First Quarter Results April 2008

Transcription

1 First Quarter Results April 2008

2 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 First Quarter Results 2008

3 Financial highlights Q HIGHLIGHTS Revenue EBITDA* Q m 111m Q m 115m Earnings per share Cash flow 66m 18m Net debt / EBITDA 2.2x 1.3x CAPEX 38m 45m * Excluding one-off items First Quarter Results 2008

4 Operational highlights Q HIGHLIGHTS Q Mobile subscriptions 2,695,000 Change in Q ,600 Fixed broadband subscriptions 526,000 4,200 Mobile ARPU % Mobile Churn 15.6% Mobile network usage, min* 1,465m +1.4%-unit +18m Active 3G data users 326, ,000 * Outgoing minutes First Quarter Results 2008

5 Revenue adjustment and IT costs Q FINANCIAL HIGHLIGHTS Revenue 367m (378) Effect of revenue adjustment -7m Effect of lower interconnection fees -14m compared to Q EBITDA excluding one-offs 111m (115) Effect of revenue adjustment and implementation costs -12m EBITDA margin 30% (30) Net debt increased to 955m (578) Net debt / EBITDA 2.2 (1.3) Gearing 121% (52) CAPEX 36m (45) First Quarter Results 2008

6 Distribution possibilities good Q FINANCIAL HIGHLIGHTS Capital structure targets unchanged Net debt / EBITDA 1.5 2x Gearing % 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 Share buy-backs up to 15m shares First Quarter Results 2008

7 Good progress in subscription base Q SEGMENT REVIEW, MOBILE BUSINESS Growth in customer base Good progress in 3G subscriptions continued Elisa s market share about 50% Customer base increased by 33,000 in Finland, 4,600 in Estonia ARPU* EUR 25.9 (29.7) Effect of revenue adjustment 1.0 Effect of lower interconnection 2.2 Effect of lower roaming 0.7 ARPU* and non-voice services 29,7 30,2 29,9 30,1 25,9 Churn 15.6% (14.2) 19 % 19 % 19 % 19 % 19 % Growth in network usage Total MoU growth +8% and SMS +16% Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 *) Average revenue per subscription First Quarter Results 2008 ARPU, EUR Share of non-voice services, %

8 Performance was effected by temporary factors Q SEGMENT REVIEW, MOBILE BUSINESS Revenue EUR 223m (229) Revenue and EBITDA-% Increase in usage and subscriptions Decrease in interconnection fees, roaming fees and handset sales Revenue adjustment EBITDA* EUR 62m (67), 28% of revenue (29) Cost efficiency, volume growth, growth in 3G usage Lower interconnection costs 29 % 29 % 32 % 32 % 28 % EBIT* EUR 33m (44), 15% of revenue (19) Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 * EBITDA and EBIT excluding one-off items First Quarter Results 2008 Revenue, EURm EBITDA-% excl. one-offs

9 Growth in network usage Q SEGMENT REVIEW, MOBILE BUSINESS ARPU Churn Usage 50 ARPU ( ) and annualised churn (%) Outgoing traffic (million minutes) Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Q4/03 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/ First Quarter Results 2008

10 Growth in mobile data usage continues Q SEGMENT REVIEW, MOBILE BUSINESS Active 3G users Active GPRS users Number of active mobile data users in Elisa s network Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/ First Quarter Results 2008

11 Improved customer satisfaction, billing to normal Q SEGMENT REVIEW, MOBILE BUSINESS Queuing time Customer satisfaction Call center queuing time (h:min:sec) and customer satisfaction (1-10) 8,22 0:10:17 0:10:41 0:10:44 8,11 8,16 8,13 8,16 8,02 0:08:20 0:08:37 0:08:21 8,03 8,07 8,04 0:06:41 0:06:50 7,98 7,93 0:06:35 0:06:00 7,98 0:05:31 7,86 0:02:50 0:01:26 week 4 week 5 week 6 week 7 week 8 week 9 week 10 week 11 week 12 week 13 week 14 week 15 week First Quarter Results 2008

12 Growth in broadband continued Q SEGMENT REVIEW, FIXED NETWORK BUSINESS Broadband market growth continued Net additions 4,200 in Q Elisa the market leader Decrease in analogue lines stable Analogue voice lines decreased by 8% and lines including ISDN channels by 10% Broadband subscriptions Q1/07 Q2/07 Q3/07 Q4/07 Q1/ First Quarter Results 2008 Broadband subscriptions Net additions

13 Cost efficiency improves profitability Q SEGMENT REVIEW, FIXED NETWORK BUSINESS Revenue EUR 156m (163) Revenue and EBITDA-% Growth through broadband and internet services EBITDA* EUR 51m (49), 33% of revenue (30) Efficiency programs EBIT* EUR 29m (26), 19% of revenue (16) 30 % 28 % 34 % 30 % 33 % Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 * EBITDA and EBIT excluding one-off items First Quarter Results 2008 Revenue, EURm EBITDA-% excl. one-offs

14 Growth in broadband and cable TV Q SEGMENT REVIEW, MOBILE BUSINESS Traditional analogue ISDN Cable TV Broadband 800 Thousands 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/ First Quarter Results 2008

15 Elisa strategy STRATEGY EXECUTION 2003 Integration of One Elisa 2005 Strengthening market position in core markets New services and new markets First Quarter Results 2008

16 Productivity improvement STRATEGY EXECUTION INTEGRATION OF ONE ELISA Increase in degree of automation and reducing overlap functions Personnel reductions in the Production and Corporate Customers units Full triple-play service from Saunalahti with flat monthly rate Lower mobile call prices to corporate numbers New organisation model in the Production and Corporate Customer units Simplification of customer delivery processes Significant profitability improvement Customer orientation Simplification of structure First Quarter Results 2008

17 3G services continue to grow STRATEGY EXECUTION STRENGTHENING MARKET POSITION Sale of 3G services continued well Significant amount of new subscriptions are 3G service bundles Elisa s market share in 3G service bundles about 50% In Q1, 69,000 new service bundles in Finland Cumulative amount of 3G terminals sold since 2006, 1.1 million ARPU increase x% from 2G to 3G 3G subscriptions and services 3G subscription market, of which (cumulative, '000) 3G service bundle market (cumulative, 000) Q1/06 Q2/06 Q3/06 Q4/06 Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Source: Elisa estimates, Matkaviestintoimittajat ry (MVT) First Quarter Results 2008

18 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 cooperation Cisco has granted Elisa with Service Provider Partner of the Year award at the Nordic level Elisa Production Elisa Office Elisa Customer Virtual conference room added to ICT Collaboration Service offering Microsoft Live Meeting service was added to the virtual conference room service Elisa is the sole ICT service provider utilizing Live Meeting as a service in Finland Elisa Design First Quarter Results 2008

19 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 per cent of revenue Significant improvement in cash flow First Quarter Results 2008

20 Financial targets by end-2009 Parameter Target* Revenue growth in 2009 EBITDA-margin Capex-to-sales (operative) Capital structure Net debt / EBITDA Gearing ROCE Mid single digit Above 35% 10-12% 1.5-2x % Above 20% * All figures on a comparable basis First Quarter Results 2008

21 Agenda CEO s review Veli-Matti Mattila, CEO Financial review Jari Kinnunen, CFO First Quarter Results 2008

22 Results negatively effected by temporary items EUR million Q1/08 Q1/ Change Revenue Other operating income Operating expenses EBITDA EBITDA excluding one-offs EBITDA-% 29 % 30 % 32 % EBITDA-% excluding one-offs 30 % 30 % 31 % Depreciation and amortisation EBIT EBIT excluding one-offs EBIT-% 16 % 18 % 19 % EBIT-% excluding one-offs 16 % 18 % 19 % Profit before tax Income taxes Profit for the period EPS, EUR/share 0,25 0,30 1, First Quarter Results 2008

23 Underlying revenue growth in mobile EUR million Analogue lines and volumes 1 Broadband, Corporate services 20 Termination, roaming and handset sales 22 Usage, subscriptions and Estonia 7 Correction of 2007 accruals 367 Q1/07 Fixed decrease Fixed growth Mobile decrease Mobile growth Correction Q1/ First Quarter Results 2008

24 Operating expenses decreased Other operating expenses Employee benefit expenses Materials and services Materials and services Employee benefit expenses 1Q 07 2Q 07 3Q 07 4Q Q Percentage of total expenses 22 % 22 % 17 % 18 % 20 % 17 % 27 % 22 % 22 % 17 % Other operating expenses % 56 % 63 % 65 % 61 % Total costs Depreciation Q/ First Quarter Results 2008

25 CAPEX decreased CAPEX / Sales 10% in Q1/08 CAPEX, EURm CAPEX includes 1 3G networks and services IT systems Backbone network Q1 CAPEX by segments Mobile EUR 20m Fixed network EUR 17m % 12 % % % % Q1/07 Q2/07 Q3/07 Q4/07 1Q/ First Quarter Results 2008 Fixed Line Mobile Shares CAPEX/Sales

26 Cash Flow affected by taxes, NWC and interests EUR million Q1/2008 Q1/ Change y-o-y EBITDA Change in receivables Change in inventories Change in payables Change in NWC Sale of Comptel shares Interest paid and received Financials (net) Taxes for the year Taxes for the previous year Taxes CAPEX Investments in shares Sale of assets and adjustments Cash flow after investments First Quarter Results 2008

27 Cash flow improved in Q1 Cash flow EUR 66m in Q1 Change in net working capital EUR 22m Decrease in receivables EUR 67m Invoicing of the delayed bills Decrease in payables EUR 49m Decrease in inventories EUR 4m Cash flow and operative cash flow, EURm Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 *) Operative cash flow = EBITDA excl. one-offs - CAPEX First Quarter Results 2008 Cash Flow after investments EBITDA - CAPEX

28 Capital structure above target level Capital structure above target level after the capital repayment Balance sheet KPIs 2,2 Net debt / EBITDA 2.2 1) Gearing 121% Target setting 1,3 1,4 1,2 1,5 121 % Net debt / EBITDA 1.5 2x Gearing % 52 % 60 % 65 % 71 % Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 1) Net Debt/ Q1/08 EBITDA* First Quarter Results 2008 Net Debt, EURm Gearing, % Net Debt/EBITDA

29 Elisa Estonia Change in termination fees decreased revenue Subscriptions grew y-o-y 32 % 31 % 33 % 32 % 36 % EUR million Q1/08 Q1/ Revenue EBITDA EBITDA-% 36% 32% 32% EBIT 5,4 5,7 25 EBIT-% 22% 22% 22% Capex Q1/07 Q2/07 Q3/07 Q4/07 Q1/08 Subs thousands EBITDA% First Quarter Results 2008

30 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 First Quarter Results 2008

31 Distribution above long-term policy Forecasted Cash Flow strong in 2008 Distribution 304 % Distribution policy 40 60% of net results Dividend yield ~9.4% 86 Authorisation for 15 million shares buy-back 130 % Authorisation for dividend and capital repayment EUR 250m 81 % 111 % % Buy back Dividend or capital repayment Pay-out ratio First Quarter Results 2008

32 First Quarter Results April 2008

33 APPENDIX SLIDE Consolidated Cash flow statement EUR million Q Q Q Q2/2007 Q1/2007 Q Q Q Q Cash flow from operating activities Profit before tax Adjustments to profit before tax Change in working capital Cash flow from operating activities Received dividends and interests and interest paid Taxes paid Net cash flow from operating activities Cash flow in investments Capital expenditure Investments in shares and other investments Proceeds from asset disposal Net cash used in investment Cash flow after investments Cash flow in financing Share Buy Backs and sales (net) Change in interest-bearing receivables Change in long-term debt Change in short-term debt Repayment of financing leases Dividends paid Cash flow in financing Change in cash and cash equivalents First Quarter Results 2008

34 APPENDIX SLIDE Financial situation EUR Million 31 Mar Dec Sep Jun Mar 2007 Interest-bearing debt Bonds and notes Commercial Paper Loans from financial institutions Financial leases Committed credit line 1) Others 2) Interest-bearing debt, total Security deposits Securities Cash and bank Interest-bearing receivables Net debt 3) ) The committed credit line is a joint EUR 170 million and EUR 130 million revolving credit facilities with five banks, which Elisa Corporation may flexibly use on agreed pricing. The loan arrangements are valid until 17 June 2012 and 23 November ) Redemption liability for minorities 3) Net debt is interest-bearing debt less cash and interest-bearing receivables First Quarter Results 2008