Transcript TeliaSonera Interim Report Jan

Interim report January–September 2003
Anders Igel
President and CEO
October 29, 2003
Beating expectations
SEK million
Q3 2003
Q3 2002
Change
EBITDA margin
39%
34%
+15%
excl. non-recurring items
4,084
1,032
+296%
CAPEX
1,889
2,788
-32%
Free cash flow
5,138
3,617
+42%
excl. non-recurring items
Operating income
• Integration completed – Common vision and values
• Synergies ahead of plan – Full financial impact still
to come
2
Strongest nine-month result ever
SEK million
Jan-Sep 2003
Jan-Sep 2002
9,531
-46,004
excl. non-recurring items
11,274
3,842
Free cash flow
14,190
5,862
Operating income
Operating income
3
Strengthening the existing footprint
Auria
• Fixed line telecom
operator in Finland
• Acquiring full
ownership
Omnitel
• Mobile operator in
Lithuania
• Increasing ownership
to 90% (55%)
4
Well-positioned in European telecom market
100,000
0
0
6,000
n
fo
da
e
2
le
Te
TE
O
TA
C
TD or
n
le
Te
m
PT sco a
is ner
Sw So
lia
Te
PN
K
a
ic
T
B fon
le
Te
TI
Vo
FT
T
D
FT
T
D
Sw
TI
PN
K
C
TD
TA
a
ic
PT fon
le
Te nor
le
Te
TE
O
ra
ne
T
B So
lia ne
Te fo
da
Vo 2
le om
Te sc
is
Source: Citigroup, October 2003
TA 2
le
Te
TE
O
PT nor
le
Te
ra
C ne
TD So
lia om
Te sc
is
Sw
PN
K
a
ic
T
B fon
le
Te
0
0.0
TI
ne
FT afo
d
Vo
T
D
ia
tr
us
A
m
ko
le
Te
TE
O
C
TD 2
m
le
co
Te nor ele
le l T
Te uga
rt
Po
PN om
K sc ra
is ne
Sw o
S
lia
lia
Te
Ita
T
B com
le ica om
Te fon lec
le Te
Te ce
an
Fr
e
T n
D afo
d
Vo
2.0
10,000
40,000
Cash flow (EBITDA-CAPEX)
Jan–June 2003
8,000
Net Debt June 30,
2003/EBITDA July 1,
2002–June 30, 2003
3.0
20,000
Top 5
80,000
5
EUR million
Revenue
Jan–June 2003
30,000
Market value
October 27, 2003
120,000
60,000
20,000
4,000
1.0
2,000
First European incumbent merger
Completed merger with synergies
BT
Deutsche Telekom
France Telecom
KPN
OTE
Portugal Telecom
Swisscom
TDC
Telecom Italia
Telefonica
Telekom Austria
Telenor
TeliaSonera
6
Strong customer growth with strong margins
• Consolidated Companies
– 11.6 million mobile customers
– Annual growth 13%
• Associated Companies
– 23 million mobile customers
– Annual growth 39%
• Increase of Internet customers
mostly compensated customer
decline within fixed voice
7
Home market
Sweden
• Strong margin despite reduced sales in
fixed communications
Finland
• Fierce competition following mobile
number portability
Norway
• Continued positive trend
Denmark
• Strong earnings improvement
The Baltic countries
• Strong mobile growth in Lithuania
• Strong mobile growth and good
earnings in fixed operations in Latvia
• Good performance in Estonia
Sales growth in local
currencies Q3 2003
Norway
Mobile 14%
Finland
Mobile
(mobile excl. adj.
Fixed
Sweden
Mobile 3%
Fixed
-3%
-6%
-1%)
7%
Estonia
Mobile 11%
Fixed
9%
Latvia
Mobile
14%
Fixed (Jan-Jun) -3%
Denmark
Mobile 47%
Fixed
-9%
Lithuania
Mobile 14%
Fixed -17%
8
TeliaSonera International
Eurasia and Russia Q3 2003
Annual customer growth
• 2 million subscriber mark
surpassed in Eurasia
• Over 1 million new mobile
customers in Russia
Russia
+132%
Total 5,328,000
International Carrier Q3 2003
Eurasia
• Continued earnings
improvement
Turkey Q3 2003
• Over 900,000 new customers
+41%
Total 2,123,000
Turkey1
+25%
Total 17,200,000
1) Turkcell figures are reported with a one-quarter lag
9
Outlook 2003
• Net sales for the second half of 2003 are expected
to be in line with the second half of 2002
• CAPEX is expected to be lower than 12% of sales
for the full year
• Operating income excluding non-recurring items
for the second half-year of 2003 is expected to be
in line with the level of the first half-year
10
Simplicity makes everything possible
Common direction basis for visionary leadership
• Business concept
– Carrying and packaging
• Vision 2010
– Simplicity and Service – Drivers behind long-term growth
– Transform TeliaSonera into a genuine service company
• Wanted position 2005
– Benchmark with European service industry
• Shared values
– Add value
– Make it happen
– Show respect
11
Focus going forward
• Commercial actions – win back
market shares
• Continued synergy realization
• Efficiency improvements
• Strengthen existing
geographical footprint
• Realize the vision
12
Kim Ignatius
CFO
October 29, 2003
Very strong earnings improvement
• EBITDA margin
Q3 2002
Q3 2003
excl. non-recurring items
– Group 39% (34)
– Sweden 43% (42)
• Operating income
SEK million
7,915
6,889
5,138
4,084
3,617
– Improvements across
the operation
• Lower CAPEX levels
• Strong free cash flow
1,032
CAPEX
Operating
income
excl. nonrecurring items
Free cash
cash flow
flow1
Free
EBITDA
excl. nonrecurring items
1)
-1,889
-2,788
Cash flow from operating activities less CAPEX
14
Net sales change
SEK million
Revenue per market
Decreased traffic
volume in fixed
42% growth and
effect of consolidation
Strong mobile growth,
fixed decline
20,102
-327
-113
1% increase
before accruals
despite price
pressure
65
94
-34
International Carrier
Eurasia
Downsizing
20,094
536
Customer growth
in mobile
-740
40
472
Eliminations
Baltic countries
Denmark
Norway
Strong customer
growth
Finland
Net sales Sweden Finland Norway Denmark Baltic Eurasia
Int.
Holding Other Net sales
Q3 2002
countries
Carrier
Q3 2003
15
Sweden
EBITDA excl. non-recurring items improvement SEK +1,026 million
SEK million
EBITDA per market
International Carrier
Successful
restructuring
Good earnings
trends and effect
of consolidation
-79
Eurasia
7,915
291
Streamlining
and synergies
6,889
Price
pressure
and accrual
adjustment
11
Baltic countries
Denmark
345
Norway
559
31
-125
-7
Reduced prices
and increased
marketing costs
Strong positive trend in
mobile, fixed and cable
Finland
EBITDA Sweden Finland
Q3 2002
Norway Denmark
Baltic Eurasia
countries
Int.
Carrier
Other
EBITDA
Q3 2003
16
Sweden
Operating income excl. non-recurring items
Higher EBITDA and income from associates
improve operating income
SEK million
Significantly better profitability in
Turkcell, negative IAS adjustments
in comparative quarter
361
732
1,032
252
-55
370
-22
-137
Int.
Carrier
Holding
4,084
1,133
215
112
91
Operating Sweden Finland Norway Denmark Baltic Eurasia
income
countries
Q3 2002
Russia
Turkey
Elim. Operating
and other income
Q3 2003
17
CAPEX reflecting business needs
SEK million
CAPEX per market
Sourcing synergies. Less
demand on the network. Tight
investment management
International Holding
Carrier
2,788
Lower CAPEX in
mobile network
-332
Lower investments
both in fixed and
mobile networks
-47
Sourcing
synergies
No network build-outs, lower
investments on present
network and re-usage of
dismantled equipment from
closed parts.
Eurasia
Sweden
Baltic
countries
-180
-136
Investments in Finans
Mainly lower CAPEX
in mobile network
-342
Increase quality of
network to meet
customer demand
219
-134
-7
1,889
Denmark
60
Norway
CAPEX Sweden Finland Norway Denmark Baltic Eurasia
Int.
Holding
Elim. CAPEX
Q3 2002
countries
Carrier
and otherQ3 2003
18
Finland
OPEX
excl. non-recurring items
Jul–Sep 2002 to Jul–Sep 2003
SEK million
Increased
interconnection costs
13,213
-355
12
Effect from
consolidation
72
Successful costcutting program
-465
-45
Lower cost for
consultants, personnel
and interconnection
191
12,179
Successful cost
reduction program
-1,031
616
-26
OPEX
Sweden Finland Norway Denmark Baltic Eurasia
Q3 2002
countries
Int.
Carrier
Holding
Elim. OPEX
and other Q3 2003
19
Strong cash flow – Strong financial position
• Strong cash flow strengthening financial
position by reducing net debt
SEK billion
38.1
-14.2
1.9
-3.8
22.0
Net debt
Dec 31, 2002
Free cash flow
Jan–Sep 2003
Dividend
Other (incl.
gain from
divestitures)
Sep 30,
2003
Dec 31,
2002
Equity-to-assets ratio
57%
52%
Net debt-to-equity ratio
20%
36%
Net debt
Sep 30, 2003
20
Non-recurring items Q3 2003
SEK million
Affecting income after financial items
Income after financial items excl. non-rec. items
Q3 2003
Jan–Sep 2003
3,815
10,571
-363
-50
+69
-363
-439
+135
Within EBITDA
Synergy implementation costs, Carrier
Redundancies
Other
Within depreciation, amortization and write-downs
Write-downs relating to synergies in Carrier
Impairments, Lietuvos Telekomas
-168
-29
-110
-
-41
+341
-1,249
-31
-
+552
-361
3,260
9,019
Within income from associated companies
Capital gains/losses
Write-downs (Infonet, MetroOne)
Within financial net
Capital gains/losses (Netia in Q2)
Write-downs (financial investments)
Income after financial items as reported
21
Forward-looking statements
Statements made in this document relating to future
status or circumstances, including future performance
and other trend projections are forward-looking
statements. By their nature, forward-looking statements
involve risk and uncertainty because they relate to
events and depend on circumstances that will occur in
the future. There can be no assurance that actual results
will not differ materially from those expressed or implied
by these forward-looking statements due to many
factors, many of which are outside the control of
TeliaSonera.
22
The Nordic and Baltic
telecommunications leader
October 29, 2003