Q2 Interim Report April-June 2015 Johan Dennelind, President - - PDF document

▶
q2
SMART_READER_LITE
LIVE PREVIEW

Q2 Interim Report April-June 2015 Johan Dennelind, President - - PDF document

Jan 17, 2023 218 likes •354 views

Q2 Interim Report April-June 2015 Johan Dennelind, President & CEO Summary Q2 2015 Reported +5.6% S E R V I C E R E V E N U E G R O W T H Organic -1.3% * Reported +4.0% E B I T D A * G R O W T H Organic -4.0% SEK 6.3 billion F R

slide-1
SLIDE 1

1

Interim Report

April-June 2015

Johan Dennelind, President & CEO

Q2

*

Summary Q2 2015

2 S E R V I C E R E V E N U E G R O W T H E B I T D A * G R O W T H F R E E C A S H F L O W

Reported +5.6% Organic -1.3% Reported +4.0% Organic -4.0% SEK 6.3 billion +156%

* Excluding non-recurring items
slide-2
SLIDE 2

2

3

Strengthened competitive position in Norway

  • Mobile market share around 40 percent
  • Superior 4G network position
  • Organic service revenue growth 3 percent
  • Target 98 percent 4G population coverage
by end 2016 >90% 4G population coverage in June 4

Faster and better integration - raised synergy target

  • Tele2 synergy execution ahead of plan,
more than SEK 200 million M&A effect in Q2
  • Synergy target increased from SEK 800 million
to SEK 1 billion net, of which approximately SEK 700 million net to be achieved in 2015 Norway - EBITDA** SEK million 516 731 Q2 14 Q2 15 M&A Organic Norway - service revenues* SEK million 1,409 1,996 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
  • Service revenues supported by Tele2 acquisition
  • Consumer segment driving organic service
revenue growth M&A Organic * External service revenues **Excluding non-recurring items
slide-3
SLIDE 3

3

Improved earnings trend in Sweden

Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
  • 3.8%
  • 3.8%
+2.6% +2.6%
  • Service revenues declined organically
by 1 percent, stable trend vs Q1
  • Mobile and fiber support growth in consumer,
while price pressure remains within enterprise
  • Optimizing market investments behind improved
trend
  • Profitability still burdened by continued decline in
fixed telephony Organic EBITDA** growth y-o-y Service revenue growth* y-o-y Q1 15 Q2 15
  • 5.1%
  • 5.1%
  • 9.6%
  • 9.6%
5 B2B B2C * External service revenues **Excluding non-recurring items

Managing a challenging environment in Eurasia

  • 2.7%
  • 2.0%
Organic service revenue growth Organic EBITDA growth Service revenues* and EBITDA**
  • Revenues and earnings impacted by intensified
competition and macro weakness in most parts of the region
  • 15.0%
  • 14.6%
  • 8.3%
  • 4.1%
  • 1.9%
7.2% 21.6% Moldova Kazakhstan Tajikistan Azerbaijan Georgia Uzbekistan Nepal Q2 Organic service revenue growth* y-o-y
  • Higher uncertainty for the second half of the year
  • The service revenue decline in Moldova is entirely
explained by one-off adjustments 6 * External service revenues **Excluding non-recurring items
slide-4
SLIDE 4

4

7

Major efforts made in Nepal following the earthquake

  • Ncell provided customers with free services post
the earthquake
  • Heroic efforts from Ncell employees to get network
up and running - most part is now back in operation
  • TeliaSonera and Ncell have donated and committed
funds to support the rebuilding of Nepal
  • Solid operational performance despite tough
conditions 8

Intensified competition in Kazakhstan

  • Ongoing price war with highly aggressive
bundled offerings
  • Kcell remains market leader with EBITDA margin
above 50 percent
  • Kcell launched new competitive nationwide all-net
tariff plan “Hello Kazakhstan” in June Mobile ARPU Number of mobile subscriptions Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15
  • 10%
  • 6%
slide-5
SLIDE 5

5

Executing on our strategic agenda

9

#1

C O N N E C T I V I T Y C O N V E R G E N C E C O M P E T I T I V E I O T E - H E A L T H M U S I C S E C U R I T Y F I N A N C I A L T V E N H A N C E T H E C O R E E X P L O R E O P P O R T U N I T I E S C L O S E T O T H E C O R E Develop the core business in the Nordics & Baltics Take Eurasia to the next level Invest in areas that complement and/or strengthen the core business O P E R A T I O N S S E R V I C E S M U S I C

Innovation key to differentiate and drive core business

10
  • Enhanced Spotify partnership to improve skills in
media distribution, customer insights and data analytics
  • Strengthened B2B offerings thanks to Soundtrack Your Brand
  • Partnership within accessories to differentiate and attract customers
4G smartphone penetration and mobile data volume 22% 43% 15% 4G smartphone penetration* * Refers to Sweden ** Refers to Sweden, 12 month rolling Mobile data volume growth** 52%
slide-6
SLIDE 6

6

Transformation pace beginning to pick up

11
  • Approximately SEK 300 million invested in H1, to be
further stepped-up during H2
  • Good progress with increasing online share of sales,
IT systems and product portfolio transformation still in early stage
  • Targets will be achieved stepwise
Area Status Targets 2017/2018 Fewer products and offerings 4% 80% Fewer IT systems 1% 50% Share of services and sales online 24% >50% Fewer products and offerings 4% 80% Fewer IT systems 1% 80% Share of services and sales online 15% >50%
  • 2.0
2.0 Accumulated investments 2015-2016 Net savings run-rate to be reached 2017 Investments and savings, SEK billion

Interim Report

April-June 2015

Christian Luiga, Senior Vice President & CFO Q2

slide-7
SLIDE 7

7

Summary Q2 2015

13 Apr-Jun 2015 Apr-Jun 2014 Change (%) Net sales (SEK million) 27,115 24,985 +8.5 Change local organic (%) +1.9 Service revenues (SEK million) 23,645 22,384 +5.6 Change local organic (%)
  • 1.3
EBITDA* (SEK million) 9,190 8,836 +4.0 Change local organic (%)
  • 4.0
EBITDA* Margin (%) 33.9 35.4 EPS (SEK) 0.75 0.82
  • 8.1
Free cash flow (SEK million) 6,307 2,469 +155.5 * Excluding non-recurring items

FX and M&A support revenue growth in the quarter

* External service revenues ** Q2 FX average Q2 Reported service revenue* growth y-o-y +5.6% +5.6% Q2 14 Organic M&A FX Q2 15
  • The Swedish krona weakened against the majority
  • f key currencies y-o-y, with the Russian ruble as
the main exception
  • Reported service revenue growth boosted by
currency tailwind and Tele2 Norway acquisition Q2 FX change y-o-y versus SEK**
  • 15.0%
  • 6.2%
  • 1.5%
0.9% 2.8% 13.7% 18.0% 23.5% Russia Azerbaijan Norway Turkey Euro Uzbekistan Nepal Kazakhstan +4.1% +4.1% +2.8% +2.8%
  • 1.3%
  • 1.3%
14
slide-8
SLIDE 8

8

Continued high growth in equipment sales

* In local currencies, excluding acquisitions and disposals ** Growth year-on-year in reported currency Group net sales growth* impact Net sales Q2 14 Billed revenues Interconnect revenues Other mobile service revenues Fixed service revenues Other service revenues Equipment sales Net sales Q2 15 Equipment sales growth**
  • 40%
  • 20%
0% 20% 40% Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Sweden Europe
  • Continued high demand for mobile handsets
  • Mobile billed revenues increased in Sweden and
Finland, supported by consumer segment, but declined in Eurasia
  • Equipment sales continues to grow in both Sweden
and Europe
  • Q2 2015 group equipment sales increased almost
by SEK 900 million y-o-y +1.9% +1.9%
  • 0.5%
  • 0.5%
  • 0.0%
  • 0.0%
  • 0.2%
  • 0.2%
  • 0.5%
  • 0.5%
+0.1% +0.1% +3.0% +3.0% 15

Reported EBITDA growth supported by M&A and FX

* Excluding non-recurring items Group EBITDA* growth y-o-y Q2 14 Organic M&A FX Q2 15 +4.0% +4.0%
  • Synergies from Tele2 Norway acquisition almost
compensate for organic EBITDA decline +5.0% +5.0% +3.0% +3.0%
  • 4.0%
  • 4.0%
Q2 Organic EBITDA* growth y-o-y Sweden Europe Eurasia Group
  • 4.0%
  • 4.0%
  • 5.1%
  • 5.1%
  • 2.7%
  • 2.7%
  • 7.5%
  • 7.5%
  • Organic drop explained by revenue pressure in Kazakhstan,
subscriber acquisition costs in Spain and decline in Swedish fixed telephony 16
slide-9
SLIDE 9

9

Investing in superior connectivity

CAPEX*, SEK million Region Sweden Region Europe Region Eurasia Group Q2 14 Q2 15 * Excluding license and spectrum fees 4,596 4,596 903 903 1,410 1,410 1,577 1,577
  • Expanding mobile coverage across our footprint
  • Solid fiber orders in Sweden - more than 50,000
new single-family homes to be connected in 2015
  • Higher CAPEX in line with invest-to-save and
invest-to-growth initiatives 17

50% >90%

SDU fiber roll-out in Sweden to increase 50% in 2015 4G population coverage above 90% in all Nordic countries

Strong free cash flow boosted by Turkcell dividend

Free cash flow H1, SEK billion
  • Turkcell dividend of SEK 4.7 billion net
  • f tax received in Q2
  • Higher CAPEX according to plan
5.0 5.0 9.2 9.2 +0.6 +0.6 +5.2 +5.2 +0.4 +0.4 +0.0 +0.0 +0.2 +0.2
  • 0.1
  • 0.1
  • 2.0
  • 2.0
  • 0.1
  • 0.1
* Excluding non-recurring items 18
slide-10
SLIDE 10

10

Minor change in net debt year on year

Net debt change y-o-y Q2 14 CF from
  • perating
activities Turkcell dividend Cash CAPEX M&A Dividend payment Minority dividend FX & Other Q2 15 68.5 68.5
  • Net debt fairly stable despite
increased CAPEX and M&A activities
  • Net Debt/EBITDA 1.91x
(1.90x end Q2 2014)
  • 30.7
  • 30.7
67.1 67.1
  • 4.7
  • 4.7
+4.3 +4.3 +13.0 +13.0 +1.2 +1.2 +0.0 +0.0 +18.2 +18.2 19

Full year outlook reiterated, but increased uncertainty related to performance in Eurasia

* Excluding non-recurring items , in local currencies, excluding acquisitions and disposals ** Excluding license and spectrum fees, currency fluctuations may impact the reported number in Swedish krona 20

Around 2014 level EBITDA* Around SEK 17 billion Target at least SEK 3 per share CAPEX** DIVIDEND

slide-11
SLIDE 11

11

Q & A Q & A

21

Financial key ratios

22 Jun 30, 2015 Dec 31, 2014 Return on equity* 14.4 15.0 Return on capital employed* 11.5 12.2 Equity/assets ratio 39.0 38.0 Net debt/equity ratio 66.5 57.4 Net debt/EBITDA** ratio 1.91 1.68 Net debt/assets ratio 25.9 21.8 * Rolling 12 months ** Rolling 12 months, excluding non-recurring items
slide-12
SLIDE 12

12

EPS impacted by lower contribution from associates

Q2 Earnings per share
  • Lower associated contribution
from MegaFon and Turkcell 0.82 0.82 0.75 0.75 +0.03 +0.03
  • 0.01
  • 0.01
+0.01 +0.01
  • 0.03
  • 0.03
+0.08 +0.08
  • 0.07
  • 0.07
  • 0.08
  • 0.08
23 Debt Maturing next 12 months – 2015 and onwards Debt Portfolio Maturity Schedule – 2015 and onwards

Debt maturity schedule

1 2 3 4 5 6 j u l
  • 1
5 a u g
  • 1
5 s e p
  • 1
5
  • k
t
  • 1
5 n
  • v
  • 1
5 d e c
  • 1
5 j a n
  • 1
6 f e b
  • 1
6 m a r
  • 1
6 a p r
  • 1
6 m a j
  • 1
6 j u n
  • 1
6 2 4 6 8 10 12 14 16 18 2015 2018 2021 2024 2027 2030 2033 2036 2039 2042 2045 2048 2051 2054 2057 2060 2063 SEK billion SEK billion 24 Debt per Q2 2015
  • Gross debt SEK 98.4 billion
  • Net debt SEK 68.5 billion
  • Net debt/EBITDA 1.91x
slide-13
SLIDE 13

13

Dividend policy

  • The company shall target a solid investment grade

long-term credit rating (A- to BBB+)

  • TeliaSonera shall target to distribute an annual dividend
  • f at least SEK 3 per share for the fiscal year 2015
25

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 TeliaSonera.
26