Interim Report January - March 2001 April 25, 2001 Interim report - - PowerPoint PPT Presentation

Interim report 1-3/2001 1

Interim Report January - March 2001

April 25, 2001

Interim report 1-3/2001 2

Content

• Financial performance and UMTS projects

Kaj-Erik Relander

• Progress of new service businesses

Juha Varelius

• Quarterly performance per business area

Kim Ignatius

Interim report 1-3/2001 3

Financial performance in January - March

• Consolidated revenues grew by 8% and were MEUR 525 (487)
• Earnings grew considerably on the previous year

due to gain (286) from the sale of TietoEnator shares

• Profit before extraordinary items and taxes was MEUR 245 (113)
• Earnings per share rose to EUR 0.22 (0.06)

Interim report 1-3/2001 4

Businesses in brief

• Domestic Mobile Communications had a good first quarter:

revenues were up 10% and operating profit 11%

• Revenues from Media Communications and New Services grew

by 24% , EBITDA was MEUR 89 negative primarily due to

• utlays on Sonera Zed
• Revenues from fixed network Telecom businesses remained

unchanged, profitability good

Interim report 1-3/2001 5

Prospects for the latter part of 2001

• Growth in revenues expected to remain at previous year’s level
• EBITDA loss from Media Communications and New Services

estimated to decrease slightly on the previous year (MEUR 303)

• Group’s comparable EBITDA estimated to grow in euro terms on the

previous year (MEUR 501)

• Equity income in associated companies is estimated to show a loss of

approximately MEUR 350, no effect on Sonera’s cash flow

• Balance sheet strengthened by major sales of 2G holdings

Interim report 1-3/2001 6

New business plan of Group 3G in Germany

• Aim to launch services by a GSM and GPRS roaming agreement

in the second half of the year

• Own network to be built when handsets available
• Allowing joint use of UMTS networks would significantly reduce

capital expenditure on fixed assets > Group 3G will negotiate agreements on network’s non-recourse project financing after the regulator’s decision

• Sonera intends to limit its equity investment in Group 3G

to the EUR 3.6 billion it has already invested

• Group 3G’s new business plan reduces the need of capital

expenditure on fixed assets and the operating expenses

Interim report 1-3/2001 7

Sonera’s other 3G markets in Europe

• Xfera, Spain (launch in 2002)
• organization ready, number of personnel 300
• network being built with external non-recourse project financing
• possibility of GSM and GPRS roaming is being studied
• IPSE 2000, Italy (launch in H1/2002) and
• Broadband Mobile, Norway (estimated 2G launch in Q4/2001)
• management elected, organization being set up
• allowing joint use of network is still open,

affects the amount of capital expenditure on fixed assets and of non-recourse project financing

Interim report 1-3/2001 8

Sonera SmartTrust’s progress

h Revenues grew by 40% on the previous year and were

MEUR 6; about 50% of the revenues came from Europe, 35% from Asia and 15% from America

h Order backlog was at the end of March MEUR 11 h The reduction in the number of personnel from 540 to about 420

in 2001 announced in February progresses as planned; employer/ employee negotiations in different countries finished

h In 2001 revenues are estimated to almost double on the previous

year’s pro forma figure of MEUR 25

Interim report 1-3/2001 9

Sonera Zed’s markets

14 operator agreements bring the services within the reach of 100 million customers on 9 markets:

Service launch

• Sonera, Finland 2.3

June 1999

• KPN Mobile, Netherlands 4.7

August 2000

• Smart Comm, Philippines 2.6

December 2000

• Mobile One, Singapore 0.6

February 2001

• Radiolinja, Finland 1.2

February 2001

• Libertel, Netherlands 3.1

February 2001

• Turkcell, Turkey 10.1

February 2001

• Powertel, USA 0.8

March 2001

• Vodafone, United Kingdom 11.6

March 2001

• T-D1, Germany 20.0

March 2001

• D2 Vodafone, Germany 20.0

March 2001

• E-Plus, Germany 6.6

May 2001

• Viag Interkom, Germany 3.6

June 2001

• TIM, Italy 22.0

June 2001

Interim report 1-3/2001 10

Use of zed services in January - March

• On average 352,000 monthly users in Finland (384,000)
• About 800,000 monthly users worldwide
• Strong growth in the Philippines: 583,000 users in March
• Launches in Germany and the UK from March 19 onwards

Interim report 1-3/2001 11

Sonera Zed’s revenue target in 2001

• Revenues in January - March MEUR 2 (1),

EBITDA MEUR 43 negative (8 negative)

• Growth in revenues will accelerate significantly in the latter part
• f the year but remain much lower than estimated earlier because
• f a delay in the central market launches in Europe
• Costs will be cut to conform to the new revenue growth forecast

Interim report 1-3/2001 12

Other new service businesses

SONERA INFO COMMUNICATIONS

• revenues MEUR 17, EBITDA MEUR 2
• acquired a holding in Metro One, a US directory service

company SONERA JUXTO

• revenues MEUR 17, EBITDA MEUR 8 negative
• Fenestrae chosen as technology partner for implementation
• f wireless ASP services

SONERA PLAZA

• revenues MEUR 15, EBITDA MEUR 10 negative
• 1.5 million unique visitors on the I nternet pages in March
• fund marketplace expands as part of a renewing service
• ffering

Interim report 1-3/2001 13

Consolidated income statement

EUR million

Revenues EBI TDA Operating profit Q1/2001 % Q1/2000 2000

487 162 90 8 137 233

• Revenues grew by 8%
• EBITDA was increased by gain from the sale of TietoEnator shares (gain MEUR 286)
• Comparable EBITDA of MEUR 102 was decreased by a loss of MEUR 89

from service businesses (Q1/2000: MEUR 31; Q4/2000: MEUR 127)

525 384 300 2,057 2,047 1,748

Interim report 1-3/2001 14

Equity income in associated companies Net financial expenses Profit before extraordinary items and taxes Earnings per share

• Net losses of Turkcell and Fintur Q4/2000
• Interest expenses related to the German 3G license are capitalized on

Sonera’s balance sheet

• High financial income partly compensated for increased interest expenses
• Amortization of acquisition costs of 3G licenses will start as operations are launched

Q1/2001 % Q1/2000 2000

(38) (17) 245 0.22 20 3 113 0.06 n/a n/a 117 267

Consolidated income statement (contd)

EUR million

121 (9) 1,860 2.05

Interim report 1-3/2001 15

Profitability of business areas

Domestic Mobile Communications EUR million

• Non-voice revenues were up 17% in the review period
• Profitability was improved by the lower than average marketing expenses in Q1

and the growth in non-voice revenues

• On average 25 SMS messages were sent per GSM subscription per month (23)
• ARPU grew to EUR 39.5 (EUR 38.8)
• Customer churn remained low: 10.3% (9.7% )

Revenues EBI TDA Operating profit Q1/2001 % Q1/2000 2000

264 132 102 10 9 11 290 144 113 1,134 543 414

Interim report 1-3/2001 16

Profitability of business areas

Media Communications and New Services EUR million

SmartTrust Zed Other services Total Q1/2001 % Q1/2000 10-12/2000

6 2 55 63 1 50

51

n/a 100 10

24 Revenues SmartTrust Zed Other services Total

(18) (43) (28) (89) (11) (8) (12)

(31)

(64) (438) (133)

(187) EBI TDA

18 7 229 254 (65) (102) (136) (303)

• SmartTrust’s pro forma figures Q1/2000: revenues MEUR 4

and EBITDA MEUR 16 negative

• Other services include Info Communications, Juxto, Plaza

and other service business initiatives

Interim report 1-3/2001 17

Profitability of business areas

Sonera Telecom EUR million

• Revenues from Fixed Network Voice and Data Services were EUR 147 million (148)
• domestic voice revenues declined, and international voice revenues grew
• revenues from data services and leased lines remained unchanged at EUR 54 million:

the cable in Russia increased revenues from leased lines; part of revenues from data services transferred to Sonera Juxto

• Revenues from Equipment Sales and Other Operations were EUR 34 million (32)
• Increased expenses of mobile terminated international calls reduced EBITDA by about

EUR 3 million Revenues EBI TDA Operating profit Q1/2001 % Q1/2000 2000

243 63 26 1 (6) 1,020 300 162 245 59 26

Interim report 1-3/2001 18

Associated companies

EUR million

2G mobile associated companies 3G mobile associated companies Fixed network associated companies Other associated companies Amortization of goodwill Total (27) (2) 6

• (15)

(38) 30

• 12

1 (23) 20 Q1/2001 Q1/2000 2000 Equity income in associated companies

• Equity income in associates was weakened by the loss of MEUR 10 recorded

from Turkcell and the loss of MEUR 28 million recorded from Fintur (Q4/00)

• In the current year, Turkcell’s operations impaired by exchange rate losses

resulting from devaluation and Turkey’s weakened economy 147 (2) 38 4 (66) 121

Interim report 1-3/2001 19

Financial income and expenses

EUR million

• Interest income included MEUR 44 on the EUR 2.7 billion shareholder loan to the

German associated company

• Capitalization of interest expenses related to the shareholders’ equity

in the German associated company, i.e. EUR 0.9 billion, improved the result by EUR 13 million Dividend income Interest income Interest expenses Capitalized interest expenses Other fin. income & expenses Exchange rate gains & losses Total Q1/2001 Change Q1/2000 2000

• 51

(83) 15 1 (1) (17) 14 4 (17)

• 1

1 3

• 14

+47

• 66

+15

• 2
• 20

21 82 (155) 20 23

• (9)

Interim report 1-3/2001 20

Financial position

• At the end of March, net debt was MEUR 5,661 (excl. interest-

bearing loan receivables); estimated to decrease significantly within the next 12 months

• The current debt of MEUR 3,264 will be reduced significantly

as the sales of shares planned for 2001 are implemented

• VoiceStream and Powertel transactions progress as planned;
• ther sales will be considered if needed
• Credit rating at “solid investment grade” level