Telenor Second Quarter
Group Overview Jon Fredrik Baksaas CEO
Record quarter strong domestic operations Revenue growth of 18% to 15.6 NOKbn Mobile: Revenue growth of 42% EBITDA 5.7 NOKbn - improved by 1.3 NOKbn Norway: Mobile: Strong subscriber growth and increased ARPU Fixed: Strengthened position within ADSL and traffic minutes Broadcast: Continued strong revenue growth and improved margins Revenues (NOKm) / EBITDA % 15 624 13 223 36.4 % 32.9 % EBITDA and Capex (NOKm) EBITDA CAPEX 5 681 4 350 4 012 1 314 3
Mobile Quarterly financial development Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 8 202 3 331 3 051 5 388 5 789 6 322 6 311 7 214 2 195 2 277 2 601 2 494 2 816 41 % 39 % 41 % 40 % 39 % 37 % 687 678 881 1 421 984 1 112 1 173 1 507 1 432 1 506 1 508 Excludes sales gains / losses 4
Mobile Strong subscriber growth Total Consolidated Total Pro Rata 100% figures (all companies) 38.9 23.1 25.1 27.2 31.0 34.2 9.6 12.1 13.0 10.0 13.7 10.6 11.4 15.2 13.2 16.9 14.3 18.7 Note: Subscriber figures exclude Cosmote 5
Telenor Mobil - Norway Subscribers ( 000) Revenue growth of 6% Net 73,000 new subscribers Solid market share Increased postpaid ratio 2 342 2 330 2 364 2 364 2 378 2 451 Improved ARPU Continued strong competition 330 ARPU (NOK) 346 354 326 332 348 6
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 2 610 2 796 2 834 2 669 2 800 2 950 41 % 37 % 41 % 37 % 36 % 37 % 1 083 1 040 1 157 982 998 1 076 790 746 873 706 760 803 77 108 79 236 214 255 7
Sonofon - Denmark Subscribers ( 000) 1212 Strong competition with decreasing prices 1 065 1 057 998 1 010 996 Weak margins Acquired CBB Mobile Market share of 26% 250 269 308 ARPU (NOK) 277 270 255 Note: Subscribers calculated using 3 months churn for prepaid 8
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 065 1 160 1 185 1 195 1 210 1 247 27 % 28 % 29 % 25 % 24 % 19 % 347 319 283 299 293 121 236 224 149 167 131 144 147 102 126 85 40-115 9
One Nordic mobile operation Total synergies with more than NOK 1 Bn in NPV Short term: NOK 200 Mn lower OPEX level at year end. NPV approx. NOK 900 Mn Long term: Synergies through simplified operations and product managment Consolidation in Denmark has created a more transparent market place Consolidation in Denmark Telmore 11 % CBB 4 % Orange 11 % Telia 22 % Other 9 % Telia 10 % Other 10 % Sonofon 23 % TDC 32 % Sonofon 26 % TDC 42 % 10
Pannon GSM - Hungary Subscribers ( 000) Revenue growth of 12% 2 514 2 514 2 564 2 618 2 596 2 588 Continued strong competition Increased post-paid ratio Activities initiated to regain total market share from 34% Growing ARPU despite price reductions 153 165 170 ARPU (NOK) 173 169 176 11
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 1 205 1 292 1 409 1 464 1 405 1 445 39 % 40 % 36 % 40 % 39 % 469 512 508 435 556 556 30 % 113 195 200 136 104 121 257 290 278 200 315 318 12
Kyivstar - Ukraine Subscribers ( 000) Revenue growth of 69% 3 037 3 221 3 610 Strong market growth 2 012 2 205 2 512 Activities initiated in to increase market share positive trend on subscriber growth ARPU (NOK) High Minutes of use Positive effect on ARPU 81 92 106 95 87 97 Extensive network roll out 13
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 996 834 801 760 590 483 55 % 57 % 61 % 63 % 61 % 59 % 591 566 507 505 465 338 331 263 290 259 218 212 186 257 375 412 403 488 14
DiGi - Malaysia Subscribers ( 000) Revenue growth of 31% 1 803 1 946 2 055 2 207 2 416 2 585 Stable market share Non-voice revenues at 14% despite price reductions Commercial launch of EDGE 123 ARPU (NOK) 117 117 116 111 110 15
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 826 882 941 963 734 734 530 42 % 39 % 39 % 44 % 45 % 43 % 386 307 283 319 240 144 129 426 410 162 103 113 90 112 182 216 202 16
GrameenPhone - Bangladesh Subscribers ( 000) Revenue growth of 52% 1 520 1795 Market penetration of 2.1% 835 928 1 047 1 141 Market share of 62% Interconnection with all mobile operators established ARPU affected by lower prices and marketing campaigns using free airtime 133 136 143 ARPU (NOK) 130 123 108 17
Quarterly financial performance Revenues (NOKm) / EBITDA % EBITDA and Capex (NOKm) EBIT (NOKm) EBITDA CAPEX 493 535 424 433 326 353 60 % 63 % 65 % 71 % 57 % 58 % 197 221 274 309 309 283 258 189 160 161 183 231 268 249 258 77 86 77 18
Mobile DTAC and VimpelCom Strong growth in subscribers VimpelCom 16.3 Million 1 DTAC 7.3 million 2 Telenor share of Market Value VimpelCom: 10.4 NOKbn 3 Vimpel-R, derived: 3.5 NOKbn 3 Market value DTAC and UCOM: 3.3 NOKbn 3 Note 1: Source: Prime-Tass Note 2: Subscriber figures as at May published by company Note 3: Closing stock exchange rates on June 30; 96,45 USD (VIP) and July 8 (DTAC and UCOM) 19
Fixed Highlights Revenues down 5.5% - affected by Sale of Comincom Sale of IT services unit to EDB EBITDA-margin in line with EBIT improvement of NOK 100 mill to NOK 729 mill Revenues (NOKm) / EBITDA % 5 150 4 868 33 % 33 % EBITDA and Capex (NOKm) EBITDA CAPEX 1 690 1 601 449 385 20
Domestic Fixed Line Adjusted Revenues and EBITDA Reported Revenues (NOKm) / EBITDA % Adjusted revenues down 1% EDB effect NOK 81 Mn Adjusted EBITDA margin down 0.1% points EDB effect NOK 17 Mn Restructuring effect NOK 32 Mn 4 540 4 413 36,2 % 35,7 % Adjusted Revenues (NOKm) / EBITDA % 4 459 4 413 36,2 % 36,1 % 21
Domestic Fixed Line Market trends Fixed Telephony Subscribers ADSL subscribers 429 2 247 2 215 2 148 2 040 1 939 1 885 313 380 96 108 437 448 460 473 476 467 237 268 161 69 19 20 224 195 59 53 31 21 121 134 259 68 41 150 80 56 177 76 208 86 235 Pre select WLR TEL End users Retail Wholesale LLUB 22
Broadcast Highlights Revenue growth of 14% Revenues (NOKm) / EBITDA % 1 169 1 336 Record EBITDA margin 28.0 % 29.2 % Positive customer/subscriber uptake in Canal Digital EBITDA and Capex (NOKm) Successful launch of Intelsat 10-02 327 EBITDA CAPEX 390 Positioned for growth 35 70 23
Focus and Strategy Maintain a strong home market position Execute Scandinavian mobile synergies Create value in international mobile Increased transparency and simplicity 24
Group Financial Overview Torstein Moland CFO
Key messages confirms our solid position in Norway Mobile: Strong subscriber growth and increased ARPU Fixed: Strengthened position within ADSL and traffic minutes Nordic mobile synergy projects on track Strong growth in emerging mobile markets Continued strong performance in Broadcast 26
Reported P&L 2002 Revenue 15 624 13 223 53 121 48 826 EBITDA 5 681 4 350 18 302 13 469 EBIT 2 739 1 612 7 560 (320) Profit before Tax 2 662 2 490 7 426 (5 136) Net Income 1 410 1 683 4 560 (4 298) NOKm 27
Adjusted P&L 2002 Revenue 15 258 13 147 52 889 48 668 EBITDA 5 505 4 529 18 586 14 506 EBIT 2 564 1 838 7 989 4 270 Assoc. comp 202 (49) (251) (205) Profit Before Tax 2 460 1 289 6 300 2 488 NOKm 28
Solid quarterly revenue growth Revenues (NOKm) * Comments (YoY)* 15 258 Revenue growth of 16% adjusted for sales gains 12 602 13 147 13 469 13 671 14 276 underlying growth of 8% Underlying Business area growth Mobile: 17% Fixed: -1% Broadcast 13% * Revenues adjusted for sales gains * Underlying growth: Adjusted for the effect of acquisitions and 29
EBITDA margin increased by 1.7%-points Adjusted EBITDA (NOKm) and Margin Comments 4 189 4 529 33.2% 34.4% 5 004 4 864 37.2% 35.6% 5 035 35.3% 5 505 36.1% Mobile increased share of Group EBITDA Consolidation of Sonofon contributes negatively to Group margin Operational excellence 30
Cost cutting and capital discipline Headcount Capex / Sales Capex Breakdown 1 st half (NOKm) International Domestic 19 450 20 600 20 200 Domestic Fixed Domestic Mobile Total Capex/Sales Broadcast 2 % Other 2 % Group functions 4 % Fixed 9 % Domes tic Mobile 6 % 7 450 8 650 8 750 18% 19% 16% 12% 12 000 11 950 11 450 7% 5% 9% 8% 8% Int. Mobile 77 % 2002 1st half 31
Increased Net Debt/EBITDA Net Debt (NOKbn) to LTM EBITDA (x) Net Debt Changes (NOKbn) 26.1 25.3 21.6 22.0 19.3 17.8 1.8 1.6 1.3 1.1 1.0 1.0 Net Debt 31 March 19.3 EBITDA - 5.3 Net investment (excl. Pakistan) + 2.3 Licence in Pakistan + 1.8 Net Interest + 0.3 Income tax paid + 0.4 Dividends + 1.7 Share buy back + 1.3 Currency adj. net debt + 0.2 Net Debt 30 June 22.0 32
Dividend and share buy back NOK 4.2 Bn Share buy back (NOK Bn) Acquired and committed to buy shares for NOK 2,531 Mn Dividend: NOK 1,690 Mn 1,315 1,216 695 657 620 559 Acquired in the market To be acquired from the state 33
Outlook for Mobile Domestic Fixed Line Growth in revenues Pressure on international EBITDA margin Increased Capex Revenues: Reduced access and traffic revenues, increased ADSL revenues Stable underlying margin Broadcast Telenor Group Continued revenue growth EBITDA and EBIT growth Increased Capex due to satellite acquisition Continued revenue growth Stable EBITDA margin Capex significantly above 34
Appendix
International mobile associates (100% figures in NOK millions according to local GAAP) Subscriptions ('000) 1) Revenues YTD EBITDA YTD 2) CAPEX YTD Net debt 3) Dec 31 %-change Dec 31 %-change Dec 31 %-change Dec 31 Dec 31 2002 2002/ 2002 2002/ 2002 2002/ 2002 Europe One (Austria) 1 348 1 420 5 % 4 631 5 299 14 % 1 172 1 568 34 % 668 735 11 067 Pro Monte 177 241 36 % 419 453 8 % 199 215 8 % 62 62-54 Russia VimpelCom 4) 5 153 11 437 122 % 6 148 9 407 53 % 2 578 4 319 68 % 4 073 5 127 3 026 Southeast Asia DTAC 5 455 6 550 20 % 5 982 5 384-10 % 1 948 2 057 6 % 2 104 932 7 171 UCOM 5) - - 3 250 3 759 16 % 337 227-33 % 76 29 808 1) Subscriber figures based on companies own counting methods 2) EBITDA consists of earnings before interest, tax, depreciation and amortization excluding gains/(losses) from sales of fixed assets and operations 3) Net debt consists of long term and short term interest-bearing debt minus cash. Closing exchange rates used 4) VimpelCom CAPEX excludes acquisitions of new entities 5) UCOM classified according to NGAAP. Figures for DTAC are not included 36