Telenor - Fourth Quarter
Group Overview Jon Fredrik Baksaas CEO
: Streamlining operations A challenging year for the industry Write downs of book values Successful implementation of Delta 4 Improved operational cash flow New business structure to improve performance Norway Stronger domestic focus Business Solutions Restructured Plus Broadcast pure play TV-distribution Basis for profitable organic growth in Sweden Executed our strategy to focus the mobile portfolio Gained majority in Pannon (Hungary) and Kyivstar (Ukraine) Exit of Extel and StavTeleSot in Russia Strong growth in future cash flow 3
Delta 4 progressing according to plan Delta 4 Focus areas Network structure and operations Information systems Support services Customer front Accounting & Finance NOK 1.1 Bn Mn cost savings Work force reductions in of more than 1500 Target of NOK 1.3 Bn in cost savings for 2003 Ambition of NOK 4 Bn in cost savings maintained by 2004 Purchasing 4
Reporting Structure 2003 GROUP Mobile Fixed Broadcast Other 5
Reported P&L Revenue 13 042 15 920 48 826 46 040 EBITDA 3 562 7 348 13 441 14 250 EBIT (2 002) 4 412 (221) 3 177 Profit before Tax (5 336) 708 (5 027) 10 255 Net Profit (4 491) 867 (4 213) 7 079 6
Balance sheet Strong key parameters 31. Dec 30. Sept Net Debt (NOK Bn) Equity Ratio (%) Net Debt / Equity (%) Net Debt / EBITDA* (x) 26.9 42% 72% 2.0 27.6 47% 64% 2.3 * EBITDA excludes gains and losses last 4 quarters 7 7
Mobile Financial highlights Revenue growth of 60% from to NOK 5,666 Mn EBITDA of NOK 2,084 Mn and CAPEX of NOK 1,399 Mn Revenue / EBITDA-Margin 5 666 5 320 5 001 4 359 Write downs of NOK 4.4 Bn 3 157 3 550 Consolidated NOK 2.2 Bn 37 % Associated NOK 2.2 Bn EBIT of NOK 1,2 bn 37 % 35 % 28 % 35 % 40 % 8
Networks Stable revenues and market share Revenue / EBITDA-Margin Subscription up and traffic down One-offs of NOK 155 Mn reduce EBITDA by 3.7 %-points 4 079 4 260 4 114 4 120 4 107 4 146 EBITDA of NOK 1,376 Mn Capex of NOK 559 Mn Reported EBIT NOK 560 Mn 35 % 36 % 34 % 34 % 37 % 33 % Revenue and EBITDA excludes gains and losses 9
Plus Broadcast positive while ADSL growth hurts margins Solid performance by Canal Digital EBITDA positive for the full year Revenue / EBITDA-Margin Lower EBITDA for Internet/ADSL 26.000 new ADSL customers in 1 350 1 521 Stopped losses in Swedish retail operations 809 993 945 1 035 NOK 75 Mn in one-offs reduce EBITDA by 5%-points From 2003: Pure TV play 8 % 4 % -3 % 5 % 8 % 0 % Revenue and EBITDA excludes gains and losses 10
Business Solutions Restructured Strengthened Nordic focus Revenues/EBITDA-margin Acquired Utfors Dec Exit Hungary and Austria EBITDA of NOK 71 Mn, CAPEX NOK 202 1 401 1 732 1 599 1 525 1 439 1 594 EBIT of NOK 306 Mn including write downs of NOK 90 Mn -3 % -1 % 2 % -2 % 4 % -30 % Revenue and EBITDA excludes gains and losses 11
Telenor NetCom Telia Mobile Tele 2 Vodafone TDC Sonofon Sonera Radiolinja Vodafone T-Mobile UK Orange SFR T-Mobile Vodafone Sun E-Plus O2 30 25 20 15 10 5 0 Regulatory issues Delay of 3G roll-out Service Provider agreement (Sense) 20 18 16 14 12 10 8 6 4 2 0 12 SMS (Teletopia) Interconnect termination fee SMS prices (Euro cent)* NOR SWE DEN FIN UK FRA GER Swisscom Cosmote Termination fees (Euro cent) Telenor NetCom LuxGSM Telia Mobilkom T-Mobil TDC Proximus Eircell Orange KPN BTCellnet Omnitel Telefonica Telecel
Group Annual Cash Flow Development Adjusted EBITDA / CAPEX High cash flow in Increased EBITDA in 2003 Stable CAPEX in 2003 EBITDA 11,6 10,4 9,6 9,5 14,5 CAPEX 9,0 2000 2003 13
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Telenor Mobile Arve Johansen CEO
Mobile Annual Financial Development (NOK mill) Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 20 346 12 588 9 799 7 482 8 075 27 % 28 % 32 % 37 % 2 161 2 720 4 067 3 731 1 106 1 594 2 495 1 556 1999 2000 1999 2000 1999 2000 16
Telenor Mobile s Portfolio * Telenor s indirect ownership in DTAC = 40,3%. (Direct ownership share in DTAC: - Telenor: 30%, - UCOM: 40,3 %) 17
Mobile Subscribers (in millions) Total Consolidated Total Pro Rata 100% figures (in all companies) 23,4 25,2 20,9 14,7 16,6 18,5 6,6 7,2 9,3 6,1 6,5 10,4 11,6 8,6 9,1 12,4 3,7 3,8 18
Mobile Growth NOK Revenues 02 vs. 01 Local Currency EBITDA Margin mnorway 7% - 37,3 % 34,3% Pannon 11% 14% 33,8 % 30,5% DiGi 5% 27% 43,5 % 34,3% Grameen 7% 33% 45,5 % 47,5% Kyivstar 22% 46% 55,1 % 31,0% 19
Subscribers ARPU MoU (AMPU) 2 360 2 409 2 289 2 307 2 382 2 314 357 331 334 351 359 340 182 177 171 185 186 178 Figures represent mnorway 20
Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 2 683 2 476 2 548 2 677 2 809 2 661 41 % 34 % 40 % 40 % 44 % 38 % 1 102 850 1 026 1 058 1 239 1 007 801 583 718 675 935 680 132 Figures represent mnorway, in NOK millions 21
Subscribers ARPU MoU (AMPU) NOK HUF 1 877 2 001 2 146 2 311 2 450 217 207 182 184 177 177 148 134 1 567 113 115 112 112 Subscriber figures based on 3 months churn for pre-paid 22
Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 1 085 1 215 1 130 1 211 1 250 1 344 41 % 31 % 37 % 38 % 34 % 34 % 440 371 423 455 427 454 261 356 230 267 235 236 89 Figures in NOK millions 23
Subscribers ARPU MoU (AMPU) NOK MYR 1 043 1 039 1 159 1 284 1 454 1 616 176 180 169 158 138 145 212 204 197 189 185 185 Subscriber figures based on 3 months churn for pre-paid 24
Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 667 692 675 664 650 726 625 43 % 315 34 % 34 % 37 % 35 % 34 % 224 237 251 234 222 94 150 154 139 95 43 figures are not audited, and calculated by DiGi due to change in Financial Year Figures in NOK millions 25
Subscribers ARPU (NOK) MoU (AMPU) NOK USD 1 856 1 659 174 820 1 095 1 296 1 461 146 121 112 113 102 57 53 46 49 51 49 26
Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 388 427 452 480 547 518 53 % 61 % 62 % 55 % 238 294 337 285 235 180 241 267 213 32 % 31 % 125 133 80 88 27
Subscribers ARPU MoU (AMPU)* NOK BDT 550 625 704 769 204 173 191 173 167 155 333 292 308 297 288 298 464 373 * Minutes of Use include both incoming and outgoing, including non-revenue generated incoming minutes. Figures can not be compared to other companies in portfolio 28
Revenues / EBITDA % EBITDA / CAPEX EBIT EBITDA CAPEX 354 409 415 386 379 232 53 % 47 % 46 % 45 % 54 % 46 % 123 168 189 187 208 173 139 90 130 147 150 173 161 Figures in NOK millions 29
Subscribers Revenues / EBITDA % EBITDA 924 941 953 984 1 032 1 103 991 958 952 1 038 1 076 1 055 31 % 257 280 264 310 311 322 26 % 29 % 28 % 30 % 29 % Subscriber figures published by the Danish National Telecom Agency (excludes service providers and based on 12 month pre-paid churn). & - subscriber figures have not been published and have been submitted by Sonofon Figures are based on actual company figures Figures in NOK Millions 30
Group Financial Overview Torstein Moland CFO
Key messages Adjusted Group EBITDA of NOK 14.5 Bn in Group CAPEX of NOK 8.9 Bn in Write downs of NOK 6.6 Bn in Delta 4 On schedule 2003 Strong growth in cash flow 32
Write Downs Consolidated - Mobile (Mainly Digi) - Business Solutions - EDB BP -Other Total Consolidated 2 176 90 360 178 2 804 2 289 734 364 166 3 553 Associated - Sonofon -DTAC/UCOM -Oniway -Other Total Associated 1000 881 316 10 2 207 1000 881 316 84 2 281 Financial Items 649 744 33
Group - Adjusted P&L (NOK Mn) Revenue 13 002 10 874 48 668 40 604 EBITDA 4 101 2 417 14 478 9 502 EBIT 1 341 439 4 369 2 251 Assoc. comp 25 (363) (205) (1 746) Profit Before Tax 827 (31) 2 552 (396) 34
Reported P&L (NOK Mn) Revenue 13 042 15 920 48 826 46 040 EBITDA 3 562 7 348 13 441 14 250 EBIT (2 002) 4 412 (221) 3 177 Associated Co. (2 146) (3 665) (2 450) 8 237 Net Finance (1 188) (39) (2 356) (1 159) Profit before Tax (5 336) 708 (5 027) 10 255 Net Income (4 491) 867 (4 213) 7 079 * Proforma 35
Reported EBITDA vs. Consensus EBITDA Reported Consensus Diff Mobile 2 084 2 033 51 Networks 1 370 1 538 (168) Plus 18 6 12 Business Sol 46 (29) 72 EDB 82 82 0 Other 93 76 17 Group Functions (214) (113) (101) Eliminations 83 (55) 138 Total 3 562 3 551 11 36
CAPEX/SALES Group (NOK Bn) Fixed Line/Domestic Mobile Fixed Mobile 10,4 11,6 22 % 22 % 8,9 29 % 29 % 16 % 17 % 11 % 18 % 7 % 2000 2000 37
Balance Sheet 31 Dec 30 Sept 31 Dec Fixed Assets 74 048 78 399 66 095 Current Assets 15 303 14 708 16 528 Total Assets 89 351 93 107 82 623 Equity & Minorities 37 201 43 498 45 683 Interest-bearing debt 32 396 31 333 19 169 Non interest-bearing debt 19 754 18 276 17 771 Total Equity and debt 89 351 93 107 82 623 38
Outlook 2003 Revenues 7-10% revenue growth EBITDA Increased margins EBIT - Strong underlying growth Capex - Approximately NOK 9 Bn 39
Telenor - Fourth Quarter
Appendix
Quarterly Figures (NOK mill) SMS & Content mnorway Pannon GSM DiGi Kyivstar 15% of sales in 10% of sales in 10% of sales in 4% of sales in 347 357 368 398 398 311 138 68 93 97 103 98 17 28 35 48 63 71 14 10 17 18 17 21 SMS & Content Revenue figures have been adjusted and now include revenue from terminated SMS 42
Telenor Mobile International Associates Total per Company - (100% figures in NOK millions according to local GAAP) Subscriptions Revenues YTD EBITDA YTD 1) Net debt 2) September 30 %-change September 30 %-change September 30 %-change September 30 2000/ 2000/ 2000/ Nordic Region Sonofon 4) 924 1 032 12 % 2 870 3 034 6 % 700 848 21 % 3 605 Europe Connect Austria 1 229 1 294 5 % 3 362 3 390 1 % 463 788 70 % 9 777 Cosmote 2 740 3 369 23 % 5 496 6 795 24 % 2 394 2 940 23 % 3 288 Pro Monte 184 193 5 % 289 324 12 % 136 161 18 % -53 Russia/Ukraine VimpelCom 1 480 4 028 172 % 2 611 4 434 70 % 948 1 953 106 % 2 397 StavTeleSot 58 136 135 % 102 154 51 % 64 86 34 % 63 Southeast Asia DTAC 2 300 5 130 123 % 4 389 4 902 12 % 1 339 1 518 13 % 7 122 UCOM 3) - - - 2 677 2 359-12 % 322 268-17 % 941 1) EBITDA consists of earnings before interest, tax, depreciation and amortization excluding gains/(losses) from sales of fixed assets and operations 2) Net debt consists of long term and short term interest-bearing debt minus cash. Closing exchange rates used 3) UCOM classified according to NGAAP. Figures for TAC are not included 4) Subscriber figures published by the Danish National Telecom Agency (excluding service providers) 43