Fourth quarter result 2019 14 February 2020 CEO Eivind Helgaker - - PowerPoint PPT Presentation

▶
fourth quarter result 2019
SMART_READER_LITE
LIVE PREVIEW

Fourth quarter result 2019 14 February 2020 CEO Eivind Helgaker - - PowerPoint PPT Presentation

Mar 30, 2023 445 likes •802 views

Fourth quarter result 2019 14 February 2020 CEO Eivind Helgaker and CFO Henning Karlsrud Disclaimer By reading this company presentation (the Presentation), or attending any meeting or oral presentation held in relation thereto, you (the

slide-1
SLIDE 1

Fourth quarter result 2019

14 February 2020 CEO Eivind Helgaker and CFO Henning Karlsrud

slide-2
SLIDE 2 2

Disclaimer

By reading this company presentation (the “Presentation”), or attending any meeting or oral presentation held in relation thereto, you (the “Recipient”) agree to be bound by the following terms, conditions and limitations. The Presentation has been produced by Ice Group ASA (the “Company”) for information purposes only and does not in itself constitute, and should not be construed as, an offer to sell or a solicitation of an offer to buy any securities of the Company in any jurisdiction. The distribution of this Presentation may be restricted by law in certain jurisdictions, and the Recipient should inform itself about, and observe, any such restriction. Any failure to comply with such restrictions may constitute a violation of the laws of any such jurisdiction. The Recipient acknowledge that it will be solely responsible for its own assessment of the Company, the market and the market position of the Company and that it will conduct its
  • wn analysis and be solely responsible for forming its own view of the potential future performance of the Company’s business. The Company shall not have any liability whatsoever
(in negligence or otherwise) arising directly or indirectly from the use of this Presentation or its contents, including but not limited to any liability for errors, inaccuracies, omissions or misleading statements in this Presentation, or violation of distribution restrictions. An investment in the Company involves significant risk, and several factors could adversely affect the business, legal or financial position of the Company or the value of its securities. For a description of relevant risk factors we refer to the Company’s annual report for 2018 and the prospectus dated 16 May 2019, available on the Company’s website www.icegroup.com. Should one or more of these or other risks and uncertainties materialize, actual results may vary significantly from those described in this Presentation. An investment in the Company is suitable only for investors who understand the risk factors associated with this type of investment and who can afford a loss of all or part of their investment. This Presentation contains certain forward-looking statements relating to inter alia the business, financial performance and results of the Company and the industry in which it
  • perates. Any forward-looking statements contained in this Presentation, including assumptions, opinions and views of the Company or cited from third party sources, are solely
  • pinions and forecasts and are subject to risks, uncertainties and other factors that may cause actual results and events to be materially different from those expected or implied by
the forward-looking statements. The Company cannot provide any assurance that the assumptions underlying such forward-looking statements are free from errors nor do any of them accept any responsibility for the future accuracy of opinions expressed in this Presentation or the actual occurrence of forecasted developments. This Presentation speaks as at the date set out on herein. Neither the delivery of this Presentation nor any further discussions of the Company shall, under any circumstances, create any implication that there has been no change in the affairs of the Company since such date. The Company does not assume any obligation to update or revise the Presentation or disclose any changes or revisions to the information contained in the Presentation (including in relation to forward-looking statements). This Presentation is subject to Norwegian law, and any dispute arising in respect of this Presentation is subject to the exclusive jurisdiction of Norwegian courts.
slide-3
SLIDE 3 3

2019 was a great year for Ice

CAPITAL MARKETS

  • NOK 1.5 billion private

placement

  • Divested Swedish operations
  • Listed on Oslo Axess
  • NOK 620 million (net) new

unsecured bond NETWORK

  • Awarded 700 & 2,100 MHz

licenses in Norway

  • First operator to use 700MHz
  • Additional 341 smartphone

base stations on ice+

  • 80% on-net share in Q4
  • Apple agreement

MARKET SHARE

  • 130k subscribers added to

reach 10% market share

  • Several innovative product

launches during the year

slide-4
SLIDE 4 4
  • 573k smartphone subscriptions at end of Q4, up 18k in the quarter
  • 130k subscribers added in 2019 to reach 10% market share
  • Smartphone ARPU at 234 NOK, +10 NOK from Q4 last year
  • Smartphone service revenues grew by 36% to NOK 389 million
  • Adjusted EBITDA of NOK -34 million, margin of -7%
  • Solid growth in share of on-net data and VoLTE
  • iPhone agreement with Apple in place

Fourth quarter highlights and main developments

slide-5
SLIDE 5 5

Growth in both ARPU and smartphone subscribers leading to 36% increase in smartphone service revenues

365 389 Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 287 289 320 +36% Q3-19 573 Q4-18 Q1-19 Q2-19 Q4-19 443 457 536 555 +130k Smartphone subscribers & ARPU

1,000 subscribers / ARPU in NOK

Smartphone service revenues

NOK million

224 221 220 231 234 ARPU Subscribers

slide-6
SLIDE 6 6

10% market share reached – medium term target of 20%

  • Added 130k subscribers in 2019, +2.3pp market share
during the year
  • Ice now with 19 consecutive quarters of subscriber
growth
  • Ice has 24% of available mobile frequencies in Norway
  • Tele2 had 19% (and growing) marketshare in 2013, before
they lost the spectrum and were acquired by Telia
  • The average #3 player in 3-player markets in Europe
has 22% market share
  • The Norwegian government actively supports a
sustainable third mobile network operator
  • We have the tools, products and strategy to support
continued subscriber growth Note: Iliad initially offered their basic mobile package free of charge to their existing fixed-line subs, allowing them to massively grow in the first year Note: Masmovil acquired Yoigo in Jun-2016, which in FY2015 held 7% market share

Market Entry Benchmarking

Mobile Market Share (incl targets/guidance)
slide-7
SLIDE 7 7

Product launches 2019:

  • Data Frihet (unlimited data for 99,-)
  • ice Junior (1GB for 0,- for u/12)
  • Mobilbytte (handset-as-a-service)
  • ice Ung (10GB for 249,- for u/24)
  • 500MB discontinued
  • ice SMB (launched in February 2020)
slide-8
SLIDE 8 8

We continue to build base stations – giving us higher on-net share and lowering our roaming costs

67% Q4-19 Q4-18 Q1-19 Q2-19 Q3-19 71% 72% 73% 80% Q4-18 Q1-19 Q2-19 Q3-19 Q4-19 1,775 1,873 1,933 1,987 2,116 +129 Operational smartphone sites Average on-net data and VoLTE share Data 16% 19% 6% 22% 30% VoLTE

slide-9
SLIDE 9 9

iPhone agreement with Apple in place

  • Handset sale and marketing
  • Launches
  • Distribution network
  • Automatic operator settings
  • Improved customer experience
  • Increased on-net shares (data & VoLTE)
slide-10
SLIDE 10 10

Ice is well prepared for the 5G era

Key considerations
  • Ice already has a large installed base of the newest and 5G ready
Nokia base station type. Ongoing core modernization (cloud) will take the nodes to 5G
  • An upcoming 5G pilot is expected in summer 2020 with 3.6GHz test-
frequencies in one or two smaller cities. Initial 5G offering on 700MHz in urban areas expected end of 2020
  • Limited investments needed to turn on initial 5G offering over the next
years 5G frequency portfolio
  • Ice has a healthy 5G frequency portfolio, and has already won the
700MHz band, one of the 5G pioneer bands. Ice was first in Norway to turn on the 700MHz band in November this year (4G)
  • Ice expects that current spectrum holdings will be re-deployed on 5G
as more handsets will support 5G on more frequencies over time
  • Norwegian auctions relevant for 5G will be arranged over the next
years, most notably the 3400-3800MHz 5G pioneer band, available from 1.1.2023 “Ice has turned on the 700 MHz band” - Inside Telecom 28 November 2019
slide-11
SLIDE 11 11

New regulation of Norwegian telecom market

  • The Norwegian telecom market will continue to be highly

regulated, as one of the least competitive markets in Europe

  • Continued and increased support for the 3rd network
  • Telenor is one of a very few telecom operators in Europe

with this kind of regulation, main points in the new regulation are:

  • Continued obligation to offer wholesale access, potentially with

lower data prices for Ice than the current regulation

  • Continued obligation to allow site sharing, with stricter

regulation on cost sharing and application deadlines

  • New regulation will likely be sent ESA for verification during

Q1, with effect from Q1/Q2 2020

  • Ice has a «National Roaming Agreement» (NRA) with Telia

until April 2021

slide-12
SLIDE 12 12

The best ever season start for the Norwegian biathlon team

CONGRATULATIONS!

All photos: Instagram @skiskytterlandslaget
slide-13
SLIDE 13 13

Finance

slide-14
SLIDE 14 14

Positive top-line and margin development in Q4 2019

*Other revenues in Q1-19 includes sale of trademark from AINMT Holdings (NOK 46 million)

72 67 75 84 79 39 34 34 287 421 Q4-18 21 80* 289 483 Q1-19 27 320 432 Q2-19 498 Q3-19 389 Q4-19 457 30 365

Sweden (divested Q1-19) Smartphone service revenues Other revenues MBB service revenues (NO/DK)
  • 36
  • 65
  • 46
  • 20
  • 34
  • 0,
  • 0,
  • 0,
  • 0,

0,0

  • 70
  • 60
  • 50
  • 40
  • 30
  • 20
  • 10
  • 8%

Q3-19 Q4-18

  • 14%

Q1-19

  • 4%
  • 11%

Q2-19

  • 7%

Q4-19 Adj EBITDA Adj EBITDA margin

Operating revenues

NOK million

Adj EBITDA and adj EBITDA margin

NOK million / %
slide-15
SLIDE 15

Revenues

15
  • Adj. EBITDA development – Q4 2018 vs Q4 2019
  • 36
  • 34
  • 19
Adj EBITDA Q4 2018 Other revenues
  • 3
102 Employee benefit expenses Smartphone service revenues
  • 34
Sweden revenues
  • 11
NRA expenses
  • 20
Operating expenses
  • 5
Other expenses
  • 9
EBITDA adjustments Adj EBITDA Q4 2019 NOK million

Expenses Adj.

slide-16
SLIDE 16
  • Network build-out

enabling shift from variable to fixed cost base

  • iPhone agreement with

Apple accelerate on- net shift

  • Continuously

decreasing network rent cost as on-net share increases

On-net data share and network rental cost as % of revenues 16

The increasing on-net share driving the decline in NRA cost share despite growth in data consumption

Q1-18 41% 45% 55% 33% 41% 16% Q2-18 36% 59% 1% Q3-18 67% 35% 6% Q4-18 71% 19% 34% Q1-19 72% 34% Q2-19 73% 22% Q3-19 80% 29% 30% Q4-19
  • Avg. data on-net share
  • Avg. voice on-net share
NRA cost / smartphone service revenues
slide-17
SLIDE 17 17

Ice already the most efficient mobile operator in Norway

Source: Tefficient's compilation based on publicly reported operator data
slide-18
SLIDE 18

mnok Q4 2018 Q4 2019

Service revenue 390 468 Other operating revenue 42 30 Total operating revenue 432 498 National roaming expenses
  • 101
  • 112
Operating expenses, excl. NRA
  • 147
  • 167
Other expenses
  • 191
  • 196
Employee benefit expenses
  • 47
  • 67
EBITDA
  • 54
  • 43
Depreciation and amortisation
  • 153
  • 129
Operating result (EBIT)
  • 207
  • 172
Net financial income/expenses
  • 126
  • 75
Profit/loss before tax
  • 333
  • 247
Income taxes
  • 5
8 Net result from continuing operations
  • 338
  • 240
Net result from discontinued operations Net result for the period
  • 338
  • 240
Adjusted EBITDA
  • 36
  • 34
Earnings per share (NOK)
  • Basic from continuing operations
  • 2.67
  • 1.19
  • Diluted from continuing operations
  • 2.63
  • 1.17
18

Income statement*

*Numbers from the divested Swedish operation are included in the 2018 figures (divested Q1-19) **Ice Group defines Adjusted EBITDA as operating profit after adjustment of operating expenses for depreciation, amortisation, impairment network upgrades, share based compensation expense, non- recurring and other non-operational items. Any effects from business combinations are not included. For details, see the section on Alternative Performance Measures and definitions. NOK 53m in bond interests, NOK 47m in interests and capitalized loan on PIK loans, NOK 28m on IFRS 16 interests, and positive NOK 55m on FX
slide-19
SLIDE 19 19

Cash flow*

*Numbers from the divested Swedish operation are included in the 2018 figures, not in 2019.

mnok Q4 2018 Q4 2019

Cash flow before changes in working capital
  • 30
1 Cash flow from changes in working capital
  • 86
  • 64
…from costs to obtain/fulfil customer contracts
  • 34
  • 90
…from discontinued operations Net cash flow from operating activities
  • 149
  • 154
Cash flow from investing activities
  • 122
  • 130
…from divestment of Sweden …from divestment of Nextel Brazil …from discontinued operations Net cash flow from investing activities
  • 122
  • 130
Cash flow from financing activities
  • 33
563 …from discontinued operations Net cash flow from financing activities
  • 33
563 Net change in cash and bank deposits
  • 305
279 New bond issue, October 2019 Higher capitalized SAC Investements in base stations, IT infrastucture and capitaized work
slide-20
SLIDE 20 20

Liquidity level sufficient to fund network build-out and growth in Norway until second half 2020

  • 2,214

Q4-19 Q4-18

  • 3,457

Q1-19 Q3-19 Q2-19

  • 2,491
  • 2,932
  • 3,208

Net interest bearing debt (NOK million) 275 902 1,183 Q4-18 1,496 Q3-19 Q1-19 Q2-19 1,164 Q4-19 Cash and cash equivalents (NOK million)

Satisfactory liquidity well into H2 2020, when the company expects to be adj EBITDA break even

slide-21
SLIDE 21 21

Update on financing

  • Current PIK loans has a step-up in call structure

and interest rates

  • Total outstanding PIK amount is around NOK 1.7

billion, the company is looking to refinance this with new PIK debt

  • Ongoing process where the ambition is to

refinance the current PIK debt and cover the company’s remaining funding need by increasing the total PIK debt

  • With this the company expects to cover remaining

capital until cash flow break even, including all network and growth investments

slide-22
SLIDE 22

Guidance & outlook

22

Smartphone network build-out:

2020: ~1,000 new smartphone base stations

National Roaming Cost (NRA):

2020: NOK ~400 million

CAPEX:

2020: NOK ~750 million

EBITDA:

Expect to reach EBITDA* break even during H2 2020 restated new new updated

* Adjusted for revenue and cost one-offs
slide-23
SLIDE 23 23

Key drivers behind profitability improvements

  • Reduction of NRA cost
  • adding ~1,000 base stations in 2020
  • increasing VoLTE penetration
  • iPhone agreement in place
  • new telecom market regulation
  • Continued topline growth
  • adding customers
  • growing in high ARPU segment
  • increasing consumption among current

customers

  • value add sevices

EBITDA:

Expect to reach EBITDA* break even during H2 2020 Guidance:

* Adjusted for revenue and cost one-offs
slide-24
SLIDE 24 24 24

Our path to medium-term and long-term value creation

  • ARPU1,2
  • Adj EBITDA margin
3
  • Capex / sales
(1) Target for smartphone subscriptions in Norway (2) Average Revenue Per User (3) Adjusted EBITDA

>25% +2.5% p.a. mid 40s % ~10%

Long term targets: Medium term targets:

>20% ~NOK300 mid 30s % ~10%

  • Subscriber share1
slide-25
SLIDE 25 25

Summary

slide-26
SLIDE 26 26
  • Continued growth in smartphone subscribers, reached 10% market share
  • ARPU improvement and solid revenue growth
  • Step-up in base station build out, ambition for 2020 to build ~1,000 base

stations

Fourth quarter highlights and main developments

slide-27
SLIDE 27 27

Q&A

slide-28
SLIDE 28 28

Appendix

slide-29
SLIDE 29 29

Income statement*

*Numbers from the divested Swedish operation are included in the 2018 figures, while only for two months in 2019. Ice Group defines Adjusted EBITDA as operating profit after adjustment of operating expenses for depreciation, amortisation, impairment network upgrades, share based compensation expense, non-recurring and other non-
  • perational items. Any effects from business combinations
are not included. For details, see the section on Alternative Performance Measures and definitions.

NOK million Q4 2018 Q4 2019 FY 2018 FY 2019

Service revenue 390 468 1,539 1,687 Other operating revenue 42 30 121 173 Total operating revenue 432 498 1,660 1,859 National roaming expenses
  • 101
  • 112
  • 434
  • 440
Operating expenses, excl. NRA
  • 147
  • 167
  • 520
  • 574
Other expenses
  • 191
  • 196
  • 721
  • 793
Employee benefit expenses
  • 47
  • 67
  • 220
  • 238
EBITDA
  • 54
  • 43
  • 236
  • 186
Depreciation and amortisation
  • 153
  • 129
  • 465
  • 468
Operating result (EBIT)
  • 207
  • 172
  • 701
  • 655
Net financial income/expenses
  • 126
  • 75
  • 352
  • 488
Profit/loss before tax
  • 333
  • 247
  • 1,052
  • 1,142
Income taxes
  • 5
8
  • 8
10 Net result from continuing operations
  • 338
  • 240
  • 1,060
  • 1,133
Net result from discontinued operations
  • 171
Net result for the period
  • 338
  • 240
  • 1,231
  • 1,133
Adjusted EBITDA
  • 36
  • 34
  • 180
  • 165
Earnings per share (NOK)
  • Basic from continuing operations
  • 2.67
  • 1.19
  • 8.37
  • 5.62
  • Diluted from continuing operations
  • 2.63
  • 1.17
  • 8.23
  • 5.52
slide-30
SLIDE 30 30

Cash flow*

*Numbers from the divested Swedish operation are included in the 2018 figures, while only two for months in 2019.

NOK million Q4 2018 Q4 2019 FY 2018 FY 2019

Cash flow before changes in working capital
  • 30
1
  • 202
  • 86
Cash flow from changes in working capital
  • 86
  • 64
  • 55
  • 138
…from costs to obtain/fulfil customer contracts
  • 34
  • 90
  • 187
  • 265
…from discontinued operations 55 Net cash flow from operating activities
  • 149
  • 154
  • 389
  • 489
Cash flow from investing activities
  • 122
  • 130
  • 461
  • 627
…from divestment of Sweden 166 …from divestment of Nextel Brazil 563 …from discontinued operations
  • 72
Net cash flow from investing activities
  • 122
  • 130
31
  • 461
Cash flow from financing activities
  • 33
563
  • 144
1,857 …from discontinued operations
  • 106
Net cash flow from financing activities
  • 33
563
  • 250
1,857 Net change in cash and bank deposits
  • 305
279
  • 607
907
slide-31
SLIDE 31 31

Balance sheet*

*Numbers from the divested Swedish operation are included in the 2018 figures. NOK million 31.12.2019 31.12.2018 ASSETS Intangible assets 2,070 1,344 Tangible assets 2,383 2,603 Other non-current assets 382 335 Deferred tax assets 1 Total non-current assets 4,835 4,282 Inventory 9 20 Trade receivables 143 127 Other receivables 18 31 Prepaid expenses and accrued income 27 63 Cash and cash equivalents 1,183 275 Total current assets 1,381 516 TOTAL ASSETS 6,216 4,799 NOK million 31.12.2019 31.12.2018 EQUITY AND LIABILITIES Equity attributable to parent company shareholders
  • 889
  • 1,258
Equity attributable to non-controlling interests
  • TOTAL EQUITY
  • 889
  • 1 258
Borrowings 4,331 3,672 Non-current leases 1,618 1,625 Provisions for deferred tax 10 Other non-current liabilities 303 Total non-current liabilities 6,252 5,307 Trade payables 164 242 Current lease liabilities 112 66 Other liabilities 21 20 Accrued expenses & deferred income 555 421 Total current liabilities 852 750 TOTAL LIABILITIES 7,104 6,057 TOTAL EQUITY AND LIABILITIES 6,216 4,799
slide-32
SLIDE 32 32

IFRS 16 impact

NOK million

Reported Change IFRS 16 Restated Reported Change IFRS 16 Restated Statement of financial positions Closing balance FY 2018 Opening balance 2018 Total assets 3,279 1,520 4,799 5,655 1,593 7,248 Equity
  • 992
  • 266
  • 1,258
1,358
  • 241
1,117 Liabilities 4,271 1,786 6,057 4,297 1,834 6,131 Statement of income Q4 2018 Full-year 2018 Total revenue 432
  • 432
1,660
  • 1,660
Total operating expenses
  • 539
53
  • 488
  • 2,103
208
  • 1,895
Depreciation, amortisation
  • 128
  • 24
  • 153
  • 369
  • 96
  • 465
Operating result
  • 235
28
  • 207
  • 813
112
  • 701
Net financial items, tax
  • 96
  • 35
  • 131
  • 221
  • 139
  • 360
Net result, continuing operations
  • 331
  • 6
  • 338
  • 1,033
  • 27
  • 1,060
Adj EBITDA
  • 88
52
  • 36
  • 388
208
  • 180
slide-33
SLIDE 33 33

Key KPIs

Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

  • No. of active subscriptions (in thousands)

573* 546 627 645 663

  • Smartphone

443 457 536 555 573

  • consumer

404 420 498 517 535

  • business

38 37 38 38 38

  • MBB (excl. M2M/IoT)

130* 89 91 91 90 Smartphone ARPU 224 221 220 231 234 Number of Smartphone base stations in service EoP 1,775 1,873 1,933 1,987 2,116 Smartphone avg. Data on-net share % 67 % 71 % 72 % 73 % 80 % Voice on-net share % 6 % 16 % 19 % 22 % 30 % Smartphone churn, annualized % 31 % 24 % 24 % 33 % 26 %

*Numbers from the divested Swedish operation are included in the 2018 MBB figures
slide-34
SLIDE 34 34

Investor contact

Henning Karlsrud CFO +47 930 45 389 henning.karlsrud@ice.no Espen Risholm Head of investor relations +47 924 80 248 espen.risholm@ice.no