Improved margin and cash flow in Q1 2013

Transcription

1 BofA Merrill Lynch Global Telecom & Media conference June 4, 2013 Per-Arne Blomquist President and CEO 1 Improved margin and cash flow in Q Revenue growth impacted by reduced mobile interconnect rates Margin improved thanks to lower cost base Cash flow increased as a result of reduced capex Revenue growth* EBITDA margin** 34.7% 34.5% Free cash flow (SEKm) 2,414 2, % -0.9% Q4 20 Q Q1 20 Q * Local organic revenue growth ** EBITDA, excluding non-recurring items 2 1 Q1 20 Q1 2013

2 Strong demand for mobile data Billed revenues*, change y/y (%) Q Volume y/y** Revenue y/y** 6% 4% Voice 0% -13% 2% 0% -2% -4% -6% Q1 11 Q2 11 Q3 11 Q4 11 Q1 Q2 Q3 Q4 Q1 13 Mobility Services, excl. Spain Messaging -10% -7% Mobile data +80% +21% Billed revenues -2.9% * Stable FX rates ** Excluding Spain 3 Changing our model to monetize on data growth Get unlimited voice and text messages Share data within certain buckets Connect up to 7 mobile devices on One bill Possibility to top-up data 4 2

3 Significant expansion of 4G network in Sweden 4G services launched as early as 2009 Network quality is key to future success 4G coverage on par with 2G by 2015, i.e. 99% of population and 92% of geography Existing 2G/3G infrastructure utilized to ensure cost efficient 4G roll-out 5 Fiber and TV vital in Broadband transition MMO 000 Broadband Services - Fiber and TV customers +11% 1,349 1, % Fiber roll-out is key to meet future customer demand Revenues from IP-based services today larger than traditional fixed line TeliaSonera has reached #2 position on the Swedish TV market Several initiatives launched within TV 20 Q Q1 20 Q Q1 Fiber customers TV customers - Telia Play+ enables access to TV offerings on tablets and smartphones - First Nordic operator to offer HBO - Partnership with Samsung on Smart TV 6 3

4 A shift in Broadband business model is needed Current model is flat fee for end user Future model is two-sided Content players Content players Paying for: High Quality Paying for: Access speed Extra services Paying for: Access speed Extra services Data volumes Extra quality End user End user 7 Eurasia remains key to TeliaSonera Revenue growth & EBITDA margin Growth 25% 20% 50.8% 53.0% Organic sales growth 13.6% in Q EBITDA-margin 53.0%, highest level since early % 10% 5% 0% Q1 Q2 Q3 Q4 Q1 13 Local organic revenue growth EBITDA margin 8 4

5 Mobile data important growth driver in Eurasia Data revenues & share of net sales SEK million % 11.3% Data revenue increased 56% in Q1, accounting for one third of total net sales growth Smartphone penetration has doubled in one year, but is still on low levels Data pricing is based on our experiences in the Nordic region Q1 Q2 Q3 Q4 Q1 13 Data revenues Data revenues to net sales 9 Monitoring balance between sales and opex Group EBITDA margin* Net sales & addressable cost base** 36% 8% 6% 34% 32% 4% 2% 0% -2% -4% Q % Q % -8% Net sales Addressable cost base *Excluding non-recurring items **In local currencies and excluding acquisitions and divestments 10 5

6 Lowering the cost base by SEK 2 billion Addressable cost base target* SEK billion Savings of SEK 0.2 billion recorded in Q4 20 and an additional SEK 0.1 billion in Q In total, 1,800 employees will be affected Close to 1,000 employees noticed y-t-d, of which the majority in April Restructuring costs of SEK 1.7 billion expected in e 2014e * Excluding Mobility Spain and NextGenTel, stable FX 11 Net debt to EBITDA within our target range SEK billion Net debt and Net debt / EBITDA* 2,5 2,0 1, ,0 Gross debt of SEK 83.6 billion and Net debt of SEK 55.3 billion Net debt to EBITDA of 1.54x (1.89x adjusted for dividend paid in early Q2) Target range between x 15 0 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q4 11 Q1 Q2 Q3 Q4 Q1 13 0,5 0,0 * 4 quarters rolling 6

7 Aiming at competitive shareholder returns SEK per share Dividend per share Extra dividend & share buy-back Ordinary dividend Ordinary dividend at least 50% of net income Ordinary dividend yield currently ~6.4% Excess capital to be returned to shareholders 13 Outlook for 2013 Outlook 3M 2013 Net sales* Flat -0.9% EBITDA margin** CAPEX-to-sales ratio*** Increase slightly (34.5% 20) 34.7% Around 14% 11.0% * In local currencies and excl. acquisitions and divestments ** Excl. non-recurring items *** Excl. license and spectrum fees 14 7

8 Summary Improved margin and cash flow in Q1 New initiative launched to monetize on mobile data growth Eurasia remains core to TeliaSonera Strong focus on efficiency measures Targeting competitive shareholder returns 15 Q&A 16 8

9 Appendix 17 Currency headwind in the quarter All of our major currencies have Net sales and EBITDA*growth y-o-y 0% Net sales lost 3-8% vs. SEK compared to a year ago EBITDA* Negative impact on Net sales SEK 0.8 billion y-o-y -1% Negative impact on EBITDA* -2% SEK 0.3 billion y-o-y -3% -4% -5% Organic M&A FX * Excl. non-recurring items 18 9

10 Slightly slower growth on a sequential basis Net sales split and Net sales growth* y-o-y +1.8% +16.3% -0.9% +13.6% -2.7% -5.9% +1.3% -2.7% Q Q4 20 Q1 20 Q Mobility Broadband Eurasia *In local currencies and excl. acquisitions and divestments 19 Mobility Services impacted by lower interconnect Net sales, Mobility Services SEK billion Net sales in Mobility Services declined by 2.7% y-o-y in local currencies Reduced interconnect revenues affected sales by around 4% y-o-y Q1 20 Billed revenues Interconnect Equipment Other FX Q

11 Mobile data supports growth in Eurasia Net sales growth* - Eurasia Ucell 75.3% Ncell 29.3% Overall revenue growth 13.6% Data revenue increased 56%, accounting for one third of total net sales growth Moldcell Tcell Kcell Geocell Azercell 7.3% 6.6% 4.0% 1.6% -0.7% Positive trend in all units, except Azercell due to lower interconnect * In local currencies and excl. acquisitions and divestments 21 Pressure on revenues in Broadband Services Broadband Services net sales growth* y-o-y Q1 Q2 Q3 Q4 Q % -1.0% -2.8% -2.7% International Carrier affected by reduced volumes of low margin voice and interconnect Fiber roll-out impacted by adverse cold weather Weaker traffic volumes in traditional fixed -5.9% *Net sales growth in local currencies and excl. acquisitions and divestments 22 11

12 Slightly higher gross margin % Q4 10 Q1 11 Gross margin* Q2 11 Q3 11 Q4 11 Q1 Q2 Q3 Q4 Gross margin, quarter Gross margin, 4 quarter rolling Q1 13 Lower interconnect Reduced low margin equipment sales Higher contribution from Eurasia * Excl. non-recurring items 23 Improved EBITDA margin in the quarter Mobility Services EBITDA* margin Broadband Services EBITDA* margin Eurasia EBITDA* margin 50.8% 53.0% 29.2% 29.1% 31.3% 29.9% Q1 Q1 13 Q1 Q1 13 Q1 Q1 13 Stable EBITDA* margin Net sales -2.7% and addressable cost base -7.1%** Mix shift from classic to IP based revenues and International Carrier Net sales -5.9% and addressable cost base +1.9%** Positive margin development helped by country mix and cost control Net sales +13.6% and addressable cost base +8.2%** * Excl. non-recurring items, **In local currencies and excl. acquisitions and divestments 24

13 Free Cash Flow improved in Q1 Free cash flow Q SEK billion Free cash flow improved to SEK 2.4 billion (2.2), due to lower cash CAPEX and lower income taxes paid Q1 20 EBITDA* Interest paid Income taxes paid Change in working capital Cash CAPEX Other Q * Excl. non-recurring items 25 Stable Earnings per share EPS, SEK EPS positively impacted by associated companies and net financials, but negative FX effect Q1 Operat. 20 Ass comp Nonrec items FX Net fin Taxes Min int Q

14 CAPEX-to-sales ratio of 10.4% in Q CAPEX split CAPEX-to-sales ratio* 5% 20% 31% 29% 35% Mobility Broadband Eurasia Other 15% 10% 5% 10.4% 14% 0% Q1 Q e CAPEX amounted to SEK 2.7 billion (3.2) whereof SEK 0.2 billion (0.0) for licenses and spectrum fees CAPEX-to-sales excl. license and spectrum fees was 10.4% * Excl. license and spectrum fees 27 Net debt development SEK billion Net debt Gross debt decreased to SEK 83.6 billion (91.6) Net debt was SEK 55.3 billion (59.4) Q4 20 Cash flow from operating activities Cash CAPEX Other investing activities Minority dividends Other Q

15 Debt maturity schedule MMO Debt Maturing next months March 31, 2013 SEK billion apr-13 maj-13 jun-13 jul-13 aug-13 sep-13 okt-13 nov-13 dec-13 Jan-14 Feb-14 Mar-14 Debt per Q Gross debt SEK 83.6 bn Net debt SEK 55.3 bn Net debt/ebitda 1.54x Debt Portfolio Maturity Schedule 2013 and onwards SEK billion Group result Q SEK million 1Q 2013 Q1 20 Change % Net sales 24,542 25, COGS 9,082 9, Gross margin, % OPEX 6,989 7, EBITDA* 8,509 8, Margin, % Depreciation, amortization 3,205 3, Income from associated companies 1,323 1, EBIT* 6,628 6, * Excl. non-recurring items 30 15

16 Group result Q SEK million Q Q1 20 Change % EBIT* 6,628 6, Non-recurring items EBIT 6,489 6, Financial net , Tax -1,151-1, Net income 4,499 4, Owners of the parent 4,108 4,2-0.3 Non-controlling interest EPS, SEK CAPEX 2,719 3, Free cash flow 2,414 2, * Excl. non-recurring items 31 Organic revenue growth Q Revenue growth (%) Q Reported growth of which currency of which acquisitions and disposals of which organic Mobility Services Broadband Services Eurasia The Group

17 Statement of cash flows Q SEK million Q Q1 20 Diff EBITDA excluding non-recurring items 8,509 8, Dividends received from ass companies Interest paid (net) -1,350-1, Income taxes paid Payment of restructuring provisions Diff between paid/recorded pensions Changes in working cap and other items -1,598-1, Cash flow from operating activities 4,834 5, Cash CAPEX -2,420-3, Free cash flow 2,414 2, Financial key ratios Mar 31, 2013 Dec 31, 20 Return on equity* 21.5% 20.5% Return on capital employed* 15.4% 14.9% Equity/assets ratio 39.1% 38.2% Net debt/equity ratio 57.3% 61.4% Net Debt/EBITDA rate* multiple 1.54x 1.64x Net Debt/assets ratio 22.4% 23.5% * Rolling months 34 17

18 Liquidity position TeliaSonera Group Cash and cash equivalents, less blocked funds approx. SEK 23.4 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 March 31, 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- 1 0 Q1-02 Q4-04 Q4-07 Q4-08 Q4-09 Q4-10 Q4-11 Q4- 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 36 18

19 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 37 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

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