Year-end Report January-December, 2012

Transcription

1 Year-end Report January-December, 20 Lars Nyberg President and CEO Record-high Free cash flow during 20 Net sales SEK 4,898 million (4,804) Increased 1.2% in local currencies EBITDA* SEK 36,059 million (37,222) Decrease of 2.4% in local currencies EBITDA margin* 34.4% (35.5) Decrease of 1.1 p.p. Earnings per share SEK 4.59 (4.21) Increase of 9.0% Free cash flow SEK 23,740 million (9,415) Incl. MegaFon dividends of SEK,726 million * EBITDA excluding non-recurring items 1

2 Second highest EPS since the merger Net sales SEK billion Earnings per share SEK %* % * Growth in net sales in local currencies and excl. acquisitions Keeping the balance between sales and OPEX MMO Net sales and addressable cost base* 8% 6% 4% 2% 0% -2% -4% % -8% Net sales Addressable cost base * In local currencies and excluding acquisitions 2

3 Negative trend in EBITDA margin EBITDA margin* EBITDA margin*, 4 quarters rolling 40% 40% 38% 33.2% 38% 34.4% 35% 35% 33% 33% 30% 30% 28% 28% 25% 25% * Excl. non-recurring items Need to reduce our structural cost base Our ambition is to fundamentally change our business by simplifying our way of working Reduce our cost base by SEK 2 billion* net during the coming two years Personnel reductions net of approx. 2,000 employees, as announced in October 300 employees in Sweden and Finland during 20 During 2013, 1,800 employees in the Nordics and Baltics will be effected** Total cost of approx. SEK 1.7 billion in 2013 Need to recruit new competence * Excluding Mobility Services Spain ** To be completed by early 2014 at the latest 3

4 Improvement in billed revenues in Mobility Billed revenues*, change y/y (%) 20 Volume y/y** Revenue y/y** 6% 4% 2% 0% -2% Voice +1% -% Messaging -5% -5% Mobile data +79% +21% Billed revenues - -2% -4% -6% Mobility Services Mobility Services, excl. Spain * Stable FX rates ** FY 20 compared to FY 20, excluding Spain Accelerated growth of fiber customers MMO 000 Broadband Services - Fiber and TV customers +13% Several strategic TV deals signed First Nordic operator to offer HBO Partnership with Samsung 1,177 1,332 Play+ launched in December +23%

5 Eurasia remains our growth engine Subscriptions - Eurasia ,535,147 Ncell Tcell Ucell Moldcell Geocell Azercell Kcell Revenue growth of 14% in local currencies with EBITDA margin kept above 50% during 20 Successful IPO s of MegaFon and Kcell MMO Successful IPO s of MegaFon in November and Kcell in December IPO proceeds of SEK billion received in 20 Ownership in MegaFon reduced to 35.6% (43.8) by sale of TCI shares in April, 20, and further reduced to current 25.2% in the IPO Direct and indirect ownership in Kcell increased from 37.9% to 86.9% in January, 20, and reduced to current 61.9% in the IPO 5

6 Dividend kept at SEK 2.85 per share Ordinary dividend and pay-out ratio SEK SEK Dividend yield of 6.1% % 60% 50% 40% 30% 20% % A number of operators have cut or even removed dividends for * 0% * Proposed dividend for fiscal year 20 by the Board of Directors ** For 2005, 2006 and 2007, EO dividends of SEK 2.25, SEK 4.50 and SEK 2.20 were paid. In April, 20 a buyback of SEK billion was completed Several ongoing sustainability initiatives Human Rights Impact Assessment together with the Danish Institute for Human Rights TeliaSonera a founding member of the Industry Dialogue, counting eleven leading telecom companies. Defining common principles for respecting privacy and freedom of expression Strengthening of anti-corruption processes and supply chain management 6

7 MMO Looking ahead Outlook for 2013 Growth in net sales* is expected to be flat EBITDA margin** is expected to increase slightly compared to last year (20: 34.4%) CAPEX-to-sales*** ratio at approximately 14% (20: 14.6%) * In local currencies and excl. acquisitions** Excl. non-recurring items *** Excl. license and spectrum fees Year-end Report January-December, 20 Per-Arne Blomquist Executive Vice President and CFO 7

8 Fourth quarter highlights Net sales SEK 27,069 million (27,259) Increased 1.8% in local currencies EBITDA* SEK 8,974 million (9,269) Decrease of 0.6% in local currencies EBITDA margin* 33.2% (34.0) Decrease of 0.8 p.p. Earnings per share SEK 1.59 (1.18) Increase of 34.7% Free cash flow SEK 2,934 million (552) Lower cash CAPEX and changes in working capital * EBITDA excluding non-recurring items Net sales growth of 1.2 percent during 20 Net sales growth 4% 3% 2% 1.8% 1% 0% Net sales in local currencies and excl. acquisitions 8

9 Positive trend towards the end of the year Net sales growth* 25% 20% 15% % 5% 0% -5% -% Mobility Broadband** Eurasia * In local currencies and excluding acquisitions ** Excluding International Carrier Solid growth within Swedish mobile Mobility Services Sweden Net sales SEK billion % y/y % -% 3.0 Improving trend in billed revenues in 20, +4% y/y Increase in subscribers and ARPU in the consumer segment while the corporate segment stabilized % Billed revenues IC, Roaming and Wholesale Equipment sales Billed revenues, excluding equipment, interconnect, inbound roaming and wholesale revenues 9

10 Weaker profitability within Broadband Services Broadband Services - EBITDA margin*, % Increase in addressable cost base despite decline in net sales Weaker profitability in Sweden and Finland partly due to one-offs * Excl. non-recurring items Positive growth in all countries in Eurasia Net sales growth* - 20 Ucell Ncell Azercell Moldcell Geocell Kcell Tcell 7.6% 4.0% 3.8% 3.7% 3.3% 41.4% 76.7% Double-digit revenue growth, 16% in local currencies in and 14% for FY 20 EBITDA margin remains above 50% * In local currencies and excluding acquisitions

11 Gross margin still under pressure Gross margin % Less billed revenues and more 66 equipment sales in Mobility Gross margin, quarter Gross margin, 4 quarter rolling Product mix shift in Broadband Higher interconnect costs in Eurasia Decline in addressable cost base Addressable cost base* SEK million 31,000 30% 30,500 28% 30,000 26% 29,500 Addressable cost base, 4 quarter rolling Addressable cost base to sales, 4 quarter rolling 24% * In stable FX

12 Lowering the cost base by SEK 2 billion SEK SEK billion Addressable cost base target* SEK 0.2 billion already recorded in, 20 Targeting a cost base of SEK 25.3 billion in e 2014e * Excluding Mobility Services Spain Negative trend in EBITDA margin EBITDA margin* EBITDA margin*, 4 quarters rolling 40% 40% 38% 33.2% 38% 34.4% 35% 35% 33% 33% 30% 30% 28% 28% 25% 25% * Excl. non-recurring items

13 Solid performance from associated companies MMO Income from associated companies* SEK billion Turkcell MegaFon 0.0 * 20 20* Better underlying trends in both Turkcell and MegaFon MegaFon contribution impacted by lower economic ownership and higher financial costs due to paid dividends Both Turkcell and MegaFon reported with one-quarter lag * Excl. capital gain of SEK 5,378 million in 20 and SEK 8,391 million in 20 from MegaFon Non-recurring items in Operating income Operating income 20 SEK million 7,979 7,798 Capital gain from MegaFon 5,378 Non-cash goodwill write-down in NetCom -2,914 Non-cash goodwill write-down in NextGenTel -1,550 Other non-recurring items, such as restructuring -725 Non-recurring impact on Operating income in 189 Operating income, excluding non-recurring items, decreased 0.8% Operating income FY 20 SEK million 29,720 28,288 Capital gain from MegaFon 8,391 Non-cash goodwill write-down in NetCom -5,666 Non-cash goodwill write-down in Omnitel -318 Non-cash goodwill write-down in NextGenTel -1,550 Other non-recurring items, such as restructuring -1,139 Non-recurring impact on Operating income in Operating income, excluding non-recurring items, decreased 4.4% 13

14 One-time effect lowered tax rate in 20 MMO Effective tax rate, % 30% 20% 13.6% % 0% One-time effect in 20 as a result of the reduction in corporate income tax in Sweden from 26.3% to 22.0%* Tax rate is expected to be around 20% going forward A one-time effect related to the net deferred tax liability of SEK 1,225 million was recorded in 20 Improved Earnings per share EPS 20 SEK EPS FY 20 SEK Operat. Ass 20 comp Nonrec items FX Net fin Taxes Min int 20 FY 20 Operat. Ass comp Nonrec items FX Net fin Taxes Min int Buy back FY 20 EPS in and 20 positively impacted by lower taxes and lower minorities, mainly as a result of the acquisition of 49% in Kcell in 20 14

15 CAPEX-to-sales ratio of 14% expected in 2013 CAPEX split 20 CAPEX-to-sales ratio* 7% 20% 31% 28% 34% Mobility Broadband Eurasia Other 15% % 5% 14.6% 14% 0% FY e CAPEX amounted to SEK 4.8 billion (6.1) whereof SEK 3 million (1,321) for licenses and spectrum fees 14% CAPEX-to-sales excl. license and spectrum fees expected in 2013 * Excl. license and spectrum fees MegaFon contributed to record-high FCF in 20 Free cash flow 20 Free cash flow FY 20 SEK billion SEK billion EBITDA* Interest paid Change in working capital Cash CAPEX Other EBITDA* Dividends Interest Change in Cash paid working CAPEX capital Buyback 20 Free cash flow for 20 improved to SEK 23.7 billion (9.4), or to SEK.0 billion excluding dividends from MegaFon * Excl. non-recurring items 15

16 Reconciliation of Net debt development SEK billion Net debt 20 to 20 Net proceeds from TCI shares (April) -0.6 MegaFon IPO (November) -8.6 SEK billion Acquisition of 49% in Kcell (January) Kcell IPO (December) -3.4 Acquisition of shares in TEO +0.9 Other +1.0 Total Net debt 20 Free cash flow Other investing activities Dividend payments Minority dividends Other Net debt 20 Net debt to EBITDA within our target range SEK billion Net debt and Net debt / EBITDA* Gross debt of SEK 91.6 billion and Net debt of SEK 59.4 billion Net debt to EBITDA of 1.65x Target range between x * 4 quarters rolling 16

17 Debt maturity schedule MMO Debt Maturing next months December 31, 20 SEK billion Debt per 20 Gross debt SEK 91.6 bn Net debt SEK 59.4 bn Net debt/ebitda 1.65x 0 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Debt Portfolio Maturity Schedule 2013 and onwards SEK billion Credit rating Standard & Poor s A-/A-2 Moody s A3/P-2 Key highlights 20 Defending revenues, improving earnings per share and generating strong cash flow IPO s of MegaFon and Kcell, increased ownership in TEO and divestment of NextGenTel Launch of efficiency measures to defend our long-term profitability Solid financial position, well within our target range 17

18 MMO Outlook 2013 Growth in net sales* is expected to be flat EBITDA margin** is expected to increase slightly compared to last year (20: 34.4%) CAPEX-to-sales*** ratio at approximately 14% (20: 14.6%) * In local currencies and excl. acquisitions** Excl. non-recurring items *** Excl. license and spectrum fees Q&A 18

19 Group result 20 SEK million Change % Net sales 27,069 27, COGS,776, Gross margin, % OPEX 7,399 7, EBITDA* 8,974 9, Margin, % Depreciation, amortization 3,232 3, Income from associated companies 1,866 1,849 EBIT* 7,608 7, * Excl. non-recurring items Group result 20 SEK million Change % EBIT* 7,608 7, Non-recurring items EBIT 7,798 7, Financial net Tax 145-1, Net income 7,168 5, Owners of the parent 6,880 5, Non-controlling interest EPS, SEK CAPEX 4,813 6,7 Free cash flow 2, * Excl. non-recurring items 19

20 Organic revenue growth 20 Revenue growth (%) 20 Reported growth of which currency of which disposals of which organic Mobility Services Broadband Services Eurasia The Group Statement of cash flows 20 SEK million Diff EBITDA excluding non-recurring items 8,974 9, Dividends received from ass companies Interest paid (net) Income taxes paid Payment of restructuring provisions Diff between paid/recorded pensions Changes in working cap and other items Cash flow from operating activities 7,683 7,2 471 Cash CAPEX -4,749-6,660 1,9 Free cash flow 2, ,382 20

21 Group result 20 SEK million Change % Net sales 4,898 4, COGS 39,590 38, Gross margin, % OPEX 29,671 30,3-1.5 EBITDA* 36,059 37, Margin, % Depreciation, amortization,977 13, Income from associated companies 5,488 5,864 EBIT* 28,570 29, * Excl. non-recurring items Group result 20 SEK million Change % EBIT* 28,570 29, Non-recurring items EBIT 28,288 29, Financial net -3,806-2, Tax -3,314-5, Net income 21,168 21,9 0.2 Owners of the parent 19,886 18, Non-controlling interest 1,282 2, EPS, SEK CAPEX 15,685 17,384 Free cash flow 23,740 9,415 * Excl. non-recurring items 21

22 Organic revenue growth 20 Revenue growth (%) 20 Reported growth of which currency of which disposals of which organic Mobility Services Broadband Services Eurasia The Group Statement of cash flows 20 SEK million Diff EBITDA excluding non-recurring items 36,059 37,222-1,163 Dividends received from ass companies,5 1,391 Interest paid (net) -2,342-2, Income taxes paid -4,593-4, Payment of restructuring provisions Diff between paid/recorded pensions Changes in working cap and other items -1,456-1, Cash flow from operating activities 38,879 26,950,929 Cash CAPEX -15,139-17,535 2,396 Free cash flow 23,740 9,415 14,325 22

23 Financial key ratios Dec 31, 20 Sep 30, 20 Return on equity* 19.8% 18.1% Return on capital employed* 15.1% 15.5% Equity/assets ratio 39.7% 40.6% Net debt/equity ratio 58.8% 73.6% Net Debt/EBITDA rate* multiple 1.65x 1.96x * Rolling months Liquidity position TeliaSonera Group Cash and cash equivalents, less blocked funds approx. SEK 27.2 billion Committed bank lines Maturity Size Amount undrawn Syndicated revolving credit facility Dec 2017 EUR 1 billion EUR 1 billion Bilateral credit facility Jun 2013 SEK 1.4 billion SEK 1.4 billion December 31, 20 23

24 TeliaSonera AB credit ratings (A3/A-) TeliaSonera AB long-term ratings migration history 2002-to-today 5 AA 4 AA- 3 A+ A 2 A Moody s (A3/P-2) January 8, 2003, lowered long-term debt rating to A2 November 1, 2006, outlook changed to Negative October 30, 2007, lowered long- and short-term debt rating to A3 and P-2 respectively May 4, 20, Outlook changed from Negative to Stable. Standard & Poor s (A-/A-2) February 5, 2003, lowered long-term debt rating to A October 28, 2005, lowered long-term debt rating to A- and short-term debt rating to A-2 July 20, debt ratings confirmed Outlook: Stable Dividend policy The company shall target a solid investment grade long-term credit rating (A- to BBB+) to secure the company s strategically important financial flexibility for investments in future growth, both organically and by acquisitions The ordinary dividend shall be at least 50% of net income attributable to owners of the parent company Excess capital shall be returned to shareholders, after the Board of Directors has taken into consideration the company s cash at hand, cash flow projections and investment plans in a medium term perspective, as well as capital market conditions 24

25 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. 25