Per-Arne Blomquist. Executive Vice President and CFO

Transcription

1 Per-Arne Blomquist Executive Vice President and CFO

2 TeliaSonera AB (A3/A-) - strong business Attractive industry with high barriers to entry Success based on providing high quality networks and first class services Unique position in the Nordic and Baltic region Well positioned in high growth emerging markets 2

3 Mobility Services - Nordic and Baltic leadership Norway (NetCom, Chess) Mobile subscriptions 1,580,000 Finland (Sonera, TeleFinland) Mobile subscriptions 2,631,000 Sweden (Telia, Halebop) Mobile subscriptions 5,229,000 #2 #1 #1 Estonia (EMT, Diil) Mobile subscriptions 778,000 Denmark (Telia, Call me, dlg) Mobile subscriptions 1,474,000 #3 #1 #1 #1 Latvia (LMT, OKarte, Amigo) Mobile subscriptions 1,035,000 Spain (Yoigo) Mobile subscriptions 756,000 # Market position (TeliaSonera estimates) Lithuania (Omnitel, Ezys) Mobile subscriptions 1,967,000 Subscriptions, September 30,

4 Broadband Services - Nordic and Baltic leadership Norway (NextGenTel) Broadband subscriptions 176,000 IPTV subscriptions 10,000 Sweden (Telia) Broadband subscriptions 1,107,000 Fixed subscriptions 4,084,000 IPTV subscriptions 320,000 Denmark (Telia) Broadband subscriptions 184,000 Fixed subscriptions 231,000 Cable TV subscriptions 209,000 IPTV subscriptions 1,000 #2 #1 #2 # = Market position Among three major #1 #1 #1 Finland (Sonera) Broadband subscriptions 479,000 Fixed subscriptions 446,000 Cable TV subscriptions 176,000 Estonia (Elion) Broadband subscriptions 172,000 Fixed subscriptions 387,000 Cable TV subscriptions 4,000 IPTV subscriptions 71,000 Latvia (Lattelecom, ownership 49%) Broadband subscriptions 172,000 Fixed subscriptions 602,000 Lithuania (TEO) Broadband subscriptions 287,000 Fixed subscriptions 773,000 IPTV subscriptions 48,000 # Market position (TeliaSonera estimates) Subscriptions, September 30,

5 Eurasia - strong growth potential Azerbaijan (Azercell) Mobile subscriptions 3,395,000 Georgia (Geocell) Mobile subscriptions 1,456,000 Kazakhstan (K cell) Mobile subscriptions 7,018,000 Moldova (Moldcell) Mobile subscriptions 529,000 Tajikistan (Indigo & Somoncom) Mobile subscriptions 954,000 Uzbekistan (UCell) Mobile subscriptions 2,056,000 Nepal (Mero Mobile) Mobile subscriptions* 1,600,000 Cambodia (Star-Cell) Mobile subscriptions* 97,500 #3 #3 #2 #2 #1 #1 #3 #1 #3 #1 #1 #2 Russia (MegaFon, ownership 43.8%) #4 Mobile subscriptions 41,740,000 Turkey (Turkcell, ownership 37.3%) Mobile subscription** 35,400,000 Ukraine (Life:-), TKC ownership 54.2%) Mobile subscriptions** 10,000,000 # Market position (TeliaSonera estimates) Subscriptions, September 30, 2008 *Subscriptions, August, 2008 ** Subscriptions, June,

6 Capital structure and dividend policy Target a solid investment grade long-term credit rating (A- to BBB+) TeliaSonera s dividend policy is to distribute at least 40% of net income attributable to shareholders of the parent company Excess capital shall be returned to shareholders, after the BoD 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 6

7 Interim Report January - September, 2008

8 Growing sales and strong EBITDA Q in brief Net sales SEK 25,817 million (24,798) In local currencies +3.3% EBITDA* SEK 8,949 million (8,714) EBITDA-margin* 34.7% (35.1) EPS SEK 1.06 (1.20) * Excl. non-recurring items 8

9 Efficiency measures Improve operational efficiency Stable EBITDA margin despite price pressure and changing product mix Half way towards personnel reductions of 2,900 Focus on net savings, per business area and business unit Gross savings effect for 2008 above SEK 1.5 billion compared to cost base

10 Growth opportunities Create leading market positions by organic growth and acquisitions Grow business in fast-growing and profitable markets Market size, young and growing population Low mobile penetration and high economic growth Cultural fit and co-operation with strong local partners Management expertise and resources Geographical focus east, not west or south Controlling interests acquired in two mobile operators in Nepal and Cambodia Considering different options for Spain going forward 10

11 Growing sales and strong EBITDA SEK million Q Q Change % Net sales 25,817 24, EBITDA* 8,949 8, EBITDA* margin 34.7% 35.1% Operating income* 8,203 8, Non-recurring items Operating income 7,904 8, Financial items Net income** 4,772 5, EPS, SEK CAPEX 3,567 3, CAPEX-to-sales 13.8% 13.5% Free Cash Flow 2,829 5, * Excluding non-recurring items ** Attributable to shareholders of the parent company

12 Growing sales and strong EBITDA SEK million Jan-Sep 2008 Jan-Sep 2007 Change % Net sales 75,489 71, EBITDA* 24,682 23, EBITDA* margin 32.7% 33.3% Operating income* 22,363 21, Non-recurring items -1,071-1, Operating income 21,292 20, Financial items -1, Net income** 13,367 13, EPS, SEK CAPEX 11,272 8, CAPEX-to-sales 14.9% 12.6% Free Cash Flow 6,410 11, * Excluding non-recurring items ** Attributable to shareholders of the parent company

13 Net sales trend 27 SEK billion Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Net sales Rolling 4 quarters 13

14 EBITDA trend (excl. non-recurring items) SEK billion Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 EBITDA Rolling 4 quarters 14

15 Statement of cash flows Q SEK million Jul - Sep 2008 Jul - Sep 2007 EBITDA excluding non-recurring items 8,949 8,714 Dividends received from associated companies - 1,547 Interest paid (net) Income taxes paid -1, Payment of restructuring provisions Difference between paid/recorded pensions Changes in working capital and other items, net -1, Cash flow from operating activities 6,410 8,393 Cash CAPEX -3,581-3,315 Free cash flow 2,829 5,078 Cash flow from other investing activities Cash flow before financing activities 2,393 4,199 Cash flow from financing activities ,683 Change in cash & cash equivalents 2,

16 Key financials Balance sheets Sep 30, 2008 Condensed consolidated balance sheets SEK million Sep 30, 2008 Dec 31, 2007 SEK million Sep 30, 2008 Dec 31, 2007 A S S E T S Goodwill and other intangible assets 90,236 83,909 Property, plant and equipment 56,574 52,602 Investments in associated and joint ventures, deferred tax assets and other non-current assets 54,849 48,633 Inventories 1,262 1,168 Trade receivables, current tax assets and other receivables 22,319 20,881 Interest-bearing receivables 1,603 1,701 Cash and cash equivalents Non-current assets held-for-sale 8, ,802 T O T A L 235, ,702 6 E Q U I T Y & L I A B I L I T I E S Shareholders equity 115, ,274 Minority interest 8,800 9,783 Deferred tax liability, other long-term provisions 24,163 16,748 Other long-term liabilities 2,312 2,366 Long-term borrowings 49,683 41,030 Short-term borrowings 8,710 2,549 Trade payables, current tax liabilities, short-term provisions and other current liabilities 26,643 26,952 T O T A L 235, ,702 16

17 Outlook for 2008 unchanged Net sales EBITDA-margin Net income CAPEX Expected to show stable growth in the financial year 2008 compared to the previous year Jan-Sep % and in local currencies +5.2% TeliaSonera s ambition for 2008 is to maintain the EBITDAmargin level of 2007, excl. non-recurring items, despite continued aggressive investments in future growth and in the quality of our networks and services Jan-Sep % Is estimated to be somewhat higher than in 2007, excluding the positive one-off items of approx. SEK 2.0 billion in 2007 and potential positive one-off items in 2008 Jan-Sep 2008 net income* approx. +3.7% Will be driven by continued investments in broadband and mobile capacity and is expected to be around SEK 15 billion in 2008 Jan-Sep 2008 approx. SEK 11.3 billion *Attributable to shareholders of the parent company 17

18 Strong business amid global financial turmoil TeliaSonera has a strong balance sheet Attractive and relatively non-cyclical industry with high barriers to entry Regulatory intervention, intense competition and customer migration remain primary challenges Unique position in the Nordic and Baltic region Well positioned in high-growth emerging markets Success based on providing high quality networks and first class services One of the best rated Telecom Operators in Europe 18

19 Krister Kylås Treasurer

20 Credit statistics TeliaSonera Group TeliaSonera Estimates SEK billion Q (A) 2007 Gross Debt Cash & Liquidity 1) Net Debt Moody s Adjusted Net Debt 2) Adjusted Retained Cash Flow 3) Adjusted (RCF/Net Debt) 22% 34% S&P Adjusted Net Debt 4) Adjusted EBITDA 5) Adjusted (Net Debt/EBITDA) 2X 1.6X (A) TeliaSonera estimates per Q (rolling 12-months for EBITDA & Cash-Flow numbers) 1) Cash and cash equivalents excl. blocked funds (1.2) and excl. available unutilized committed revolving credit facilities (13.1) 2) Net debt + pensions (4.9) + non-standard adj. etc. (4) + operating lease adj. (13.4) (Moody s approach) 3) Cash flow before change in working cap (24.9) + operating lease adj. (1.8 ) - aligned & unusual FFO (0.9) - ordinary dividend payment (common & minority) (9.5) (Moody s approach) 4) Net debt + adj. incl. pensions & credit guarantees (6.9) + operating lease adj. (7) (S&P s approach) 5) EBITDA, excl. non-recurring, adj. for operating lease effect etc. (+0.4) (S&P s approach) 20

21 TeliaSonera pension obligations TeliaSonera uses defined benefit pension plans for most employees in Sweden, Finland & Norway. TeliaSonera uses Government Bond yields when discounting the Swedish pension liabilities, which account for ca 85% of the total pension liabilities. TeliaSonera pension funds are funding vehicles for those pension obligations, the remainder recorded on the balance sheet, covered via credit guarantees Rating agencies would typically define our pension gap to be approx. up to SEK 4.9 billion (TeliaSonera est. as of Q3 2008) SEK billion Q est Present value of pension obligation Fair value of plan assets Pension obligations less plan assets Booked Pension Liability / Receivable (-) Pension gap

22 TeliaSonera pension obligations (cont d) Main reasons for the increase in the estimated pension gap by some SEK 3.6 billion (est. Q vs. YE 2007) Decrease of discount rate for pension obligations Pension liabilities increased by SEK 2.4 billion Negative overall returns on assets (total approx. SEK 1.2 billion) Other assets (36%) return approx. -21% (shares, hedge funds and other (private equity & real estate)) Fixed income (64%) return approx. +2.5% Based on estimated impact as of Q the expected increase in pension costs (P/L) in 2009 would amount to some SEK million, mainly consisting of amortization of actuarial losses etc. (outside the IAS-corridor) TeliaSonera Group assumptions regarding pensions Q est. YE 2007 Discount rate 3.9% 4.6% Expected return on Plan Assets (Net) 5.1% 5.1% Expected salary increase 3.2% 3.2% 22

23 TeliaSonera pension obligations (cont d) TeliaSonera Group pension related risks Reduction of the discount rate for pension obligations by 100 bps from a level of 3.9%, would imply an increase in TeliaSonera Group pension liabilities, all else equal, by some SEK 3.6 billion The expected impact on fixed income Plan Assets, for the same change in overall interest rates, would imply an increase in value, all else equal, by some SEK 1 billion Net impact thus SEK 2.6 billion (other Plan Assets assumed yielding a zero return) Exogenous risks include e.g. change in Life Expectancy 23

24 TeliaSonera AB credit ratings (A3/A-) TeliaSonera AB long-term ratings migration history 2002-to-today AA AA- A+ A A Q1/02 Q4/02 Q1/03 Q4/03 Q4/04 Q1/05 Q4/05 Q4/06 Q4-07 Q3-08 January 8, 2003, lowered long-term debt rating to A2 Nov 1, 2006, outlook changed to Negative Oct 30, 2007, lowered long- and short-term debt rating to A3 and P-2 respectively Outlook: Stable Moody s (A3/P-2) 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 September 29, 2008, debt ratings confirmed Outlook: Stable One of the best rated Telecom Operators in Europe 24

25 Debt maturity schedule (excl. lease and pension liabilities) Debt Maturing next 12 months (SEK million) 2,500 2,000 1,500 September 30, 2008 TeliaSonera AB TeliaSonera Finland Oyj (formerly Sonera Corporation) 1, /08 11/08 12/08 01/09 02/09 03/09 04/09 05/09 06/09 07/09 08/09 09/09 Debt Portfolio Maturity Schedule (SEK billion), Oct 2008 & onwards

26 Liquidity position, TeliaSonera Group Cash and cash equivalents, less blocked funds approx. SEK 7.6 billion* Committed bank lines Maturity Size Amount undrawn Bilateral credit facility Sep 2010 SEK 2 billion SEK 2 billion Syndicated revolving credit facility Dec 2011 EUR 1 billion EUR 1 billion Bilateral credit facility Apr 2013 SEK 1.4 billion SEK 1.4 billion September 30, * On October 1, 2008, payment of approx. SEK 3.3 billion for the acquisitions in Nepal & Cambodia

27 TeliaSonera s funding strategy Liquidity position, as of September 30, 2008 Cash and cash equivalents, less blocked funds approx. SEK 7.6 billion Available unutilized amount of committed bank credit lines approx. SEK 13.1 billion Primary means of external borrowing EMTN ( 7 billion) 1) Swedish FTN (SEK 12 billion) 2) ECP ( 1 billion) 3) TeliaSonera s intention is to continue to refinance the outstanding Sonera ( TSF ) debt as well as any new financing required 27 1) Approx. 4.9 billion utilized of the EMTN 2) Approx. SEK 4.8 billion utilized of the FTN (in the form of CP s) 3) ECP programme presently unutilized

28 TeliaSonera s funding strategy (cont d) Base-case implies a focus on EMTN financing in the coming months, primarily in the form of smaller sized EMTN-PP s Public Eurobond is an alternative, subject to market conditions. Some continued utilisation of our CP programmes is likely for interim funding SEK & EUR are the preferred currencies Other currencies utilised for flexibility reasons, when deemed attractive Expected total (EMTN) funding in 2009 Approx. EUR 750 million (equivalent) 28

29 Strong business amid global financial turmoil TeliaSonera has a strong balance sheet Attractive and relatively non-cyclical industry with high barriers to entry Regulatory intervention, intense competition and customer migration remain primary challenges Unique position in the Nordic and Baltic region Well positioned in high-growth emerging markets Success based on providing high quality networks and first class services One of the best rated Telecom Operators in Europe 29

30 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. 30

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