Q4 2015 presentation FINAL - Telia Company · 2016-03-09 · Q3 15 Q4 15 Q1 15 Q2 15 Q3 15 Q4 15 Q1...
Transcript of Q4 2015 presentation FINAL - Telia Company · 2016-03-09 · Q3 15 Q4 15 Q1 15 Q2 15 Q3 15 Q4 15 Q1...
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Year-end ReportJanuary-December 2015
Johan Dennelind, President & CEO Q4
Deliver onpotentialTransform
& step upTransform& performStabilize
& shapeBigchanges
2014
2015
2016
2013
2017
2018T H E N E W
T E L I A S O N E R A
2015 – high pace towards the new TeliaSonera
• Started to reduce presence in region Eurasia
• Continued business transformation
• Solid development in core markets
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Summary Q4 and FY15 – continuing operations
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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 +4.4%Organic +1.1%
Reported +11.1%Organic +9.0%
SEK 1.8 billion
*Excluding non-recurring items
Reported +4.2%Organic -0.4%
Reported +3.8%Organic +0.1%
SEK 12.5 billion
Q4 2015 FY 2015
10.0%
2.1%
9.0%
Q115
Q215
Q315
Q415
Q115
Q215
Q315
Q415
Q115
Q215
Q315
Q415
Solid trend in core markets
EBITDA** growth y-o-y
4
Sweden Europe Total continuing
operations
Service revenue growth* y-o-y
2.5%
-1.0%
1.1%
Q1 15 Q2 15 Q3 15 Q4 15
Sweden
Europe
Total continuing operations
* Local organic ** Local organic excluding non-recurring items
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Strong consumer propositions
2.2%
5.2%
9.5%
Q115
Q215
Q315
Q415
Q115
Q215
Q315
Q415
Q115
Q215
Q315
Q415
Sweden ARPU growth y-o-y
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TV
B2C Sweden supported by fiber growth
7.2%
1.7%
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15
• Acceleration of growth in B2C explained by record pace in fiber roll-out
B2C Service revenue growth* y-o-y
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* External service revenues
Excl. fiber installation charges
Incl. fiber installation charges
Q4 14 Q1 15 Q2 15 Q3 15 Q4 15
Telia passed, not connectedCommunication operatorTelia connected (MDUs + SDUs)
• 185,000 new homes passed in 2015, of which more than 60,000 in Q4
• Roll-out to be further stepped up in 2016
1.3 million1.3 million
1.1 million1.1 million
TeliaSonera fiber households
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Sweden B2B tough, signs of recovery in SME/SoHo
-2.9%
Q1 15 Q2 15 Q3 15 Q4 15
• Still competitive in large and public segments
B2B Service revenue* growth y-o-y
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* External service revenues
SME/SOHO
• Strengthened offerings support performance in SME/SoHo
SME/SoHo Service revenue* growth y-o-y
-0.8%
-4.8%
2.1%
Q1 15 Q2 15 Q3 15 Q4 15
Total Fixed Mobile
1.2%1.7% 2.0%
3.5%
-3.1% -2.7%-1.8%
2.9%
Q1 15 Q2 15 Q3 15 Q4 15
Billed revenuesMobile service revenues
Improved performance in Finland
Mobile service revenue* growth organic y-o-y
• Mobile service revenues supported by upsell activities and price adjustments
• Q4 mobile service revenue growth from higher billed and wholesale revenues
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• Positive mobile service revenue growth offset by pressure in fixed and B2B
• EBITDA growth from improved equipment margins and lower costs
Service revenues* & EBITDA**, SEK million
* External service revenues **Excluding non-recurring items
876 956
Q4 14 Q4 15
+9.3%+9.3%
Service revenues EBITDA
= Local organic growth
2,800 2,771
Q4 14 Q4 15
-1.6%-1.6%
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Integration of Tele2 in Norway successfully completed
• Q4 organic EBITDA impacted by lower service revenues and higher marketing spend
• Q4 EBITDA margin stable at around 30 percent
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Service revenues* & EBITDA**, SEK million
543
681
Q4 14 Q4 15
-2.1%-2.1%
Service revenues EBITDA
1,417
1,828
Q4 14 Q4 15
EBITDA**, SEK million
• Approximately SEK 750 million realized in 2015
• Synergies on track to reach full run-rate of SEK 1 billion in 2016
2,130
2,761
FY 2014 FY 2015
-2.1%-2.1%
* External service revenues **Excluding non-recurring items = Local organic growth
Process to leave region Eurasia is progressing
• Announcement in September to reduce presencein region Eurasia
• Divestment of Ncell announced on December 21
• The deal is subject to approvals and is expected to be closed in the first half of 2016
• Positive net cash effect expected to be approximately SEK 7.5 billion
• Process is on-going in remaining markets
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Still challenges in several markets in Eurasia Q4
* External service revenues **Local organic excluding non-recurring items
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Region Eurasia – Service rev*. & EBITDA**
-3% -6%
Service revenuesQ4-15
EBITDAQ4-15
Nepal – Service revenues* & EBITDA**
2%
22%
Service revenuesQ4-15
EBITDAQ4-15
Kazakhstan – Service revenues* & EBITDA**
-14%
-30%
Service revenuesQ4-15
EBITDAQ4-15
Azerbaijan – Service revenues* & EBITDA**
-8% -5%
Service revenuesQ4-15
EBITDAQ4-15
Targets for transformation remain unchanged
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• Approximately SEK 700 million invested in 2015
• Net run-rate saving in the range of SEK 200 million achieved end of 2015
Area Status Targets 2017/2018
Fewer products and offerings 11% 80%
Fewer IT systems 10% 50%
Share of services and sales online 23% >50%
Fewer products and offerings 13% 80%
Fewer IT systems 8% 80%
Share of services and sales online 15% >50%
-2.0
2.0
Accumulated
investments
2015-2016
Net savings run-rate
to be reached end 2017
Investments & savings, SEK billion
• In addition, initiatives on a central level relating to IT infrastructure consolidation and modernization is ongoing
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New company – new dividend policy
Dividend proposal 2015
• SEK 3.00 per share for fiscal year 2015, to be paid in 2016
• Dividend to be split in two equal tranches and paid in Q2 and Q4 2016, respectively
Changed dividend policy
• Target annual dividend corresponding to at least 80 percent of free cash flow from continuing operations
• Dividend to be split in two equal tranches to be paid in Q2 and Q4, respectively
• The ambition is a dividend of at least SEK 2 per share for the fiscal year 2016, to be paid in 2017
Leverage target
• Solid investment grade rating of A- or BBB+
• Net debt/EBITDA ratio of 2x plus/minus 0.5x
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Outlook 2016
* 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
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Ambition to maintain 2015 levelEBITDA*
SEK 14-15 billion
>80% of FCF - at least SEK 2 per share
CAPEX**
DIV IDEND
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Year-end ReportJanuary-December 2015
Christian Luiga,
Senior Vice President & CFO Q4
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Full year summary 2015
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-1.5%
Europe Other Eurasia FY15total
FY14total
Sweden
Service revenue* growth EBITDA** growth
* Local organic ** Local organic excluding non-recurring items
• EBITDA from continuing operations around last year’s level
• Total EBITDA lower due to region Eurasia
• Service revenue growth for continuing and discontinued operations was negative by 0.7 percent driven by Europe and Eurasia
FY15total
SwedenFY14total
Europe EurasiaOther
-0.7%
Continuing operations
-0.4%
Discontinuedoperations Continuing operations
+0.1%
Discontinuedoperations
Positive development in continuing operations
Organic EBITDA* growth y-o-y
9.0%
Q1 15 Q2 15 Q3 15 Q4 15
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* Excluding non-recurring items
• Profitability supported by improved service revenues – high pace in fiber roll-out
• Better equipment margin
• Overall good cost control
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CAPEX increase due to fiber roll-out
CAPEX excl. licenses - Continuing operations
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2014 2015
2.6
5.5
6.2
4.7
2.4
4.9
Other
Europe
Sweden
12.0
14.3
CAPEX excluding licenses - Sweden
Fiber 4G Other
• Higher CAPEX excluding licenses in Sweden mainly due to high fiber roll-out
• Focus on reinvestments as well as 4G coverage and capacity in all European markets
• Possible spectrum investments in Sweden and Europe in 2016
SEK billion
Full year cash flow supported by Turkcell dividend
Total free cash flow FY15**, SEK billion
• Turkcell dividend of SEK 4.7 billion net of tax received in Q2 main driver behind higher free cash flow 2015
* Excluding non-recurring items, ** Continuing and discontinued operations
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-0.8
Dividends received
1.1
EBITDA* Interest paid
FY15total
16.6
Change in
WC
-2.5
Other
4.80.1
Cash CAPEX
FY14total
13.0
1.0
Total free cash flow**, SEK billion
• Region Eurasia accounted for approximately one-third of free cash flow in Q4
5.7
6.9
4.0
Q4 15 FY 15
Eurasia
Dividends from associated companies
Other16.616.6
2.72.7
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Net debt reduced by SEK 5.8 billion in Q4
Net debt* change q-o-q, SEK billion
• Reduced net debt due to strong operating cash flow, including dividend from MegaFon, and early payment of last tranche from AF Telecom
• Net cash in Eurasia amounts to approximately SEK 10.6 billion, of which SEK 6.6 billion related to Nepal and Uzbekistan
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-2.3-8.25.5
CF from operating activities**
AF Telecom payment**
Cash CAPEX
-0.8
FX & Other Q4 15total
55.7
Q3 15total
61.5
* Continuing and discontinued operations ** Excluding interest received from AF Telecom
Reduced leverage
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* Net debt to rolling twelve months EBITDA excl. non-recurring items (Continuing and discontinued operations)
1.53
1.0
1.5
2.0
FY 2011 FY 2012 FY 2013 FY 2014 FY 2015
Net debt/EBITDA*
• Net debt/EBITDA reduced to 1.53x from 1.70x end Q3
• Long-term credit rating target A- to BBB+
• Target Net debt/EBITDA of 2.0 +/-0.5
• Proposal to split dividend payment in two equal tranches to align with cash flow generation and reduce liquidity risk
• Distribution in Q2 and Q4
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Q4 EPS impacted by non-recurring items
Earnings per share*, SEK
23
0.13
-0.70
0.68
Q4 15total
Discontinuedoperations
Net financials
0.09
OperationalQ4 14total
Non-recurring items
-0.07-0.08
FX
-0.04
Associates
-0.37
Taxes
-1.02
* Continuing and discontinued operations
Continuing operations
• Nonrecurring items mainly attributable to SEK 1.9 billion Danish non-cash impairment charge (SEK 0.44/share)
• Discontinued operations primarily due to SEK 5.3 billion non-cash impairment charge related to the Uzbek operations (SEK 1.23 share)
Summary Q4
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SOLID PERFORMANCE IN CORE OPERATIONS
HIGHER FREE CASH FLOW & REDUCED NET DEBT
2016: AMBIT ION TO MAINTAIN EBITDA AT 2015 LEVEL
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Outlook 2016
* 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
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Ambition to maintain 2015 levelEBITDA*
SEK 14-15 billion
>80% of FCF - at least SEK 2 per share
CAPEX**
DIV IDEND
Q & A
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Debt maturity scheduleMMO
0
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2
3
4
5
6
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Dec-16
0
2
4
6
8
10
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14
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2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 2052 2055 2058 2061 2064
SEK billion
SEK billion
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Debt maturing next 12 months – 2016
Debt portfolio maturity schedule – 2016 and onwards
Debt per Q4 2015
• Gross debt SEK 96.9 billion
• Net debt SEK 55.7 billion
• Net debt/EBITDA 1.53x
Liquidity position TeliaSonera
Committed bank lines Maturity Size Amount undrawn
Syndicated revolving credit facility
Dec 2017 EUR 1 billion EUR 1 billion
Revolving credit facility June 2017 EUR 1 billion EUR 634 million
Total liquidity surplus, approximately SEK 28.4 billion
December 31, 2015
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Funding currencies TeliaSonera
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EUR, 71%
SEK, 12%
GBP, 5%
KZT, 4%
USD, 4% NOK, 2% JPY, 2%
Financial summary Q4 2015
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* Excluding non-recurring items
Oct-Dec 2015 Oct-Dec 2014 Change (%)
Net sales (SEK million) 22,655 21,399 +5.9
Change local organic (%) +2.9
Service revenues (SEK million) 18,521 17,738 +4.4
Change local organic (%) +1.1
EBITDA* (SEK million) 6,556 5,902 +11.1
Change local organic (%) +9.0
EBITDA* Margin (%) 28.9 27.6 +1.3pp
EPS (SEK) -0.70 0.68 -
Free cash flow (SEK million) 2,691 1,635 +64.6
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Financial key ratios
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Dec 31, 2015 Dec 31, 2014
Return on equity*, % 9.3 15.0
Return on capital employed*, % 8.9 12.2
Equity/assets ratio, % 35.1 38.0
Net debt/equity ratio, % 62.5 57.4
Net debt/EBITDA** ratio, multiple 1.53 1.68
Net debt/assets ratio, % 21.9 21.8
* Rolling 12 months ** Rolling 12 months, excluding non-recurring items
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.