Q2 AlliSON KIRKBY PRESIDENT & CEO 1 FIRST IMPRESSIONS - - PowerPoint PPT Presentation

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Q2 AlliSON KIRKBY PRESIDENT & CEO 1 FIRST IMPRESSIONS - - PowerPoint PPT Presentation

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Interim REPORT January june 2020 Q2 AlliSON KIRKBY PRESIDENT & CEO 1 FIRST IMPRESSIONS Important role in society Strong positions in attractive markets OUR VALUES OF Huge opportunities in 5G, fiber, convergence and

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SLIDE 1

Q2

AlliSON KIRKBY

1

PRESIDENT & CEO

Interim REPORT January – june 2020

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SLIDE 2

FIRST IMPRESSIONS

  • Important role in society
  • Strong positions in attractive markets
  • Huge opportunities in 5G, fiber, convergence and

cloud-based services

  • Highly engaged employees
  • Desire to restore top line and earnings growth
  • Improvements needed in
  • Customer experience
  • Commercial speed & execution
  • Strategy execution
  • Productivity
  • Building a new GEM/Leadership team

OUR VALUES OF

DARE CARE SIMPLIFY

COULD NOT BE MORE RELEVANT

2
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SLIDE 3

ProForma leverage post Turkcell sale

Q2 HIGHLIGHTS – RESILIENT DESPITE COVID-19

SERVICE REVENUE development OPERATIONAL FREE CASHFLOW Q2 2020 ADJUSTED EBITDA development

(SEK 2.4 billion Q2 2019) YoY growth, like for like YoY growth, like for like

EBITDA less Cash capex*

3 SEK EK

3.7 3.7

bil illio ion Q2 2020 Ytd growth SEK EK

0.8 0.8

bil illio ion SEK EK

2.2 2.2

bil illio ion (2.64x Q2 2020)

2.48 2.48x

(SEK 3.0 billion Q2 2019) * Adjusted EBITDA including repayment of lease liabilities less cash CAPEX excluding licenses
  • 5.6%
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
  • Ex. TV &
Media Q2 20 0.0% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 1.8%
  • Ex. TV &
Media Q2 20
  • 2.3%
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SLIDE 4

telco business resilient

  • Flat EBITDA despite COVID-19 implications
  • The traditional telco business ex COVID-19 grew

EBITDA by around 5 percent mainly from:

  • Sequentially improved cost control
  • TV and Media EBITDA reduced although much less

than on revenues

  • Content cost phasing
4

EBITD TDA b bridge q q2 2 2020 2020

Like for like, excluding adjustment items Q2 19 Telco op ex COVID-19 Roaming and IPTV sport* TV & Media Q2 20 +5.0%
  • 3.2%
  • 1.8%
* COVID-19 impact outside the TV & Media unit
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SLIDE 5

EBITDA DE DA DEVE VELOPM PMENT

Like for like growth, excluding adjustment items

GOOD COST CONTROL IN THE QUARTER

LAT TV & Media LIT Telia Carrier DEN NOR SWE Other Q2 20 Q2 19 FIN EST
  • 5.6%
NOR DEN LIT EST TV & Media Telia Carrier Q2 19 Q2 20 LAT SWE FIN Other 0.0% 5

SERVICE R REVENUE d development

Like for like growth, external service revenues
  • Roaming pressured mobile in all markets
  • TV & Media impacted by lower advertising/pay-TV
  • Improved cost control in all markets
  • OPEX down 4 percent
  • Norway benefited from synergies
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SLIDE 6

MOBILE SUBSCRIBER SERVICE REVENUE GROWTH MOBILE ARPU development Q2 2020 EX. M2M

MOBILE REVENUES STABLE

  • Mobile subscriber revenues

impacted by lower roaming

  • Solid ARPU trend excl. roaming
In local currency, based on subscription revenues, y-o-y change Like for like, y-o-y change
  • 2.7%
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 6 SWEDEN

+2.8%

FINLAND

+3.0%

NORWAY

+1.0%

LITHUANIA

+4.2%

ESTONIA

+5.4%

DENMARK
  • 6.2%

+0.0%

  • 1.8%

+0.2%

  • 2.1%
  • 10.0%

+0.5%

Excl. roaming Incl. roaming Ex roaming Q2 20
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SLIDE 7

BROADBAND revenues growing

0% 25% 50% 75% 100% 250 500 750 1,000 1,250 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Total broadband subscriptions Share of fiber % Share of copper %
  • Fiber growth mitigating copper declines
  • Strong growth in OCN enabling convergence

Fixed d broadb adban and r d reve venue de deve velopm pment

Like for like growth, external service revenues

Fixed d broadb adban and b d bas ase c compo position

Subscriptions in thousands, Sweden 7 1.3% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

BROADBAND ARPU development Q2 2020

In local currency, based on subscription revenues, y-o-y change SWEDEN

+4.5%

FINLAND
  • 4.7%
NORWAY
  • 5.0%
LITHUANIA
  • 4.0%
ESTONIA

+2.5%

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SLIDE 8

Converged customer base growing

TELIA LIFE CUSTOMERS 8 TELIA1 CUSTOMERS TRIPLE PLAY CUSTOMERS CONVERGENCE/ TRIPLE PLAY CUSTOMERS TELIA1 CUSTOMERS

87 87k

(-2% Q2 vs. Q1)

288 288k

(+14% Q2 vs. Q1)

75 75k

(+8% Q2 vs. Q1)

70 70k

(+4% Q2 vs. Q1)

82 82k

(-2% Q2 vs. Q1)
  • Growing subscriber base in

markets where we have an established converged offering

  • Further opportunities across

footprint

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SLIDE 9

TV & Media fundamentals are MIXED

Free-TO-AIR

* CSOV= Commercial Share of Viewing 9

C MORE IPTV

  • Sweden linear stable
  • Sweden digital CSOV +12 p.p. to 70%
  • Finland linear stable at 41%
C More OTT subscriber base (direct)
  • Sequential reduction due to
  • Postponed/cancelled sport
  • Conflict effects
  • 10.2%
  • 12%
  • 8%
  • 4%
0% 4% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 593k 200 400 600 800 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Service revenues, like for like ex. IPTV Sport adjustments (%) Swedish linear CSOV*, ages 15-64
  • Premium sports severely impacted Q2
  • Premium sports prices now reinstated
48.3% 48.4% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Ex. COVID-19 Q2 20
  • 0.4%
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SLIDE 10

Q2

Douglas lubbe

10

Acting cfo

Interim REPORT January – june 2020

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SLIDE 11

EBITDA DE DA DEVE VELOPM PMENT

Like for like growth, excluding adjustment items

GOOD COST CONTROL IN THE QUARTER

LAT TV & Media LIT Telia Carrier DEN NOR SWE Other Q2 20 Q2 19 FIN EST
  • 5.6%
NOR DEN LIT EST TV & Media Telia Carrier Q2 19 Q2 20 LAT SWE FIN Other 0.0% 11

SERVICE R REVENUE d development

Like for like growth, external service revenues
  • Roaming pressured mobile in all markets
  • TV & Media impacted by lower advertising/pay-TV
  • Improved cost control in all markets
  • OPEX down 4 percent
  • Norway benefited from synergies
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SLIDE 12

SWEDEN - REVENUES IMPACTED BY COVID-19

12
  • 1.9%
  • 0.9%
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth Subs. (q-o-q) ARPU (y-o-y) +41k
  • 11%
+3k +4% 11 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y) +0.5% Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA
  • Mobile impacted by roaming, interconnect and a

positive one-off

  • Fixed telephony no longer benefits from price

increases

  • ARPU grew despite Covid-19 impacts
  • Broadband continues to show good momentum

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency
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SLIDE 13

FINLAND - STRONG COST CONTROL

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  • 4.1%
4.3% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth Subs. (q-o-q) ARPU (y-o-y)
  • 15k
  • 27%
  • 6k
  • 5%
2 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y) 0.0% Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA
  • Revenues fell largely driven by mobile and TV
  • Cost control drove EBITDA growth
  • Growth in mobile subs driven by B2B segment
  • Liiga playoff cancelation impacted TV adversely

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency
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SLIDE 14

NORWAY – EBITDA IS IMPROVING

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  • 5.4%
8.4% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency Subs. (q-o-q) ARPU (y-o-y)
  • 2k
  • 7%
+9k
  • 5%
  • 8
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y)
  • 1.8%
Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA
  • Consumer mobile and TV still challenging
  • Cost control and synergies deliver better EBITDA
  • Mobile ARPU fell due to roaming
  • Continued growth in broadband subs
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SLIDE 15

LITHUANIA - A STRONG QUARTER

15 7.2% 9.2% Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth Subs. (q-o-q) ARPU (y-o-y) +3k +11% +2k
  • 1%
6 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y) +0.2% Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency
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SLIDE 16

ESTONIA – UNABLE TO FULLY OFFSET COVID-19 IMPACT

16 2.1%
  • 1.3%
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth Subs. (q-o-q) ARPU (y-o-y)
  • 2k
+14%
  • 1k
+2% 5 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y)
  • 2.1%
Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency
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SLIDE 17

DENMARK – STRONG COST CONTROL

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  • 7.4%
  • 0.5%
Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20

SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

Like for like growth Subs. (q-o-q) ARPU (y-o-y) +12k
  • 41%
+3k +16% 14 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 ARPU (y-o-y)
  • 10.0%
Subs. (q-o-q) ARPU (y-o-y) Service revenues EBITDA

SUB UBSCRI RIPTION ONS & A & ARP RPU d U dev evel elop

  • pmen

ent

Subscription growth q-o-q in 000’, subscription rev. ARPU ex M2M in local currency
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SLIDE 18

TV AND MEDIA - SEVERELY IMPACTED BY COVID-19

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SERV ERVICE REV E REVEN ENUES UES & & ADJUS USTED EB EBITDA

SEK million, like for like growth, external service revenues 500 1,000 1,500 2,000 2,500 Q2 19 Q2 20 Q2 19 Q2 20
  • 32%
  • 30%
Service revenues EBITDA
  • Revenues fell due to:
  • Advertising market hit by COVID-19
  • Cancellation of sport broadcasts
  • Impact on EBITDA from revenue loss largely offset by:
  • Lower content cost due to cancelled sports
  • Phasing on non sports related content
  • Large part of content costs that was expected in

Q2 20 will be taken in H2 20

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SLIDE 19

OP OPERA RATION ONAL FRE REE E CASH F FLOW OW Q2 Q2

SEK billion

OP OPERA RATION ONAL FRE REE E CASH F FLOW OW devel elop

  • pmen

ent

SEK billion, rolling twelve months

Stable cash flow development

2 4 6 8 10 12 14 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 SEK 11.2 billion Q2 2019 0.3 EBITDA less leasing* 0.4 2.4
  • 1.0
CAPEX ex. licenses Working capital 0.2 Tax
  • 0.2
Other Q2 2020 2.2
  • 0.2
  • EBITDA now includes the acquired TV & Media unit
  • Lower CAPEX mainly related to Sweden (fiber)
  • Negative working capital development driven by

tough comparison and TV and Media

* Repayment of lease liabilities 19
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SLIDE 20

Stable net debt and leverage development

  • Unchanged net debt despite payment of dividend

and final Bonnier Broadcasting payment

  • Exchange rate movements reduced net debt by
  • c. SEK 2 billion
  • Second dividend payment of SEK 3.7 billion due

Q4 2020

  • Turkcell proceeds of c. SEK 5 billion expected in

H2 2020

3.5 .5 3.7 .7 0.6 .6 Q2 20 Dividend FX & other 83. 83.7 Q1 20
  • 6.3
.3 Operations Cash CAPEX Closing adjustment
  • 1.4
.4 83. 83.8 2.62x 2.64x = Leverage ratio (multiple, rolling 12 months including a full 12 months of Bonnier Broadcasting) 20

NET DEBT D DEVELOPMENT

SEK billion and leverage ratio
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SLIDE 21

Q2

AlliSON KIRKBY

21

PRESIDENT & CEO

Interim REPORT January – june 2020

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SLIDE 22

OUTLOOK FOR 2020

22

Operational free cash flow (unchanged) SEK 9.5 – 10.5 billions CAPITAL ALLOCATION (UNCHANGED) Committed to maintain investment grade Maintain previously communicated 2019 dividend Adjusted EBITDA (new) Adjusted EBITDA generation in constant currency is expected to be similar in the second half of the year compared to the first half

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SLIDE 23

summary

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  • Q2 better than our expectations
  • On track to deliver outlook for the full year
  • Telco business resilient
  • Supporting our communities remains a priority
  • Key immediate priorities to improve performance
  • Customer Experience
  • Connectivity
  • Convergence
  • Cost base

OUR VALUES OF

DARE CARE SIMPLIFY

COULD NOT BE MORE RELEVANT

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SLIDE 24

Q&A

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SLIDE 25

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 2019 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. 25