JANUARY – december 2019 Q4 Year-end REPORT CHRISTIAN LUIGA president & CEO Douglas lubbe CFO
CASH FLOW AND EBITDA GROWTH FROM LOWER COST EBIT BITDA DE DA DEVELO LOPME MENT OPERAT ATIO IONAL FR AL FREE C CAS ASH H FLO FLOW ✔ ✔ We said We did We said We did 4% 12.6 BN* 12-12.5 BN Q1 Q2 Q3 Q4 * SEK12.2bn adjusted for Q4 pension refund Q1 19 Q2 19 Q3 19 Q4 19 GROUP ROUP OP OPEX RE REDUC UCTION ON SWEDEN OPEX REDUCTION ✔ * 3% adjusted for pension refund Q4 ✔ We did We said We said We did ~ 4%* ~ 2% ~ 2% ~ 3% 2
IMPROVED SERVICE REVENUE AND EBITDA TRENDS Adj Adjusted E d EBIT BITDA DA DE DEVELO LOPME MENT* SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT* Organic & like for like growth, external service revenues SEK million in reported currency, organic & like for like growth excl. IFRS 16 Service revenue growth Reported EBITDA Organic/like for like EBITDA growth Growth excl. Telia Carrier +4% Growth excl. Telia Carrier & Sweden fiber OTC Q4 2019 -0.6% 0% 8,226 7,914 7,413 7,465 -1.5% 6,680 -1.7% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 • Improved revenue trend excluding fiber OTC • Mainly driven by OPEX and COGS reductions • Telia Carrier still weights slightly on group • Easy comparison and SEK 100 million pension refund in Sweden – despite this EBITDA is still growing Y/Y and Q/Q * 2018 based on organic growth (stable FX and M&A excluded) 3 2019 based on like for like growth (Stable FX and M&A included in current & corresponding period) Not including the segment TV and Media established in Q4 2019
NEW AND UNIQUE PLAYER IN THE NORDIC MEDIA SPACE Synergies of SEK 0.6 billion by end 2022 Operational free cash flow of SEK 0.5 billion 2020 4
PROVIDING HIGH QUALITY CONTENT FOR EVERYBODY Commit mmitted t d to r reac ach h an and av d availabilit ailability Ott r rig ight hts treat ated in d in lin line wit ith c h commit mmitme ments Continued focus on market leading reach Content availability for all guaranteed • Despite being offered to distribute at a zero cost in • In accordance with our commitments to the EC December, Com Hem stopped giving its customers we will negotiate OTT distribution rights with at right to view TV4 and C More on their TV screens least one other player in each market • We continued to provide TV4 and C More content through other platforms for all users in Sweden 5
2019 WAS A RECORD YEAR FOR TV & MEDIA KEY EY OPER ERATIONAL H HIGH GHLIGH GHTS 2019 2019 Net sale ales & & E EBIT BITDA ( DA (2020 illu illustrat ativ ive) SEK billion in reported currency, external net sales & adjusted EBITDA Co Cont ntinu nued Succe ccessful co cont ntent nt str trate tegy 8.7 8.2 • Leading CSOV* position maintained • Strong sales execution in ad space • PUT* down 8% FY 2019 and 10% Dec 2019** Sig ignific ifican ant g growt wth h in in s subs bscrip iptio ions 1.5 1.2 • More than 30% OTT subscriber growth due to domestic drama content and added sport rights 2018 2019 2020e 2018 2019 2020e • Gradual NPS improvement Net sales EBITDA Market imp Mar improved albe d albeit it still ill • EBITDA growth from strong service revenues, despite challeng ch nging ng the conflict at year-end • Growing in a continuously challenging market • Decline in PUT* and implications of the Com Hem • Leading CSOV market position maintained dispute will imply some pressure on 2020 6 * In the target group A15-64 year olds * PUT=People Using TV, CSOV=Commercial Share Of Viewing
Sweden B2C mobile back to growth Mobile Subscr cription r n revenu nues - b2c Postpaid aid ar arpu - B2C Like for like growth Postpaid ARPU B2C excluding VAS 3% 2.0% +2% 2% 1% 0% -1% +4% -2% -3% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 18 Subscription IDD* Top-ups Other Q4 19 fees • ARPU growth due to rise in subscription fees • Mobile subscription revenues back into positive due to increase in postpaid subscriptions and • Top-ups headwind faded, pressure from IDD* ARPU growth remained • Stable churn despite price adjustments 7 * EU international direct dialing regulation, introduced May 2019
Improved B2b 2019 vs 2018 B2B 2B ser ervice e rev even enue GR e GROWTH – group roup/S /Sweden IC ICT AN AND D IO IOT IN INCREAS ASIN INGLY LY COMP MPENSAT ATIN ING LE LEGAC ACY Organic growth 2018 & like for like growth 2019 FY19 -1.2% FY18 -2.3% Ict/IOT revenues up 20% 2019 vs. 2018 -1.3% Finland b2b +1% q4 due to ict -2.1% growth Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19* Q3 19 Q4 19 8 * Q2 2019 positively impacted by one-off like revenues in Sweden
FULL YEAR 2019 OPEX TARGET REALIZED 2020 2020 key ey ef efficien ency driver ers OPEX EX d dev evel elopmen ent External expenses, like for like, including an estimated 2% cost inflation 2% • Efficiency gains in New operating model – pooling effects and synergies 0% 3,300 1,700 -2% MOVED TO -2% RESOURSES FROM IN CPS COUNTRIES now -4% -5% • Further synergy realization from Get as well as -6% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Full year TV & Media 2019 NOK 220 NOK 350 million MILLION • OPEX Q4 down 5 percent largely driven by Sweden run-rAte END 2022 • Sweden, CPS and Denmark main contributors full year • New ways of working, such as Shared service • Full year target of around -2% on group OPEX realized center in Lithuania • Continued cost take-out expected 2020 300 500 RESOURCES RESOURCES END 2018 END 2019 9 * CPS = Common Products and Services
PROPOSING A 3.8 PERCENT DIVIDEND INCREASE Div Divide idend bas d base an and p d pay ay-out out ra ratios os PROPOSED DIVIDEND EQUALS AN SEK billion and pay-out ratios AMOUNT OF SEK 10.0 BILLION VS. SEK SEK 12.9 billion reported 2019 SEK 12.5 billion adjusted for pension refund* 9.8 billion 2018 80% 84% 115% 80% 12.5 12.4 +3.8% 11.7 0.4 2.45 2.36 2.30 2.00 7.5 12.2* 2016 2017 2018 2019 2016 2017 2018 2019 (proposed) Dividend from associated companies Operational free cash flow (2019 adjusted for pension*) * Adjusted for SEK 0.4 billion pension refund in Q4 2019 10
CMD 2019 MESSAGE UPDATE WISE BEST IN CLASS CMD 2019 FIGHT FOR PUSH FOR EXECUTION OF INVESTMENtS CASH message GROWTH M&A EFFICIENCY USING OUR MANAGEMENT SCALE • • • • • Structural reductions Get/TDC NOK 800 CAPEX coming SEK 2.4 billion Convergence remaining in working million down further • • Smart pricing Cost smartness capital efficiencies • Bonnier Broadcasting • • Telia global Net OPEX reduction SEK 600 million of 2 percent 2019-21 Increased CAPEX Well in reach of Convergence 2019 ambition Norway cost Current ambitions from the SEK 6bn capabilities realized & 2020- synergies realized customer driven ambition – will be status enhanced - ready 2021 ambitions – revenue synergies demand, mobile in above SEK 6bn end for next step unchanged up next FInland & Get in 2020 NOrway 11
STAKING OUT OUR ROAD TO ZERO By 2022 we will • 100 percent renewable electricity use • 5 percent lower energy consumption per subscription equivalent (baseline 2018) • Climate neutral within our own operations (energy and business travel) • Engage with all suppliers to have a plan in place by 2022 to reach Zero CO 2 by 2030, including their suppliers • Significantly increase reuse of network and B2C/B2B equipment • Comprehensive green offerings in all markets • Include sustainability in incentives and performance evaluation DARING GOALS 2030 12
OUTLOOK FOR 2020 SEK 10.5-11.5 BILLION OPERATIONAL FCF* ADJUSTED EBITDA* TO GROW BETWEEN 2-5% COMPARED TO 2019 13 * Based on the Group structure at year-end 2019 (i.e. including the segment TV and Media established in December 2019). Adjusted EBITDA in stable FX
JANUARY – december 2019 Q4 Year-end REPORT Douglas lubbe CFO
EBITDA GROWTH DESPITE REVENUE PRESSURE SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT EBIT BITDA DE DA DEVELO LOPME MENT Like for like growth, external service revenues Like for like growth, excluding adjustment items and IFRS 16 +4% -1.7% Q4 18 SWE FIN NOR DEN LIT EST LAT Telia Other Q4 Q4 18 SWE FIN NOR DEN LIT EST LAT Telia Other Q4 Carrier 2019 Carrier 2019 • Sweden down due to PSTN and fiber OTC • Strong Sweden due to lower OPEX • Pressure on PSTN in Finland and interconnect • Norway impacted by one-off items • Norway decline related to B2C mobile • Revenue mix and lack of efficiencies in Finland 15
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