interim REPORT JANUARY june 2019 MOVING IN THE RIGHT DIRECTION - - PowerPoint PPT Presentation

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interim REPORT JANUARY june 2019 MOVING IN THE RIGHT DIRECTION - - PowerPoint PPT Presentation

Sep 16, 2023 168 likes •382 views

JOHAN DENNELIND PRESIDENT & CEO CHRISTIAN LUIGA EXECUTIVE VICE PRESIDENT & CFO interim REPORT JANUARY june 2019 MOVING IN THE RIGHT DIRECTION SERVICE REVENUES SEK 6.9 -2% -4% -1.4% -2.6% BILLION EBITDA EBITDA OPERATIONAL

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SLIDE 1

JOHAN DENNELIND

PRESIDENT & CEO

CHRISTIAN LUIGA

EXECUTIVE VICE PRESIDENT & CFO

interim REPORT JANUARY – june 2019

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SLIDE 2

MOVING IN THE RIGHT DIRECTION

SERVICE REVENUES SERVICE REVENUES OPERATIONAL FREE CASH FLOW OPERATIONAL FREE CASH FLOW EBITDA EBITDA

* Like for like, excluding IFRS 16 impact 2

  • Sequential improvement

although H1 still weak

  • On track to reach full year
  • utlook
  • Full year cash flow

composition slightly different versus previously expected

  • 2.6%
  • 1.4%

Q1 19 Q2 19

  • 4%
  • 2%

Q1 19 Q2 19

YoY growth* YoY growth*

  • Driven by mobile service

revenues and B2B

SEK 6.9 BILLION

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SLIDE 3

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

Service revenue growth Service revenue growth excl. Telia Carrier

  • 1.4%
  • 1.4%
  • 0.8%
  • 0.8%

SERVICE REVENUES IMPROVED SEQUENTIALLY

  • Sequentially better due to less fixed erosion and

mobile back to positive

  • Still loss of low-margin revenues in Telia Carrier

3

SERVICE REVENUE DEVELOPMENT* SERVICE REVENUE DEVELOPMENT*

Organic & like for like growth, external service revenues Organic & like for like growth, external service revenues

* 2018 based on the previous organic growth definition (stable FX and M&A excluded) 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period)

SERVICE REVENUE DEVELOPMENT SERVICE REVENUE DEVELOPMENT

Like for like growth, external service revenues Like for like growth, external service revenues

  • Better in B2B and less legacy pressure in Sweden
  • Norway neutral Q2 from growth in wholesale and Get

development remained flat

  • 3%

0%

Sweden Finland Group Norway LED**

  • 1%
  • 1%
  • 4%

0%

  • 3%
  • 2%
  • 3%
  • 1%

Q1 19 Q2 19

** LED=Lithuania, Estonia & Denmark

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SLIDE 4

MOBILE IMPROVED - SUPPORT FOR BETTER H2 2019

4

MOBILE service revenue GROWTH MOBILE service revenue GROWTH

Like for like, total mobile service revenues Like for like, total mobile service revenues

  • Mobile recovery Q2 from growth in four markets
  • Sweden improvement related to B2B – no

effects from new mobile portfolio yet

  • Finland driven by both B2C and B2B
  • Norway benefited from improved B2B and

growth in wholesale

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 +0.1% +0.1% SERVICE REVENUE SUPPORT FOR the REST OF 2019 SERVICE REVENUE SUPPORT FOR the REST OF 2019 EFFECTS FROM NEW MOBILE PORTFOLIO IN SWEDEN EFFECTS FROM NEW MOBILE PORTFOLIO IN SWEDEN B2B WINS AND PRICe OPTiMIZATION IN FINLAND B2B WINS AND PRICe OPTiMIZATION IN FINLAND B2B MOMENTUM AND PRICE OPTIMIZATION IN NORWAY B2B MOMENTUM AND PRICE OPTIMIZATION IN NORWAY

1 2 3

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SLIDE 5

B2B IMPROVING SUPPORTED BY CONVERGENCE

5

B2b service revenue growth in key markets - q2 B2b service revenue growth in key markets - q2

External service revenues, like for like growth External service revenues, like for like growth

B2B CONVERGENCE STARTING TO YIELD B2B CONVERGENCE STARTING TO YIELD

+0.4%

(Q1 –2.8%)

+0.4%

(Q1 –2.8%)

  • 1.9%

(Q1 –8.5%)

  • 1.9%

(Q1 –8.5%)

5G

CITY VITALITY INSIGHTS

IOT

  • 0.2%

(Q1 –2.2%)

  • 0.2%

(Q1 –2.2%)

  • Improvement in B2B mainly driven by Sweden

and Norway

  • ICT traction an important part of the explanation
  • Convergence on the back of a strong ICT

proposition is starting to yield

Telia Global

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SLIDE 6

balanced approach to 5g

6

Country Spectrum Likely timing Estonia 3.5 GHz Q1 2020 Estonia 700 MHz 2020 or > Lithuania 3.5 GHz Q4 2019 or > Sweden 2.3 & 3.5 GHz Q1 2020

APPROACH APPROACH CUSTOMER CASES CUSTOMER CASES Upcoming auctions Upcoming auctions

  • Early and curious
  • B2B driving demand
  • Mass market to come later –

we are ready

  • Partner network
  • Aim to drive development of

new services based on 5G technology

  • Several commercial contracts
  • Industry differentiation
  • Important tool to further

digitalize businesses and drive efficiency

  • 5G pilots in all markets
  • Key spectrum secured in some

markets - while some markets are still late

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SLIDE 7

6,443 6,977 6,735 7,468 7,520 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

Reported EBITDA Organic/like for like EBITDA growth

LESS PRESSURE ON GROUP EBITDA

  • EBITDA down from continued pressure on legacy

7

Adjusted EBITDA DEVELOPMENT* Adjusted EBITDA DEVELOPMENT*

Reported in absolute, organic & like for like growth excl. IFRS 16 impact Reported in absolute, organic & like for like growth excl. IFRS 16 impact

* 2018 based on the previous organic growth definition (stable FX and M&A excluded) 2019 based on the new definition “like for like growth” (Stable FX and M&A included in current & corresponding period)

  • 2%
  • 2%
  • Less revenue pressure in Sweden but elevated costs
  • ICT-related costs hampered Finland
  • Synergies in Norway on track, EBITDA burdened by

weak mobile B2C

Adjusted EBITDA DEVELOPMENT Adjusted EBITDA DEVELOPMENT

Like for like growth, excluding adjustment items and IFRS 16 Like for like growth, excluding adjustment items and IFRS 16

  • 8%

Sweden Norway Finland LED** Group

  • 2%
  • 6%
  • 4%
  • 4%
  • 4%

1% 1%

  • 4%
  • 2%

Q1 19 Q2 19

** LED=Lithuania, Estonia & Denmark

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SLIDE 8

H1 19 H2 19

3%

H1 18 H2 18 H1 19

COSTS GREW H1 BUT FULL YEAR TARGET IS INTACT

8

OPEX development OPEX development

External expenses ex. properties (IFRS 16), organic & like for like growth External expenses ex. properties (IFRS 16), organic & like for like growth

OPEX DEVELOPMENT - 2019 estimated OPEX DEVELOPMENT - 2019 estimated

External expenses ex. properties (IFRS 16), like for like growth External expenses ex. properties (IFRS 16), like for like growth

  • Underlying OPEX increase of less than 1 percent

in H1 2019

  • Ongoing initiatives to be visible H2
  • Mainly resource cost related reduction
  • Pace to accelerate throughout H2
  • Full year target of ~3 percent intact
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SLIDE 9

FULL YEAR COST TARGET REITERATED

9

OPEX development OPEX development

External expenses, like for like External expenses, like for like

1%

H1 18 H2 18 H1 19

  • Increase Q2 driven by energy and resource costs
  • Sweden and Finland main drivers
  • Full year target of ~2 percent reduction is unchanged

Q1 19 Q2 19 Q3 19 Q4 19

  • 2%

FULL YEAR

  • 2%

FULL YEAR OPEX DEVELOPMENT - 2019 estimated OPEX DEVELOPMENT - 2019 estimated

External expenses, like for like growth External expenses, like for like growth

GET SYNERGIES GET SYNERGIES NEW OPERATING MODEL NEW OPERATING MODEL ROBOTICS AND NEAR SHORING ROBOTICS AND NEAR SHORING G&A AND OTHER EFFICIENCIES G&A AND OTHER EFFICIENCIES EASIER COMPARISONs (H2) EASIER COMPARISONs (H2)

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SLIDE 10

B2B turned positive and new mobile portfolio

  • B2C supported by price adjustments
  • B2B uptick from several levers
  • Growth in core revenues

B2B

10

B2C

SERVICE REVENUE DEVELOPMENT SERVICE REVENUE DEVELOPMENT

Reported currency, external service revenues Reported currency, external service revenues

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

B2C excl. fiber OTC B2B B2C

  • 2.1%
  • 2.1%

+0.4% +0.4%

  • 2.9%
  • 2.9%
  • Subscription base growth driven by M2M and

prepaid

  • Churn down due to growth in prepaid (reactivations)

200 210 220 230 5,500 5,700 5,900 6,100 6,300

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

Subscriptions ARPU 0.0% 0.0%

= ARPU growth y-o-y

MOBILE SUBSCRIPTIONS AND ARPU MOBILE SUBSCRIPTIONS AND ARPU

Total subscription base in 000’, blended ARPU in local currency Total subscription base in 000’, blended ARPU in local currency

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SLIDE 11

Good in mobile - ict behind cost increase

3,248 3,359 1,124 1,226 Q2 18 Q2 19 Q2 18 Q2 19 Service revenues EBITDA

  • 0.5%
  • 0.5%
  • Mobile subscription revenues up 3 percent
  • Fixed telephony affected by network dismantling
  • Cost base up from ICT push

= Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items 11

SERVICE REVENUES* & EBITDA** SERVICE REVENUES* & EBITDA**

SEK million, reported currency & like for like growth excl. IFRS 16 SEK million, reported currency & like for like growth excl. IFRS 16

  • 4%
  • 4%
  • Subscription base development improved vs. Q1
  • Strong ARPU uplift driven by both B2C and B2B

15 16 17 18 19 20 3,000 3,100 3,200 3,300 3,400

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

Subscriptions ARPU +3.6% +3.6%

= ARPU growth y-o-y

MOBILE SUBSCRIPTIONS AND ARPU MOBILE SUBSCRIPTIONS AND ARPU

Total subscription base in 000’, blended ARPU in local currency Total subscription base in 000’, blended ARPU in local currency

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SLIDE 12

2,221 3,298 987 1,563 Q2 18 Q2 19 Q2 18 Q2 19

SEQUENTIAL IMPROVEMENT

+1% +1%

  • 0.2%
  • 0.2%
  • Sequential mobile improvement
  • Synergies and less marketing supported EBITDA
  • Slight growth as broadband compensated for lower

TV revenues

  • Good fixed broadband intake from new partnership

12

SERVICE REVENUES* & EBITDA** SERVICE REVENUES* & EBITDA**

SEK million, reported currency & like for like growth excl. IFRS 16 SEK million, reported currency & like for like growth excl. IFRS 16

Broadband/TV service REVenue development Broadband/TV service REVenue development

SEK million, like for like, external service revenues SEK million, like for like, external service revenues

= Like for like growth excl. IFRS 16 * External service revenues ** Excluding adjustment items

Service revenues EBITDA

300 600 900

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

TV revenues Broadband revenues

+0.4%

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SLIDE 13

A STRONGER TELIA NORWAY

B2C

1 2 3 4 5 2014 2015 2016 2017 2018 NOK billion

2015 2017 B2B B2C 2018

  • Building size and convergence from

Tele2 Norway, Phonero and Get/TDC Norway

  • Current EBITDA synergy run-rate
  • f NOK 200 million
  • M&A, synergy execution and good
  • rganic performance behind major

step-up in EBITDA generation

Creating a new player EBITDA more than doubled Synergies on track

13

NOK 800 million

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SLIDE 14

stable Cash flow development

14

2 4 6 8 10 12 14 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

  • Stable operational free cash flow development
  • Continued strong contribution from working

capital – although pace to come down

  • Higher CAPEX driven by the consolidation of Get

as well as increased fixed network investments in Norway + handset financing of SEK 0.2 billion (impacts NWC)

  • Leverage of 2.65x in Q2 (would be around 0.1x

lower including full IFRS 16 EBITDA impact)

OPERATIONAL FREE CASH FLOW development OPERATIONAL FREE CASH FLOW development

SEK billion, rolling twelve months SEK billion, rolling twelve months

SEK 10.8 billion SEK 10.8 billion

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SLIDE 15

Full year cash flow outlook unchanged

15

O P E R A T I O N A L F R E E C A S H F L O W S E K 1 2 - 1 2 . 5 B I L L I O N U N C H A N G E D

  • H1 19 operational free cash flow equal to H1 18
  • After weak H1 19, EBITDA sequential improvement H2 19
  • Stronger H2 19 from a combination of other levers
  • Full year cash flow composition slightly different versus

previously expected

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SLIDE 16
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SLIDE 17

KEY FIGURES IN REPORTED CURRENCY (SEK BILLION, R12)

SERVICE REVENUES (r12) SERVICE REVENUES (r12) CASH CAPEX excl licenses (R12) CASH CAPEX excl licenses (R12) ADJUSTED EBITDA (R12) ADJUSTED EBITDA (R12) OP FREE CASH FLOW (R12) OP FREE CASH FLOW (R12)

17

68.1 68.6 69.6 70.6 71.7

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

26.0 26.4 26.6 27.6 28.7

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

10.4 10.2 10.8 11.0 10.8

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

13.5 13.7 13.6 14.0 14.3

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

NET DEBT (per Q) NET DEBT (per Q)

32.4 31.7 55.4 70.0 77.7

Q2 18 Q3 18 Q4 18 Q1 19 Q2 19

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SLIDE 18

net debt Increased in the quarter

  • Leverage Q2 would be around 0.1x lower

including full IFRS 16 EBITDA impact

  • Second dividend of SEK 1.18/share in Q4 2019

18

70.0 Fintur transaction +3.8 Q1 19

  • 7.1

Operations +1.2 77.7 Q2 19 Buy- backs +1.1 FX &

  • ther

+5.0 Cash CAPEX +3.7 Dividend

2.44x 2.44x 2.65x 2.65x

= Leverage ratio (including a full year of Get in Norway)

NET DEBT DEVELOPMENT NET DEBT DEVELOPMENT

Continuing and discontinued operations, SEK billion, and leverage ratio Continuing and discontinued operations, SEK billion, and leverage ratio

Payment to Turkcell

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SLIDE 19

EPS development

0.50 0.38

0.10

Q2 18 Associates Discontinued

  • perations
  • 0.17

Operations

  • 0.01
  • 0.04

Finance net & tax

0.00

Other Q2 19

  • 0.12

CONTINUING OPERATIONS

19

TOTAL EPS DEVELOPMENT TOTAL EPS DEVELOPMENT

SEK, continuing and discontinued operations SEK, continuing and discontinued operations

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SLIDE 20

DISCLAIMER & FORWARD-LOOKING STATEMENTS

This document contains the use of alternative performance measures (APM’s) to provide readers with additional financial information that is regularly reviewed by management, such as adjusted EBITDA, CAPEX and operational free cash flow. These APM’s should not be viewed as a substitute for Telia Company’s IFRS based figures, but as a complement. APM definitions can be found in Telia Company’s interims reports and Annual and Sustainability Report 2018 and may be defined differently by other companies and are therefore not always comparable to similar measures used by other companies. Telia Company’s management considers these APM’s combined with IFRS performance measures and in conjunction with each other, the most appropriate way to measure the performance of Telia Company. 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.