Interim Report January - March 2001 April 25, 2001 Interim report - PowerPoint PPT Presentation

Interim Report January - March 2001 April 25, 2001 Interim report 1-3/2001 1

Content • Financial performance and UMTS projects Kaj-Erik Relander • Progress of new service businesses Juha Varelius • Quarterly performance per business area Kim Ignatius Interim report 1-3/2001 2

Financial performance in January - March • Consolidated revenues grew by 8% and were MEUR 525 (487) • Earnings grew considerably on the previous year due to gain (286) from the sale of TietoEnator shares • Profit before extraordinary items and taxes was MEUR 245 (113) • Earnings per share rose to EUR 0.22 (0.06) Interim report 1-3/2001 3

Businesses in brief • Domestic Mobile Communications had a good first quarter: revenues were up 10% and operating profit 11% • Revenues from Media Communications and New Services grew by 24% , EBITDA was MEUR 89 negative primarily due to outlays on Sonera Zed • Revenues from fixed network Telecom businesses remained unchanged, profitability good Interim report 1-3/2001 4

Prospects for the latter part of 2001 • Growth in revenues expected to remain at previous year’s level • EBITDA loss from Media Communications and New Services estimated to decrease slightly on the previous year (MEUR 303) • Group’s comparable EBITDA estimated to grow in euro terms on the previous year (MEUR 501) • Equity income in associated companies is estimated to show a loss of approximately MEUR 350, no effect on Sonera’s cash flow • Balance sheet strengthened by major sales of 2G holdings Interim report 1-3/2001 5

New business plan of Group 3G in Germany • Aim to launch services by a GSM and GPRS roaming agreement in the second half of the year • Own network to be built when handsets available • Allowing joint use of UMTS networks would significantly reduce capital expenditure on fixed assets > Group 3G will negotiate agreements on network’s non-recourse project financing after the regulator’s decision • Sonera intends to limit its equity investment in Group 3G to the EUR 3.6 billion it has already invested • Group 3G’s new business plan reduces the need of capital expenditure on fixed assets and the operating expenses Interim report 1-3/2001 6

Sonera’s other 3G markets in Europe • Xfera, Spain (launch in 2002) - organization ready, number of personnel 300 - network being built with external non-recourse project financing - possibility of GSM and GPRS roaming is being studied • IPSE 2000, Italy (launch in H1/2002) and • Broadband Mobile, Norway (estimated 2G launch in Q4/2001) - management elected, organization being set up - allowing joint use of network is still open, affects the amount of capital expenditure on fixed assets and of non-recourse project financing Interim report 1-3/2001 7

Sonera SmartTrust’s progress h Revenues grew by 40% on the previous year and were MEUR 6; about 50% of the revenues came from Europe, 35% from Asia and 15% from America h Order backlog was at the end of March MEUR 11 h The reduction in the number of personnel from 540 to about 420 in 2001 announced in February progresses as planned; employer/ employee negotiations in different countries finished h In 2001 revenues are estimated to almost double on the previous year’s pro forma figure of MEUR 25 Interim report 1-3/2001 8

Sonera Zed’s markets 14 operator agreements bring the services within the reach of 100 million customers on 9 markets: Service launch • Sonera, Finland 2.3 June 1999 • KPN Mobile, Netherlands 4.7 August 2000 • Smart Comm, Philippines 2.6 December 2000 • Mobile One, Singapore 0.6 February 2001 • Radiolinja, Finland 1.2 February 2001 • Libertel, Netherlands 3.1 February 2001 • Turkcell, Turkey 10.1 February 2001 • Powertel, USA 0.8 March 2001 • Vodafone, United Kingdom 11.6 March 2001 • T-D1, Germany 20.0 March 2001 • D2 Vodafone, Germany 20.0 March 2001 • E-Plus, Germany 6.6 May 2001 • Viag Interkom, Germany 3.6 June 2001 • TIM, Italy 22.0 June 2001 Interim report 1-3/2001 9

Use of zed services in January - March • On average 352,000 monthly users in Finland (384,000) • About 800,000 monthly users worldwide • Strong growth in the Philippines: 583,000 users in March • Launches in Germany and the UK from March 19 onwards Interim report 1-3/2001 10

Sonera Zed’s revenue target in 2001 • Revenues in January - March MEUR 2 (1), EBITDA MEUR 43 negative (8 negative) • Growth in revenues will accelerate significantly in the latter part of the year but remain much lower than estimated earlier because of a delay in the central market launches in Europe • Costs will be cut to conform to the new revenue growth forecast Interim report 1-3/2001 11

Other new service businesses SONERA INFO COMMUNICATIONS • revenues MEUR 17, EBITDA MEUR 2 • acquired a holding in Metro One, a US directory service company SONERA JUXTO • revenues MEUR 17, EBITDA MEUR 8 negative • Fenestrae chosen as technology partner for implementation of wireless ASP services SONERA PLAZA • revenues MEUR 15, EBITDA MEUR 10 negative • 1.5 million unique visitors on the I nternet pages in March • fund marketplace expands as part of a renewing service offering Interim report 1-3/2001 12

Consolidated income statement EUR million % Q1/2001 Q1/2000 2000 8 487 2,057 Revenues 525 137 384 162 2,047 EBI TDA 233 90 1,748 300 Operating profit • Revenues grew by 8% • EBITDA was increased by gain from the sale of TietoEnator shares (gain MEUR 286) • Comparable EBITDA of MEUR 102 was decreased by a loss of MEUR 89 from service businesses (Q1/2000: MEUR 31; Q4/2000: MEUR 127) Interim report 1-3/2001 13

Consolidated income statement (contd) EUR million 2000 Q1/2001 Q1/2000 % Equity income in associated 20 (38) n/a 121 companies 3 (17) n/a (9) Net financial expenses Profit before extraordinary 113 245 117 1,860 items and taxes Earnings per share 0.06 0.22 267 2.05 • Net losses of Turkcell and Fintur Q4/2000 • Interest expenses related to the German 3G license are capitalized on Sonera’s balance sheet • High financial income partly compensated for increased interest expenses • Amortization of acquisition costs of 3G licenses will start as operations are launched Interim report 1-3/2001 14

Profitability of business areas Domestic Mobile Communications EUR million % Q1/2001 Q1/2000 2000 10 264 1,134 Revenues 290 9 144 132 543 EBI TDA 11 102 414 113 Operating profit • Non-voice revenues were up 17% in the review period • Profitability was improved by the lower than average marketing expenses in Q1 and the growth in non-voice revenues • On average 25 SMS messages were sent per GSM subscription per month (23) • ARPU grew to EUR 39.5 (EUR 38.8) • Customer churn remained low: 10.3% (9.7% ) Interim report 1-3/2001 15

Profitability of business areas Media Communications and New Services EUR million Q1/2001 Q1/2000 % 10-12/2000 Revenues 6 0 n/a SmartTrust 18 2 1 100 7 Zed 55 50 10 229 Other services 63 51 24 254 Total EBI TDA SmartTrust (18) (11) (64) (65) (43) (8) (438) Zed (102) (28) (12) (133) (136) Other services (89) (31) (187) (303) Total • SmartTrust’s pro forma figures Q1/2000: revenues MEUR 4 and EBITDA MEUR 16 negative • Other services include Info Communications, Juxto, Plaza and other service business initiatives Interim report 1-3/2001 16

Profitability of business areas Sonera Telecom EUR million % Q1/2001 Q1/2000 2000 1 1,020 243 Revenues 245 (6) 300 59 63 EBI TDA 0 162 26 26 Operating profit • Revenues from Fixed Network Voice and Data Services were EUR 147 million (148) - domestic voice revenues declined, and international voice revenues grew - revenues from data services and leased lines remained unchanged at EUR 54 million: the cable in Russia increased revenues from leased lines; part of revenues from data services transferred to Sonera Juxto • Revenues from Equipment Sales and Other Operations were EUR 34 million (32) • Increased expenses of mobile terminated international calls reduced EBITDA by about EUR 3 million Interim report 1-3/2001 17

Associated companies EUR million Equity income in associated companies Q1/2001 Q1/2000 2000 (27) 147 2G mobile associated companies 30 (2) (2) 3G mobile associated companies - 6 38 Fixed network associated companies 12 - 4 Other associated companies 1 (15) (66) Amortization of goodwill (23) (38) 121 Total 20 • Equity income in associates was weakened by the loss of MEUR 10 recorded from Turkcell and the loss of MEUR 28 million recorded from Fintur (Q4/00) • In the current year, Turkcell’s operations impaired by exchange rate losses resulting from devaluation and Turkey’s weakened economy Interim report 1-3/2001 18

Financial income and expenses EUR million Change Q1/2001 Q1/2000 2000 Dividend income - 21 14 -14 Interest income 51 82 4 +47 Interest expenses (83) (155) (17) -66 Capitalized interest expenses 15 20 - +15 1 23 Other fin. income & expenses 1 - (1) - Exchange rate gains & losses 1 -2 (17) (9) Total 3 -20 • Interest income included MEUR 44 on the EUR 2.7 billion shareholder loan to the German associated company • Capitalization of interest expenses related to the shareholders’ equity in the German associated company, i.e. EUR 0.9 billion, improved the result by EUR 13 million Interim report 1-3/2001 19