PIONEERS IN BRINGING TRUE CONVERGENCE TO NORDIC CUSTOMERS 20 - - PowerPoint PPT Presentation

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PIONEERS IN BRINGING TRUE CONVERGENCE TO NORDIC CUSTOMERS 20 - - PowerPoint PPT Presentation

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PIONEERS IN BRINGING TRUE CONVERGENCE TO NORDIC CUSTOMERS 20 July, 2018 TRANSACTION SUMMARY STRATEGIC By combining Bonnier Broadcastings competence and portfolio within domestic content and Telias award winning TV service and

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SLIDE 1

PIONEERS IN BRINGING TRUE CONVERGENCE TO NORDIC CUSTOMERS

20 July, 2018

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SLIDE 2 2

TRANSACTION SUMMARY

VALUE FINANCIAL EFFECTS TIME TABLE STRATEGIC RATIONAL CONDITIONS BALANCE SHEET IMPACT *Based on last twelve months as of 31 March 2018
  • By combining Bonnier Broadcasting’s competence and portfolio within domestic content and Telia’s award winning TV service and
first class network we create a unique converged player in the Nordic region
  • SEK 9.2 billion on a cash and debt free basis with a additional purchase price of maximum SEK 1 billion
  • Implies EV/EBIT, including full run rate synergies of 7.7x*
  • Earnings and cash flow accretive to Telia Company post closing
  • Operational free cash flow contribution of SEK 0.6 billion standalone and SEK 0.5 billion net of synergies and integration costs 2020
  • Total consideration to be financed using cash on balance sheet
  • Net debt to EBITDA impact 0.2x
  • Subject to approval from EU Competition Authority
  • Expected closing in H2 2019
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SLIDE 3

REDEFINING THE INDUSTRY ON CUSTOMERS’ TERMS

  • Telia Company leading the way in convergence and fulfilling customer demand
  • With around 7.5 million B2C customers in Sweden and Finland we know what customers want and we can deliver
  • Leverage brand and customer relations as well as utilize data analytics and customer knowledge to offer a unique and
personalized service to our customers CONVERGENCE BELIEVERS AND CUSTOMER CHAMPIONS
  • Bonnier Broadcasting is EPS and cash flow accretive stand alone basis – adding SEK 0.6 billion in cash flow by 2020
(SEK 0.5 billion net of synergies)
  • Full run rate synergies of SEK 0.6 billion from 2022 gradually improving.
  • No change to capital allocation commitments and supportive for ambition of growing dividend over time
EARNINGS AND CASH FLOW ACCRETIVE
  • Great potential combining Telia Company’s B2C sales engine with Bonnier Broadcasting’s attractive content
  • Content costs largely fixed, implies significant operational leverage opportunity
CONTENT IS A SCALE GAME 1 2 3 3
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SLIDE 4

VALUE FROM OWNING CONTENT

BE PART OF THE RESHAPING MEDIA VALUE CHAIN ON OUR TERMS ENHANCE CUSTOMER EXPERIENCE WITH DATA ANALYTICS INTO UNIQUE OFFERINGS SECURE KEY CONTENT, NOW AND FOR THE FUTURE MONETIZE ON VIDEO ACROSS THE ENTIRE MARKET, NOT JUST OUR CUSTOMERS

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BONNIER BROADCASTING AT A GLANCE

Number 1 commercial broadcaster in Sweden

  • CSOV*: 38% 2017**
  • Wide range of attractive quality content with key strength in domestic series, entertainment and news
  • Main brands: TV4, Sjuan and TV12
  • TV4 Play: More registered users than any other service in Sweden

Number 1 commercial broadcaster in Finland

  • CSOV*: 36% 2017
  • Wide range of attractive quality content with key strength in domestic series, entertainment and news
  • Main brands: MTV3, SUB and AVA
  • Katsomo: Widely used online TV service

Fastest growing SVOD service

  • C More growing twice as fast as the SVOD market Q1 2018 y-o-y
  • Pay TV channels and SVOD services in Sweden, Finland and Denmark
  • Key strength in domestic content incl. movies, TV series, drama and sport
  • Several hundred thousands SVOD customers and even more pay-TV customers
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COMPANY DESCRIPTION TOP FORMATS

*CSOV=Commercial share of viewing ** Source MMS, among age group 15-59 years
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SLIDE 6

TELIA – A LEADING TV DISTRIBUTOR

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MOST SATISFIED TV CUSTOMERS GROWING TV CUSTOMER STOCK

200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 (‘000) TV customers
  • 1.8 million TV customers
  • 100 channels
  • 1 app
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SLIDE 7 1 2 3 4 2015 2016 2017 R12 SEK in billions Costs 2 3 4 5 2015 2016 2017 R12 SEK in billions Revenues

TV4 IN MORE DETAIL

MOST ATTRACTIVE CONTENT

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TOTAL TV POLE POSITION COST CONTROL & LEVERAGE

35% 38% 2013 2014 2015 2016 2017 CSOV, 15-59 years (%) TV4 Player 2 Player 3 Others Int** AVOD #1 #2 Dom.* AVOD 13% 39% 61% 200 400 600 800 1000 1200 #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 The most popular commercial TV shows are all at TV4* * June 2018 R12, excluding the public service channels (SVT1 & SVT2) as well as various sport events Leverage from growth in revenues, content cost management and stable other costs +5.5%
  • 15
  • 10
  • 5
5 10 15 20 TV4 ad revenue growth (%) Good track record of growing ad revenues Premium position in ad market shift Steady growth in CSOV Source: MMS Source: MMS No of viewers (‘000) Source: MediaVision – Number of daily viewers Q1 2018 *TV4 Play, Aftonbladet TV, Viafree, Expressen TV and D Play ** Facebook and YouTube Growth in number of daily viewers Q1 2018
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SLIDE 8

C MORE IN MORE DETAIL

NEW STRATEGY SUCCESSFUL SVOD OUTPACES PAY TV

16% 1% CAGR 2015-18 (%) SVOD market Pay TV market Source: MediaVision, PTS
  • SVOD growth driven by customer
changing behavior
  • C More to benefit
  • Increased demand for domestic content
  • Improved platform
  • Volume driven growth
  • Synergies from TV4 co-operation and
volume growth not fully realized

MATERILIAZING ON REVENUES

  • Fastest growing SVOD service in
Sweden for three years
  • C More and TV4 in closer co-operation
  • Improved content portfolio management
2013 2014 2015 2016 2017 Q1 2018 Subscriptions New strategy implemented 0.5 1.0 1.5 2.0 2015 2016 2017 R12 Q1 2018 SEK in billions Revenues 8
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SLIDE 9

MTV IN MORE DETAIL

TOUGHER AD MARKET SVOD GAINING MOMENTUM

38% 1% CAGR 2015-18 (%) SVOD market Pay TV market Source: MediaVision, Ficora
  • SVOD growth driven increased
willingness to pay
  • Similar growth domestic SVOD vs
international SVOD
  • Strengthened offering when combining
MTV and Telia together with partners

STRONGER TOGETHER

  • Ad market lagging Sweden
  • AVOD less than 10 percent of total market
vs 25 percent in Sweden
  • A relatively weak macro development
also impacts
  • MTV largest commercial broadcaster
12%
  • 2%
CAGR 2015-18 (%) AVOD ad market Linear TV ad market Source: MediaVision, Ficora TEAM PASS LIIGA PASS GAME PASS 9
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SLIDE 10

FINANCIAL OVERVIEW - BONNIER BROADCASTING

FINANCIAL OVERVIEW

SEK in billions 0.3 0.4 0.6 7.5 2016 2017 Q1 2018 R12 7.4 7.4 Net sales EBIT 2016 2017 2018 R12 Q1 NET SALES 7.4 7.4 7.5
  • TV4
4.2 4.4 4.4
  • C MORE
1.5 1.6 1.6
  • MTV
1.8 1.7 1.7
  • OTHER
0.0
  • 0.2
  • 0.2
EBIT 0.2 0.4 0.6
  • TV4
0.7 1.0 1.1
  • C MORE
  • 0.4
  • 0.4
  • 0.3
  • MTV
  • 0.1
  • 0.3
  • 0.3
  • OTHER
0.0 0.0 0.0

FINANCIAL BREAKDOWN

SEK in billions

OPERATIONAL CASH FLOW

SEK in billions
  • Scale and increased efficiency in content management lead to earnings growth
10 0.3 0.3 2016 2017 Q1 2018 R12
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SLIDE 11

EBITDA SYNERGIES OF SEK 0.6BN IN 2022

  • C More/TV4 Play upsell to
Telia customers
  • OTT upsell to new
customers ENHANCING OUR CORE (SEK 350 MILLION)
  • 5 ppt lower churn
  • Proves significant potential
to take down SAC/SRC
  • Monetize better on our
connectivity MORE OF CMORE/TV4 PLAY (SEK 150 MILLION)
  • Content ownership -
flexibility for packaging
  • State of the art user
experience
  • Potential to monetize
premium service 11 Churn BB TV+BB
  • 5ppt
COSTS (SEK 100 MILLION)
  • Platform consolidation
  • Reduce number of third
parties
  • Consolidate systems
Common tech & development Insourcing Other ≈6.0 C More Telia
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SLIDE 12

SIZEABLE SYNERGIES

S Y N E R G Y R U N - R A T E T A R G E T O F S E K 0 . 6 B I L L I O N I N 2 0 2 2 G R A D U A L I N C R E A S E I N S Y N E R G I E S 2 0 2 0 - 2 0 2 2

EBITDA SYNERGY DEVELOPMENT

In SEK billion, run-rate 12 2020 2021 2022

SEK 0.6 BILLION

SYNERGY RUN-RATE TARGET OF SEK 0.6 BILLION IN 2022 GRADUAL INCREASE IN SYNERGIES 2020-2022 AGGREGATED INTEGRATION COSTS OF SEK 0.4 BILLION 2020-2021

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SLIDE 13 2017 (SEK BILLION)

TELIA COMPANY** BONNIER BROADCASTING FULL RUN-RATE SYNERGIES COMBINED PRO FORMA

79.8 7.4 n.a

>87.2 13.8 17.3% 0.4 5.2% 0.6

14.8 n.a 10.3 41.0% 0.4 82.4% 0.6

11.3 43.1% 13 Revenues EBIT (margin) EBITDA-CAPEX (cash conversion) *Telia definition ** Continuing operation, excluding GET/TDC Norway ***Post tax

FINANCIALLY ACCRETIVE TRANSACTION

2017 (SEK BILLION)

TELIA COMPANY** BONNIER BROADCASTING FULL RUN-RATE SYNERGIES*** COMBINED PRO FORMA

1.92 0.06 0.11

2.08 (+8.6%) 9.7 38.4% 0.3 66.2% 0.5

10.4 (+7.3%) 39.7% EPS (SEK) Op FCF* (cash conversion)
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SLIDE 14

PROCESS AHEAD

14 Phase 1 investigation Potential phase 2 investigation

ANNOUCEMENT & NOTIFICATION

  • Telia announces intention to acquire
Bonnier Broadcasting
  • EU Commission is notified and initiates
phase I investigation

PHASE 1 DECISION

  • Following discussions, EU Commission
informs whether merger is cleared or phase II investigation is required

PHASE 2 DECISION

  • EU Commission informs whether
merger is cleared and any potential remedies
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SLIDE 15

GREAT VALUE CREATIVE COMBINATION

  • Sizeable synergies
  • Enhancing our core incl churn
reduction
  • Improved market reach
  • Common costs
  • EV/EBIT of 7.7x including synergies
  • Clear support for growing operational
free cash flow STRONG STAND ALONE
  • Superior Total-TV position with great
domestic content
  • Well positioned in shifting market
  • Strong operational leverage
  • New strategy yielding
  • SEK 0.6 billion in cash flow contribution
by 2020 stand alone, SEK 0.5 billion net of synergies and integration costs. SIZEABLE SYNERGIES
  • Strong combination
  • Improved converged offerings
  • More personalized products and
services
  • Leverage brands and existing customer
relations CONVERGENCE BELIEVERS & CUSTOMER CHAMPIONS

NO CHANGE TO CAPITAL ALLOCATION COMMITMENTS – DIVIDEND AND BUYBACKS

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SLIDE 16

Q&A

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FORWARD-LOOKING STATEMENTS

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

  • utside the control of Telia Company.
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MORE TO CUSTOMERS

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TELIA COMPANY

  • Most satisfied TV customers and best network
  • Large existing base to leverage
  • Strong retail presence
  • Leading brand

BONNIER BROADCASTING

  • Leading provider of attractive content
  • Strong brands and market position in both
traditional TV and OTT
  • Best in class TV expertize
  • Content ownership enables flexibility and
attractive bundles for our customers
  • Combining video, connectivity and data in new
bundled offerings – easy and convenient
  • State of the art user experience and knowledge
fulfilling future customer needs
  • Securing high quality domestic content to our
customers
  • A unique TV service including previews, extra
material and new features with freedom of how, when and where to consume content
  • A personalized experience based on data
analytics and customer insights – relevant
  • fferings, recommendation and features

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NEW OPPORTUNITIES NEW SERVICES AND REVENUES

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SLIDE 19

TELIA COMPANY DRIVING CONVERGENCE

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CONTENT TV & BROADBAND MOBILE

STAGE 1 STAGE 2 STAGE 3

PURE OTT PLAYERS/ CONTENT OWNERS NON-CONVERGENT FIXED PLAYERS CONVERGENT PLAYERS NON-CONVERGENT MOBILE PLAYERS

SUPERIOR CONVERGENT OFFERING

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CONVICTION ON VALUE CREATION

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OPERATIONAL LEVERAGE

SEK 0.5 BILLION CASH FLOW CONTRIBUTION 2020

SYNERGIES

SEK 0.6 BILLION, FULL RUN RATE 2022

VALUE CREATION THROUGH CASH FLOW ACCRETION

+ + =

NO CHANGE TO CAPITAL ALLOCATION COMMITMENTS – DIVIDEND AND BUYBACKS