Q3 2013 FINAL million Q3 2013 Q3 2012 Diff EBITDA excluding non-recurring items 9,419 9,283 136...
Transcript of Q3 2013 FINAL million Q3 2013 Q3 2012 Diff EBITDA excluding non-recurring items 9,419 9,283 136...
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Interim ReportJanuary-September, 2013
Johan DennelindPresident and CEO
Third quarter summary
• Revenues impacted by modest economic growth and lower regulated interconnect
• Improved billed revenue trend in Mobility Services across Scandinavia supported by new pricing models
• Continued implementation and effects of efficiency measures
• Significant investments in internet experience - 4G and fiber
• Increased focus on governance and sustainability
• Initial observations as new CEO – a good company with untapped potential
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Free cash flow
3,825
7,308
Q3 12 Q3 13
SEK million
Flat organic sales and stronger margins
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* Excluding non-recurring items
• Revenue stable in local currency, excluding acquisitions and disposals
• Improved profitability due to implemented efficiency measures
• Higher free cash flow from working capital change and MegaFon dividend
Net sales & EBITDA margin*
25,842 25,381
Q3 12 Q3 13
37.1%35.9%
SEK million
0.0% LC
Net sales & EBITDA* margin
12,476 12,208
Q3 12 Q3 13
31.4%29.3%
SEK million
-3.0% LC
CAPEX & CAPEX-to-sales**
SEK million
944
1,136
Q3 12 Q3 13
9.3%7.6%
Improved margin trend in Mobility Services
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* Excluding non-recurring items **Excluding license and spectrum fees
• Positive billed revenue trend, but total net sales growth affected by reduced regulated interconnect
• Margins supported by cost savings
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Data centric models gain traction in Mobility Services
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* In local currencies
Data growth
0%
20%
40%
60%
80%
100%
120%
Q4 12 Q1 13 Q2 13 Q3 13
Volume Revenue
Billed revenues Q313 y-o-y*
6.0%
4.4%
3.2%
1.2%
0.2%
-4.3%
-7.3%
-7.9%
-8.9%
Denmark
Spain
Sweden
Mobility
Norway
Finland
Estonia
Latvia
Lithuania
CAPEX & CAPEX-to-sales**
SEK million
1,202 1,217
Q3 12 Q3 13
Revenue pressure in Broadband Services
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* Excluding non-recurring items **Excluding license and spectrum fees
• Continued decline in traditional fixed telephony and heavy price pressure in B2B
• Profitability under pressure, but cost savings start to come through
Net sales and EBITDA* margin
8,644 8,252
Q3 12 Q3 13
31.5%33.2%
SEK million
-2.4% LC
14.7%13.9%
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Continued double-digit growth in Eurasia
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* Excluding non-recurring items **Excluding license and spectrum fees
SEK million
• Mobile data supports overall growth
• Positive margin trend
Net sales and EBITDA* margin
5,133 5,292
Q3 12 Q3 13
53.9%50.3%
SEK million
+11.1% LC
3.8257.308
Q3 12 Q3 13
CAPEX & CAPEX-to-sales**
SEK million
853
1,086
Q3 12 Q3 13
20.5%16.6%
Solid margin within Mobility Services in Sweden
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* Excluding non-recurring items
46.7%
• Improved billed revenue growth
• Higher profitability due to cost savings
• Revenues under pressure
• Cost savings start to come through
Net sales & EBITDA margin*
4,8834,660
Q3 12 Q3 13
39.9%40.7%
SEK million
-4.6% LC
Broadband Sweden
Net sales & EBITDA margin*
4,180 4,159
Q3 12 Q3 13
44.1%
SEK million-0.5% LC
Mobility Sweden
46.7%
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Challenging environment in Finland
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* Excluding non-recurring items
46.7%
• Billed revenues under pressure
• EBITDA margin supportedby efficiency gains
• Weak sales and margin decline
Net sales & EBITDA margin*
1,335 1,273
Q3 12 Q3 13
25.6%28.6%
SEK million
-7.5% LC
Broadband Finland
Net sales & EBITDA margin*
1,938 1,856
Q3 12 Q3 13
30.3%
SEK million-7.2% LC
Mobility Finland
34.9%
Formalizing our sustainability agenda
• Three dimensions to secure ethical decision making– Compliance to legal frameworks– Adherence to ethical standards and values– Reinforcing a corporate culture and values that
embed sustainability in all things we do
• Actions taken/underway– New Compliance function– Establishment of CEO Office– Roll out of Code of Ethics and Conduct program
• Next step - Establish KPIs to be reportedand monitored continuously
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A strong foundation to build upon for the future
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c
Growing and valuable associates
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c
• Associated income of SEK 1,503 million (833)– of which Turkcell SEK 675 million (631)– of which MegaFon SEK 793 million (173)
• MegaFon dividend of SEK 1,940 million, net of taxes
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Need to increase competitiveness
• Decreasing market shares in too many areas in recent years
• Unsatisfactory profitability trend in several units
• Focus areas– Understand customers– Reduce complexity– Shape culture
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Summary and priorities
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• Improved margin, stable revenue and strong cash flow in the quarter
• Data centric pricing models gaining traction across Scandinavia
• Essential to embed sustainability in all we do - several actions taken
• The journey ahead - need to strengthen competitiveness
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Interim ReportJanuary-September, 2013
Per-Arne BlomquistExecutive Vice President and CFO
Summary first 9 months
• Net sales SEK 75,197 million (77,829)– Decline of 0.2 percent in local FX, excluding acquisitions
and disposals
• EBITDA* SEK 26,856 million (27,169)– Increase of 2.2 percent in local FX
• EBITDA margin* 35.7 percent (34.9)
• Earnings per share SEK 2.95 (3.00)
• Free cash flow SEK 12,244 million (9,080)
– Excluding dividends from MegaFon
* Excluding non-recurring items
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Flat revenue development
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* In local currencies, excluding acquisitions and disposals
Net sales split and Net sales growth* y-o-y
Q2 2012 Q2 2013 Q3 2012 Q3 2013
Mobility Broadband Eurasia
+14.3%+14.3%
-1.8%
-3.6%
+11.1%
-3.0%
+0.4% 0.0%
-2.4%
• Double-digit growth in Eurasia, but tougher comparable numbers in Uzbekistan
• Sequential improvement in Broadband related to International Carrier
• Mobility affected by lower growth in Spain
Sound balance between revenues and costs
* In local currencies, excluding acquisitions and disposals
Net sales and addressable cost base* change y-o-y
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
2007 2008 2009 2010 2011 2012 Q113 Q213 Q313
Net sales Addressable cost base
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Significant impact from interconnect in Mobility Services
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Revenue growth* (%)
-3.0 0.7
-15 -10 -5 0 5 10 15
Lithuania
Norway
Finland
Estonia
Latvia
Total Mobility
Sweden
Denmark
Spain
Revenue growth exinterconnect impact
Total revenue growth
Billed revenues* change y/y (%)Billed revenues* change y/y (%)
-6%
-4%
-2%
0%
2%
4%
6%
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
* In local currencies
Further margin improvement
* Excluding non-recurring items
EBITDA margin*, 4 quarters rollingEBITDA margin*, 4 quarters rolling
32%
33%
34%
35%
36%
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
35.1%
EBITDA margin*, change Y/YEBITDA margin*, change Y/Y
-2
-1
0
1
2
3
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
Percentage point
20
* Excluding non-recurring items
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Balance between sales and OPEX growth
• All business areas reduced costs in the quarter
Net sales in local currencies, excluding acquisitions and disposals
BroadbandBroadband
-15%
-10%
-5%
0%
5%
Q112 Q212 Q312 Q412 Q113 Q213 Q313
Change in Net Sales (y-o-y)Change in Opex (y-o-y)
MobilityMobility
-15%
-10%
-5%
0%
5%
10%
Q112 Q212 Q312 Q412 Q113 Q213 Q313
Change in Net Sales (y-o-y)Change in Opex (y-o-y)
EurasiaEurasia
-10%
-5%
0%
5%
10%
15%
20%
25%
Q112 Q212 Q312 Q412 Q113 Q213 Q313
Change in Net Sales (y-o-y)Change in Opex (y-o-y)
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• Revenue remains under pressure, but cost savings start to come through
Stronger margins in Mobility and Eurasia
• Higher margins in 5 out of 8 business due to positive impact from efficiency measures
• Positive margin change due to solid sales growth and reduced costs
* Excluding non-recurring items
Mobility Services
9M 12 9M 13
EBITDA* margin
29.3% 30.7%
Broadband Services
9M 12 9M 13
EBITDA* margin
31.7% 30.1%
Eurasia
EBITDA* margin
9M 12 9M 13
52.9%50.5%
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Addressable cost base target*
Lowering the cost base by SEK 2 billion
• Savings of SEK 0.2 billion recorded in Q4 2012 and around SEK 0.6 billion in 9M 2013
• In total, 1,800 employees will be affected
• 1,460 employees noticed y-t-d
• Restructuring costs of SEK 1.7 billion, of which SEK 1.4 billion expected in 2013. SEK 1.0 billion has been recorded y-t-d
* Excluding Mobility Spain and NextGenTel, stable FX
2012 9M 2013 2013e 2014e
SEK billion
26.0
25.0
26.8
26.1
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CAPEX-to-sales
* Excluding license and spectrum fees
CAPEX-to-sales ratio*CAPEX-to-sales ratio*
Q3 12 Q3 13 2012 2013 9M 2013e
14.0%14.6%
12.7%
14.3%
12.5%
• Increased CAPEX following relatively low activity in H113
• Focus on high speed internet access through 4G and fiber
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CAPEX-to-sales ratio*CAPEX-to-sales ratio*
Mobility Services Broadband Services Eurasia
14.7%
20.5%
9.3%
Q3 12 Q3 12 Q3 12Q3 13 Q3 13 Q3 13
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Significantly higher Free Cash Flow
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* Excluding non-recurring items
Free cash flow
7.3
3.83.8
SEK billionSEK billion
+1.6+1.6+0.1+0.1
+2.0+2.0
+0.1+0.1
-0.5-0.5
Free cash flow
7.3
3.8
SEK billion
+1.6+0.1
+2.0
+0.1
-0.5+0.2
-0.1
+0.1
• Dividends received relate to MegaFon
• Positive working capital change explained by calendar effect on customer payments and one-time effect Q3 2012
Net debt Net debt
Reduced Net debt
Q2 2013 Cash flowfrom
operatingactivities
CashCAPEX
Otherinvestingactivities
Dividendsnet oftaxes
Minoritydividends
FX &other
Q3 2013
56.8
66.2
SEK billion
+0.3
-1.3-9.1-1.1
-1.9
• Net debt SEK 56.8 billion
• Other investing activities include SEK 1.9 billion repayment from AF Telecom
+3.7
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Net debt and Net debt / EBITDA*Net debt and Net debt / EBITDA*
Net debt to EBITDA within our target range
* 4 quarters rolling
0.0
0.5
1.0
1.5
2.0
2.5
0
15
30
45
60
75
Q110
Q210
Q310
Q410
Q111
Q211
Q311
Q411
Q112
Q212
Q312
Q412
Q113
Q213
Q313
SEK billion
• Gross debt of SEK 86.6 billion and Net debt of SEK 56.8 billion
• Net debt to EBITDA of 1.58x
• Target range between 1.5-2.0x
1.58
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Outlook for 2013 – Unchanged
* In local currencies, excluding acquisitions and disposals** Excluding non-recurring items *** Excluding license and spectrum fees
Outlook 9M 2013
Net sales* Flat -0.2%
EBITDA margin**Increase slightly
(34.5% 2012)35.7%
CAPEX-to-sales ratio***
Around 14% 12.7%
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Organic revenue growth Q3 2013
Revenue growth (%)Q3 2013
Reportedgrowth
of whichcurrency
of whichacquisitions
and disposals
of which organic
Mobility Services -2.1 0.9 - -3.0
Broadband Services -4.5 0.9 -3.0 -2.4
Eurasia 3.1 -8.3 0.3 11.1
The Group -1.8 -0.9 -0.9 0.0
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Statement of cash flows Q3 2013
SEK million Q3 2013 Q3 2012 Diff
EBITDA excluding non-recurring items 9,419 9,283 136
Dividends received from ass companies 2,043 0 2,043
Interest paid (net) -109 -259 150
Income taxes paid -836 -922 86
Payment of restructuring provisions -220 -157 -63
Diff between paid/recorded pensions 24 -26 50
Changes in working cap and other items 741 -854 1,595
Cash flow from operating activities 11,062 7,065 3,997
Cash CAPEX -3,754 -3,240 -514
Free cash flow 7,308 3,825 3,483
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Financial key ratios
Sep 30, 2013 Dec 31, 2012
Return on equity* 21.5% 20.5%
Return on capital employed* 16.2% 14.9%
Equity/assets ratio 40.9% 38.2%
Net debt/equity ratio 57.3% 61.4%
Net debt/EBITDA rate* multiple 1.58 1.64
Net debt/assets ratio 23.4% 23.5%
* Rolling 12 months
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Higher earnings per share
EPS, SEK EPS, SEK
Q32012
Operat. Asscomp
Non-rec
items
FX Net fin Taxes Min int Q32013
1.07
0.93
+0.07
+0.16
-0.11-0.03
+0.05+0.04
-0.04
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Debt Maturing next 12 months – Sept 30, 2013
Debt Portfolio Maturity Schedule – 2013 and onwards
Debt maturity scheduleMMO
0
1
2
3
4
5
6
Oct-13
Nov-13
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
0
2
4
6
8
10
12
14
16
18
2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043
SEK billion
SEK billion
Debt per Q3 2013• Gross debt SEK 86.6 bn
• Net debt SEK 56.8 bn
• Net debt/EBITDA 1.58
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Liquidity position TeliaSonera Group
Committed bank lines Maturity Size Amount undrawn
Syndicated revolving credit facility
Dec 2017 EUR 1 billion EUR 1 billion
Cash and cash equivalents, less blocked funds approx. SEK 23.7 billion
September 30, 2013
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TeliaSonera AB long-term ratings migration history 2002-to-today
TeliaSonera AB credit ratings (A3/A-)
0
1
2
3
4
5
Q1 02 Q4 04 Q4 07 Q4 08 Q4 09 Q4 10 Q4 11 Q4 12
AAAA-A+AA-
Moody’s (A3/P-2)
• January 8, 2003, lowered long-termdebt rating to A2
• November 1, 2006, outlook changed to Negative
• October 30, 2007, lowered long- and short-term debt rating to A3 and P-2respectively
• May 4, 2012, Outlook changed from Negative to Stable
• January 8, 2003, lowered long-termdebt rating to A2
• November 1, 2006, outlook changed to Negative
• October 30, 2007, lowered long- and short-term debt rating to A3 and P-2respectively
• May 4, 2012, Outlook changed from Negative to Stable
Moody’s (A3/P-2)
• January 8, 2003, lowered long-termdebt rating to A2
• November 1, 2006, outlook changed to Negative
• October 30, 2007, lowered long- and short-term debt rating to A3 and P-2respectively
• May 4, 2012, Outlook changed from Negative to Stable
Standard & Poor’s (A-/A-2)
• February 5, 2003, lowered long-term debt rating to A
• October 28, 2005, lowered long-term debt rating to A- and short-term debt rating to A-2
• July 2012, debt ratings confirmedOutlook: Stable
• February 5, 2003, lowered long-term debt rating to A
• October 28, 2005, lowered long-term debt rating to A- and short-term debt rating to A-2
• July 2012, debt ratings confirmedOutlook: Stable
Standard & Poor’s (A-/A-2)
• February 5, 2003, lowered long-term debt rating to A
• October 28, 2005, lowered long-term debt rating to A- and short-term debt rating to A-2
• July 2012, debt ratings confirmedOutlook: Stable
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Dividend policy
• The company shall target a solid investment grade long-term credit rating (A- to BBB+) to secure the company’s strategically important financial flexibility for investments in future growth, both organically and by acquisitions
• The ordinary dividend shall be at least 50% of net income attributable to owners of the parent company
• Excess capital shall be returned to shareholders, after the Board of Directors has taken into consideration the company’s cash at hand, cash flow projections and investment plans in a medium term perspective, as well as capital market conditions
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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 outside the control of TeliaSonera.