PIONEERS IN BRINGING TRUE CONVERGENCE TO NORDIC CUSTOMERS 20 July, 2018
TRANSACTION SUMMARY STRATEGIC • By combining Bonnier Broadcasting’s competence and portfolio within domestic content and Telia’s award winning TV service and RATIONAL first class network we create a unique converged player in the Nordic region • SEK 9.2 billion on a cash and debt free basis with a additional purchase price of maximum SEK 1 billion VALUE • Implies EV/EBIT, including full run rate synergies of 7.7x* FINANCIAL • Earnings and cash flow accretive to Telia Company post closing EFFECTS • Operational free cash flow contribution of SEK 0.6 billion standalone and SEK 0.5 billion net of synergies and integration costs 2020 BALANCE • Total consideration to be financed using cash on balance sheet SHEET IMPACT • Net debt to EBITDA impact 0.2x CONDITIONS • Subject to approval from EU Competition Authority TIME TABLE • Expected closing in H2 2019 *Based on last twelve months as of 31 March 2018 2
REDEFINING THE INDUSTRY ON CUSTOMERS’ TERMS 1 • Telia Company leading the way in convergence and fulfilling customer demand CONVERGENCE BELIEVERS • With around 7.5 million B2C customers in Sweden and Finland we know what customers want and we can deliver AND CUSTOMER CHAMPIONS • Leverage brand and customer relations as well as utilize data analytics and customer knowledge to offer a unique and personalized service to our customers 2 • Great potential combining Telia Company’s B2C sales engine with Bonnier Broadcasting’s attractive content CONTENT IS A SCALE GAME • Content costs largely fixed, implies significant operational leverage opportunity 3 • Bonnier Broadcasting is EPS and cash flow accretive stand alone basis – adding SEK 0.6 billion in cash flow by 2020 (SEK 0.5 billion net of synergies) EARNINGS AND CASH FLOW ACCRETIVE • Full run rate synergies of SEK 0.6 billion from 2022 gradually improving. • No change to capital allocation commitments and supportive for ambition of growing dividend over time 3
VALUE FROM OWNING CONTENT SECURE KEY CONTENT, NOW AND FOR THE FUTURE ENHANCE CUSTOMER BE PART OF THE RESHAPING EXPERIENCE WITH DATA MONETIZE ON VIDEO MEDIA VALUE CHAIN ON OUR ANALYTICS INTO UNIQUE ACROSS THE ENTIRE TERMS OFFERINGS MARKET, NOT JUST OUR CUSTOMERS 4
BONNIER BROADCASTING AT A GLANCE DESCRIPTION TOP FORMATS COMPANY Number 1 commercial broadcaster in Sweden - CSOV*: 38% 2017** - Wide range of attractive quality content with key strength in domestic series, entertainment and news - Main brands: TV4, Sjuan and TV12 - TV4 Play: More registered users than any other service in Sweden Fastest growing SVOD service - C More growing twice as fast as the SVOD market Q1 2018 y-o-y - Pay TV channels and SVOD services in Sweden, Finland and Denmark - Key strength in domestic content incl. movies, TV series, drama and sport - Several hundred thousands SVOD customers and even more pay-TV customers Number 1 commercial broadcaster in Finland - CSOV*: 36% 2017 - Wide range of attractive quality content with key strength in domestic series, entertainment and news - Main brands: MTV3, SUB and AVA - Katsomo: Widely used online TV service *CSOV=Commercial share of viewing 5 ** Source MMS, among age group 15-59 years
TELIA – A LEADING TV DISTRIBUTOR MOST SATISFIED TV CUSTOMERS GROWING TV CUSTOMER STOCK 2 000 1 800 1 600 1 400 1 200 (‘000) 1 000 800 600 400 200 0 • 1.8 million TV customers Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 TV customers • 100 channels • 1 app 6
TV4 IN MORE DETAIL MOST ATTRACTIVE CONTENT TOTAL TV POLE POSITION COST CONTROL & LEVERAGE The most popular 20 1200 Good track record of Revenues commercial TV shows 15 +5.5% 5 No of viewers (‘000) growing ad revenues 1000 are all at TV4* 10 SEK in billions 800 5 4 600 0 400 -5 3 -10 200 TV4 ad revenue growth (%) -15 2 0 2015 2016 2017 R12 #1 #2 #3 #4 #5 #6 #7 #8 #9 #10 Source: MMS Leverage from growth in revenues, content cost Premium position in management and stable other costs ad market shift 4 61% CSOV, 15-59 years (%) Growth in number of SEK in billions 3 daily viewers Q1 2018 Steady 39% 2 growth in CSOV 1 13% 38% 35% 0 2015 2016 2017 R12 2013 2014 2015 2016 2017 Int** Dom.* #2 #1 AVOD AVOD TV4 Player 2 Player 3 Others Costs Source: MMS Source: MediaVision – Number of daily viewers Q1 2018 *TV4 Play, Aftonbladet TV, Viafree, Expressen TV and D Play * June 2018 R12, excluding the public service channels (SVT1 7 ** Facebook and YouTube & SVT2) as well as various sport events
C MORE IN MORE DETAIL NEW STRATEGY SUCCESSFUL SVOD OUTPACES PAY TV MATERILIAZING ON REVENUES 2.0 Revenues Subscriptions 16% SEK in billions CAGR 2015-18 (%) 1.5 New strategy implemented 1.0 1% 0.5 2015 2016 2017 R12 Q1 SVOD market Pay TV market 2018 2013 2014 2015 2016 2017 Q1 2018 Source: MediaVision, PTS • Fastest growing SVOD service in • SVOD growth driven by customer • Volume driven growth Sweden for three years changing behavior • Synergies from TV4 co-operation and • C More and TV4 in closer co-operation • C More to benefit volume growth not fully realized • Increased demand for domestic content • Improved content portfolio management • Improved platform 8
MTV IN MORE DETAIL TOUGHER AD MARKET SVOD GAINING MOMENTUM STRONGER TOGETHER 38% CAGR 2015-18 (%) 12% TEAM PASS LIIGA PASS GAME PASS CAGR 2015-18 (%) 1% SVOD market Pay TV market -2% AVOD ad market Linear TV ad market Source: MediaVision, Ficora Source: MediaVision, Ficora • Ad market lagging Sweden • SVOD growth driven increased • Strengthened offering when combining willingness to pay MTV and Telia together with partners • AVOD less than 10 percent of total market vs 25 percent in Sweden • Similar growth domestic SVOD vs • A relatively weak macro development international SVOD also impacts • MTV largest commercial broadcaster 9
FINANCIAL OVERVIEW - BONNIER BROADCASTING FINANCIAL OVERVIEW FINANCIAL BREAKDOWN OPERATIONAL CASH FLOW SEK in billions SEK in billions SEK in billions 7.5 2016 2017 2018 7.4 7.4 0.3 0.3 R12 Q1 NET SALES 7.4 7.4 7.5 - TV4 4.2 4.4 4.4 - C MORE 1.5 1.6 1.6 - MTV 1.8 1.7 1.7 0.6 - OTHER 0.0 -0.2 -0.2 0.4 0.3 EBIT 0.2 0.4 0.6 - TV4 0.7 1.0 1.1 - C MORE -0.4 -0.4 -0.3 2016 2017 Q1 2018 0 R12 - MTV -0.1 -0.3 -0.3 2016 2017 Q1 2018 - OTHER 0.0 0.0 0.0 Net sales EBIT R12 • Scale and increased efficiency in content management lead to earnings growth 10
EBITDA SYNERGIES OF SEK 0.6BN IN 2022 ENHANCING OUR CORE MORE OF CMORE/TV4 PLAY COSTS (SEK 100 MILLION) (SEK 350 MILLION) (SEK 150 MILLION) ≈ 6.0 -5ppt Common tech & development Insourcing Churn Other • Content ownership - BB TV+BB C More Telia flexibility for packaging • 5 ppt lower churn • State of the art user • Platform consolidation • Proves significant potential experience • C More/TV4 Play upsell to to take down SAC/SRC • Reduce number of third Telia customers • Potential to monetize parties • Monetize better on our premium service • OTT upsell to new connectivity • Consolidate systems customers 11
SIZEABLE SYNERGIES EBITDA SYNERGY DEVELOPMENT SYNERGY RUN-RATE TARGET OF S Y N E R G Y R U N - R A T E T A R G E T O F SEK 0.6 BILLION IN 2022 In SEK billion, run-rate S E K 0 . 6 B I L L I O N I N 2 0 2 2 SEK 0.6 BILLION G R A D U A L I N C R E A S E I N S Y N E R G I E S GRADUAL INCREASE IN SYNERGIES 2020-2022 2 0 2 0 - 2 0 2 2 AGGREGATED INTEGRATION COSTS OF 2020 2021 2022 SEK 0.4 BILLION 2020-2021 12
FINANCIALLY ACCRETIVE TRANSACTION BONNIER FULL RUN-RATE COMBINED TELIA COMPANY** BROADCASTING SYNERGIES PRO FORMA 2017 (SEK BILLION) Revenues 79.8 7.4 n.a >87.2 EBIT 14.8 13.8 0.4 0.6 (margin) 17.3% 5.2% n.a EBITDA-CAPEX 10.3 0.4 11.3 0.6 (cash conversion) 41.0% 82.4% 43.1% BONNIER FULL RUN-RATE COMBINED TELIA COMPANY** BROADCASTING SYNERGIES*** PRO FORMA 2017 (SEK BILLION) EPS (SEK) 1.92 0.06 0.11 2.08 (+8.6%) Op FCF* 0.3 10.4 (+7.3%) 9.7 0.5 (cash conversion) 38.4% 66.2% 39.7% *Telia definition 13 ** Continuing operation, excluding GET/TDC Norway ***Post tax
PROCESS AHEAD Phase 1 investigation Potential phase 2 investigation ANNOUCEMENT & PHASE 1 DECISION PHASE 2 DECISION NOTIFICATION • Telia announces intention to acquire • Following discussions, EU Commission • EU Commission informs whether Bonnier Broadcasting informs whether merger is cleared or merger is cleared and any potential phase II investigation is required remedies • EU Commission is notified and initiates phase I investigation 14
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