/08 Fixed Line Shares 25 25.4.
Slide 26: Cash Flow affected by taxes, NWC and interests
Cash Flow affected by taxes, NWC and interests EUR million Q1/2008 Q1/2007 2007 Change y-o-y EBITDA 108 115 499 -7 Change in receivables 67 2 -116 65 Change in inventories 4 11 10 -8 Change in payables -49 -58 7 9 Change in NWC 22 -44 -100 67 Sale of Comptel shares 0 0 13 0 Interest paid and receive
Slide 27: Cash flow improved in Q1
Cash flow improved in Q1 Cash flow EUR 66m in Q1 Cash flow and operative cash flow, EURm 88 Change in net working capital EUR 22m 70 70 70 Decrease in receivables 66 EUR 67m 59 – Invoicing of the delayed bills 53 Decrease in payables EUR 49m Decrease in inventories EUR 4m 37 18 6 Q1/07 Q2/07 Q3/07 Q
Slide 28: Capital structure above target level
Capital structure above target level Capital structure above target Balance sheet KPIs 2,2 level after the capital repayment Net debt / EBITDA 2.2 1) 1,5 1,4 Gearing 121% 1,3 1,2 121 % Target setting Net debt / EBITDA 1.5 – 2x 71 % Gearing 50 – 100% 65 % 60 % 52 % 955 738 578 651 646 Q1/07 Q2/07 Q3/
Slide 29: Elisa Estonia
Elisa Estonia Change in termination fees decreased revenue 36 % Subscriptions grew 27 900 y-o-y 32 % 31 % 33 % 32 % EUR million Q1/08 Q1/07 2007 Revenue 24 26 113 EBITDA 9 8 36 313 323 327 EBITDA-% 36% 32% 32% 300 306 EBIT 5,4 5,7 25 EBIT-% 22% 22% 22% Capex 2 3 11 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Subs
Slide 30: Temporary implementation costs in Q1
Temporary implementation costs in Q1 Billing and CRM system implementation IT costs External services Credit losses Booked as normal expenses (not non-recurring) Discussions with suppliers ongoing 30 25.4.2008 First Quarter Results 2008
Slide 31: Distribution above long-term policy
Distribution above long-term policy Forecasted Cash Flow strong Distribution in 2008 304 % Distribution policy Dividend yield ~9.4% 86 40 – 60% of net results Authorisation for 15 million 130 % shares buy-back 111 % 401 Authorisation for dividend and capital repayment EUR 250m 81 % 79 285 39 % 123 1
Slide 32: First Quarter Results 2008
First Quarter Results 2008 25 April 2008
Slide 33: Consolidated Cash flow statement
APPENDIX SLIDE Consolidated Cash flow statement EUR million Q1 2008 Q4 2007 Q3 2007 Q2/2007 Q1/2007 Q4 2006 Q3 2006 Q2 2006 Q1 2006 Cash flow from operating activities Profit before tax 52 65 89 67 64 69 69 34 39 Adjustments to profit before tax 56 63 41 47 50 46 50 63 59 Change in working capital 2
Slide 34: Financial situation
APPENDIX SLIDE Financial situation EUR Million 31 Mar 2008 31 Dec 2007 30 Sep 2007 30 Jun 2007 31 Mar 2007 Interest-bearing debt Bonds and notes 634 634 633 633 677 Commercial Paper 118 92 0 0 0 Loans from financial institutions 0 0 0 0 0 Financial leases 26 28 44 46 45 Committed credit line 1) 220