YEAR-END REPORT JANUARY DECEMBER 2016

Transcription

1 YEAR-END REPORT JANUARY DECEMBER 20 JOHAN DENNELIND, PRESIDENT & CEO DELIVERING ON OUR AMBITIONS WE REVISED UP AND SAID EBITDA IN LINE OR SLIGHTLY ABOVE 2015 WE DID +2.6% WE SAID CAPEX IN THE UPPER RANGE OF SEK BILLION WE REPORTED SEK 15 BILLION AMBITION OF A DIVIDEND OF AT LEAST SEK 2 PER SHARE WE PROPOSE SEK 2 2 1

2 WEAKER IN LINE WITH OUR FULL YEAR EXPECTATIONS - CONTINUING OPERATIONS 20 FY 20 S E R V I C E R E V E N U E G R O W T H Reported -5.0% Organic +0.6% Reported -1.9% Organic -0.4% E B I T D A * G R O W T H Reported -2.% Organic -1.9% Reported +2.2% Organic +2.6% F R E E C A S H F L O W SEK 0.0 billion SEK.2 billion *Excluding non-recurring items 3 FULL YEAR 20 AND IN BRIEF FULL YEAR REFOCUSING TO THE NORDICS & BALTICS SOLID PERFORMANCE IN KEY MARKETS STRONG NORWAY GETTING READY FOR MORE SERVICE REVENUE GROWTH NEW OPERATING STRUCTURE TELIA CARRIER ENDING STRONG BETTER TREND IN EURASIA ALL TIME HIGH FIBER IN SWEDEN BEST NETWORK IN 5 OF MARKETS 4 2

3 STRONG TV DEVELOPMENT ACROSS THE FOOTPRINT TV SUBSCRIPTION BASE Continuing operations, in 000 TV ARPU DEVELOPMENT Local currency, FY 20 vs % 1,688 Sweden +11.2% Estonia +.6% 15 Q1 Q2 Q3 Lithuania +5.2% Finland +.2% 5 Subscription growth in 4 of 5 markets - improved proposition Subscription base growth of 5% in Sweden and 8% in Lithuania Solid ARPU development from Price adjustments Package optimization Successful upsell GROWING MOBILE BILLED REVENUES MOBILE BILLED REVENUE GROWTH Continuing operations, organic growth MOBILE BILLED REVENUE GROWTH Organic growth, 20 y-o-y 2.0% 1.5% +1.% Sweden +2.0% Norway +0.9% 1.0% 0.5% 0.0% Q1 Q2 Q3 Finland +5.2% Continuing operations +1.% Demand for data and upsell main drivers Growth in 6 of markets 6 3

4 REVENUE GROWTH WITH DIFFERENT MIX SERVICE REVENUES Organic growth, external service revenues Sweden Europe Continuing operations +1.2% +0.6% EBITDA Organic growth, excluding non-recurring items Sweden Europe 4.3% Continuing operations +0.3% -1.8% -1.9% 15 Q1 Q2 Q Growth in fiber and strong development in fixed broadband and TV revenues in Sweden Positive mobile service revenue growth in 5 of 6 markets in Europe Negative sales mix in Sweden from pressure on high margin fixed legacy revenues Growth in Europe driven mainly by solid development in Norway SWEDEN ENDING THE YEAR WITH REVENUE GROWTH SERVICE REVENUES BY SEGMENT Organic growth, external service revenues SERVICE REVENUES B2B Organic growth, external service revenues B2C incl. fiber installation revenues B2C excl. fiber installation revenues SME/SoHo +0.5% Large enterprises B2C +2.4% +1.% 15 Q1 Q2 Q3-3.1% B2B -4.8% Stable growth in B2C amplified by fiber Better performance in B2B driven by less pressure on the large segment SME/SoHo remains slightly positive Improvement in large enterprises to some extent due to phasing 8 4

5 OVERALL GOOD TRENDS IN SWEDEN REVENUE TREND BY KEY SERVICE Service revenues, growth y-o-y Mobile billed revenues Fixed broadband TV Fixed telephony 15.0% 5.9% 2.3% ARPU TREND BY KEY SERVICE Growth y-o-y Mobile Fixed broadband TV 9.5% 6.0% 2.5% 15 Q1 Q2 Q3 Pressure on mobile due to B2B large Broadband benefiting from price increases -15.0% Strong TV growth supported by net adds and ARPU uplift Rise in mobile ARPU from improvement in B2B TV ARPU growth remains strong 9 GROWING FIBER REVENUES AND GREAT ACHIEVEMENTS FIBER BROADBAND REVENUES SEK million, reported currency Fiber service revenues Growth y-o-y +30% FIBER ACHIEVEMENTS 20 44% growth in villa campaigns 186,000 new households reached SEK 1.2 bn installation revenues 15 Q1 Q2 Q3 Quarterly y-o-y growth in recurring fiber broadband revenues stable around 30% SEK 3.2 bn CAPEX Market share 10 5

6 STABLE OPERATIONAL DEVELOPMENT IN FINLAND SERVICE REVENUES* & EBITDA** SEK million, reported currency MOBILE SERVICE REVENUES* Organic growth 2,1 +1.0% 2, % Mobile billed service revenues Total mobile service revenues 5.2% 94 1,000 2.% 15 Service revenues 15 EBITDA 15 Q1 Q2 Q3 Fixed service revenue growth in B2B main driver behind positive service revenue development EBITDA growth somewhat negative due to higher operational costs Mobile billed service revenue growth mainly driven by B2C Lower interconnect revenues pressure total mobile service revenues 11 = Organic growth * External service revenues **Excluding non-recurring items SOLID REVENUE AND EARNINGS GROWTH IN NORWAY SERVICE REVENUES* & EBITDA** SEK million, reported currency MOBILE SUBSCRIPTIONS & ARPU Subscriptions in 000, blended ARPU 2400 Mobile subscription base, 000 Blended mobile ARPU growth, local currency 1, % 2, Service revenues % EBITDA Q1 Q2 Q3 +2.9% Increased wholesale revenues key driver behind service revenue growth Revenue uplift and lower SAC behind solid EBITDA development Loss of mainly low ARPU pre and postpaid subscriptions (compensated by wholesale) ARPU supported by higher data usage that drives upsell and top-ups 12 = Organic growth * External service revenues **Excluding non-recurring items 6

7 HIGH COMPETITION IN DENMARK REMAINS SERVICE REVENUES* & EBITDA** SEK million, reported currency -0.2% Still challenging market conditions in B2C and B2B Flat service revenues and a less favorable sales mix eroded EBITDA Value loading strategy 1,052 1, % Service revenues 15 EBITDA Telia TV 13 = Organic growth * External service revenues **Excluding non-recurring items MIXED DEVELOPMENT IN THE BALTICS SERVICE REVENUES Organic growth, external service revenues EBITDA* SEK million, reported currency Estonia Lithuania Latvia +2.2% +1.0% -5.3% +.5% % % Q1 Q2 Q3 15 Estonia 15 Lithuania 15 Latvia 14 Lower sales in Green IT (-5 p.p. impact) and less demand for travel products in Estonia Growth in fixed broadband and TV revenues in Lithuania Increased demand for mobile data in Latvia Less marketing and good cost control in Estonia Latvia flat as revenue growth was offset by higher marketing expenses = Organic growth * Excluding non-recurring items

8 THE RIGHT TREND IN THE EURASIAN OPERATIONS TRENDS IN EURASIA Organic growth, excluding Nepal Service revenues* EBITDA** TRENDS IN KAZAKHSTAN Organic growth Service revenues* EBITDA** 1% 3% -3% -2% -2% -24% -9% Q1 Q2 Q3 Positive EBITDA and service revenue growth trends intact Revenues rose in 5 of 6 markets Double digit service revenue growth in Uzbekistan, Tajikistan and Moldova -2% -% -15% -3% -34% -12% -25% -8% -14% Q1 Q2 Q3 Main reason for Eurasian turnaround is less deterioration from Kazakhstan Improved market conditions but still a competitive environment in Kazakhstan Service revenue erosion pressuring EBITDA 15 * External service revenues **Excluding non-recurring items SUMMARY FULL YEAR AND 20 F U L L Y E A R E B I T D A O U T C O M E I N L I N E W I T H G U I D A N C E G O O D P E R F O R M A N C E I N K E Y M A R K E T S E U R A S I A O N T H E R I G H T T R A C K 8

9 YEAR-END REPORT JANUARY DECEMBER 20 CHRISTIAN LUIGA, EXECUTIVE VICE PRESIDENT & CFO 1 ENDING 20 WITH POSITIVE NET SALES GROWTH NET SALES DEVELOPMENT Organic growth +0.2% FIBER INSTALLATION TREND SDU campaigns and installation revenues SERVICE REVENUES +0.5pp -0.3pp Mobile Fixed excl fiber Fiber Other Equipment 0 15 SDUs in thousands Q1 Q2 Q Revenues in SEK million Q1 Q2 Q3 18 Mobile growth in 6 of markets Growth in TV and fixed broadband not enough to compensate for pressure on fixed legacy Lower equipment sales mainly due to Finland and Denmark Strong SDU campaign roll-out resulted in 34,000 new households connected Lower average installation fee due to 6,000 SDUs not generating installation revenues 9

10 NEGATIVE EBITDA GROWTH BUT POSITIVE FULL YEAR EBITDA DEVELOPMENT Organic growth, excluding non-recurring items EBITDA GROWTH TREND Organic growth, excluding non-recurring items -1.9% 15 SWE FIN NOR DEN Baltics Other -1.9% 15 Q1 Q2 Q3 Pressure on legacy revenues and challenging 20 comparable figures for Sweden Europe EBITDA growth still in positive territory driven by Norway and Estonia Foundation laid H1 for reaching 2.6% EBITDA growth for the full year Growth profile 20 largely impacted by comparable figures in INVEST TO SAVE PROGRAM DELIVERED AND ENDED INVEST TO SAVE SEK billion, savings run-rate at period/year-end Sweden Finland Central functions CAPEX Invest to save program initiated 2014 has ended Financial outcome in line with targets Transformation will be ongoing to improve customer experience and efficiency Cash flow initiatives initiated throughout the group e

11 PRESSURE ON LEGACY REVENUES IN SWEDEN MITIGATED SERVICE REVENUE GROWTH SWEDEN SEK billion, reported currency Share of -0.4% revenues Legacy Gross margin >80% Revenue trend EBITDA GROWTH SWEDEN SEK billion, reported currency +1.3% Core New ~60-80% <25% Legacy Core New ITS* Other Legacy: Mainly copper-based services like fixed telephony and various business solutions Core: Mainly TV, mobile and broadband New: Value added and adjacent services Drop in legacy revenues mainly from fixed telephony and various business solutions Since the launch call & errand volumes are down 23% and 53 IT systems have been closed in Sweden * Invest to save program (transformation, procurement and general efficiencies) CAPEX TO COME DOWN DESPITE FOCUS ON FIBER CAPEX EXCL. LICENSES* 2015/20 SEK billion, continuing operations CAPEX EXCL. LICENSES* 20/201e Distribution by type, continuing operations 19.6% 21.0% Other operations Europe Sweden 100% 5% 50% 25% Fiber Other Network/IT % e 22 Sweden CAPEX higher due to fiber roll-out and business transformation Europe lower despite high pace 4G roll-out = In relation to external service revenues * In reported currency CAPEX 201 expected to come down despite: Continued high fiber roll-out pace in Sweden Need for continued business transition in

12 TOTAL EPS IMPACTED BY NON-RECURRING ITEMS TOTAL EPS SEK, continuing and discontinued operations CONTINUING OPERATIONS Operating income* Impairment charges made to the operation in Denmark 2015 and capital gain from disposal of Yoigo 20 explain the development in non-recurring items Discontinued operations impacted by impairment charges made to the operation in Uzbekistan 2015 Lower contribution from associates attributable to Turkcell and MegaFon * Excluding income from associates and non-recurring items Non-recurring items Associates Other Discontinued operations LEVERAGE IN LOW-END OF THE TARGET RANGE NET DEBT AND LEVERAGE TREND Continuing and discontinued operations NET DEBT DEVELOPMENT Continuing and discontinued operations Leverage ratio* Net debt Leverage ratio* x Net debt (SEK billion) 1.6x 1.69x Leverage remains at the low-end of target range (2.0x +/- 0.5x) * Net debt to rolling twelve months EBITDA excl. non-recurring items 0 Q3 Operations Cash Capex Dividend Yoigo paid disposal Other Around SEK 6 billion impact from Yoigo disposal Second dividend tranche of SEK 6.5 billion paid Extra dividend from MegaFon of SEK 0.5 billion received = Leverage ratio 12

13 LOWER DIVIDEND FROM ASSOCIATES 20 FREE CASH FLOW 20 SEK billion, continuing operations FREE CASH FLOW, R12 MONTHS SEK billion, continuing and discontinued operations EBITDA Dividend Tax * associates ** Change in WC Cash CAPEX Dividend of SEK 4. billion from Turkcell 2015 Lower taxes mainly in Sweden Other Positive working capital driven by Europe Higher cash CAPEX driven by fiber 20 0 Q Q1 Q2 Q3 Discontinued operations Dividends from associates net of taxes Continuing operations excl. Associates Continuing operations incl. Associates 25 * Excluding non-recurring items ** Net of tax DIVIDEND PROPOSAL FOR 20 SEK

14 FREE CASH FLOW 3 DEFINITIONS FREE CASH FLOW, from continuing operations as reported today FREE CASH FLOW EXCLUDING LICENSES, from continuing operations as basis for dividend OPERATIONAL FREE CASH FLOW, from continuing operations as basis for guidance equals free cash flow excluding licenses and dividends from associates 2 FREE CASH FLOW- OUTLOOK & DIVIDEND DEFINITIONS SEK BILLION 20 FCF DEFINITIONS* DEFINITION IN DIVIDEND POLICY Free cash flow from continuing operations FREE CASH FLOW EXCLUDING LICENSES Free cash flow from continuing operations excluding licenses DEFINITION FOR OUTLOOK OPERATIONAL FREE CASH FLOW Free cash flow from continuing operations excluding licenses and dividends from associates** 5.5 Free cash flow continuing operations Licenses Free cash flow excl. licenses Dividends from associates** Operational free cash flow * For illustrative purpose only, based on 20 ** Net of taxes 28 14

15 CAPITAL MANAGEMENT L E V E R A G E Net debt/ebitda of 2x plus/minus 0.5x C R E D I T R A T I N G Solid investment grade long-term credit rating (A- to BBB+) D I V I D E N D P O L I C Y U P D A T E D At least 80% of free cash flow from continuing operations excluding licenses (previously including licenses) 29 OUTLOOK 201 O P E R A T I O N A L F C F * Above SEK billion (SEK 5.5 billion in 20) Op. FCF & dividends from associates should cover a dividend around the 20 level E B I T D A * * Around the 20 level 30 * Continuing operations, in reported currency, associate dividends net of taxes ** Excluding non-recurring items, in local currencies, excluding acquisitions and disposals 15

16 Q&A DEBT MATURITY SCHEDULE DEBT MATURING NEXT 12 MONTHS SEK billion ec D -1 ov N -1 ct O -1 ep S -1 ug A l-1 Ju 1 nju -1 ay M -1 pr A -1 ar M 1 bfe 1 nja DEBT PORTFOLIO MATURITY SCHEDULE 201 AND ONWARDS SEK billion

17 FINANCIAL SUMMARY CHANGE (%) Net sales (SEK million) 21,130 22, Change local organic (%) +0.2 Service revenues* (SEK million) 1,594 18, Change local organic (%) +0.6 EBITDA** (SEK million) 6,380 6, Change local organic (%) -1.9 EBITDA** Margin (%) Total EPS (SEK) Total free cash flow (SEK million) ,691 of which continuing operations 32 1, * External service revenues ** Excluding non-recurring items FINANCIAL KEY RATIOS 20 Dec 31, 20 DEC 31, 2015 Return on equity*, % Return on capital employed*, %. 8.9 Equity/assets ratio, % Net debt/equity ratio, % Net debt/ebitda** ratio, multiple Net debt/assets ratio, % * Rolling 12 months ** Rolling 12 months, excluding non-recurring items 34 1

18 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 Telia Company