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Q1 Interim REPORT JANUARY March 2020 CHRISTIAN LUIGA president - PowerPoint PPT Presentation

Oct 29, 2022 •358 likes •615 views

Q1 Interim REPORT JANUARY March 2020 CHRISTIAN LUIGA president & CEO CONTINUED IMPROVEMENT IN OUR TELCO BUSINESSES OPERAT ATIO IONAL FR AL FREE C CAS ASH H FLO FLOW q1 2020 SER ERVICE E REV EVEN ENUEs Es I Improved ed

  1. Q1 Interim REPORT JANUARY – March 2020 CHRISTIAN LUIGA president & CEO

  2. CONTINUED IMPROVEMENT IN OUR TELCO BUSINESSES OPERAT ATIO IONAL FR AL FREE C CAS ASH H FLO FLOW q1 2020 SER ERVICE E REV EVEN ENUEs Es I Improved ed SEK 3.3 Bn -0.2% -1.0% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 20 (SEK 4.4 billion Q1 2019) (excl. YoY growth* TV/media) Adj Adjusted E d EBIT BITDA DA imp impac acted d by by tv an and d me media dia Dividend and leverage Leverage Dividend SEK 1.80/share -1.4% 2.62x -5.1% (SEK 7.4 billion) Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 20 (excl. YoY growth* (2.71x Q4 2019) TV/Media) 2 * Like for like

  3. Covid-19 impacts and implications COVID Imp ID Impac act o on q q1 2 2020 – largel gely tv r rel elated ed Potential ial OPPORTUNIT ITIE IES/ r ris isks ahe ahead ad Adjusted EBITDA, SEK million 0 FURTHER HIGH DEMAND FOR SUPPORT TO B2B AND SOCIETY -20 Liiga write-down and pay-TV -40 TELCOS KEY ROLE IN DIGITALIZATION OF SOCIETY TO BECOME impact on TV & EVEN MORE VISIBLE -60 Media unit and -80 within countries ROAMING impacted by travel restrictions -100 CANCELLED SPORT EVENTS WILL IMPACT TV DISTRIBUTION -120 CUSTOMER FINANCIAL STABILITY MAY DEGRADE • Additional impact on the advertising market sentiment – difficult to isolate B2C AND B2B SEGMENT MAY SEE IMPACT FROM INCREASED UNEMPLOYMENT • Cancelled sport events affect TV distribution and cost • Limited impact on the telco business so far • Activation of identified mitigating actions if needed • Networks holding up well despite high usage • No significant supply chain issues so far • Plans in place to ensure business continuity 3

  4. Supporting our stakeholders DURING THIS TIME SUP UPPORT ORTING A AUT UTHORI ORITIES SUP UPPORT ORTING CUS USTOM OMERS RS & S & SOC OCIETY • Keeps customers connected • Telia Crowd Insights tool used Keep distance by authorities thought our footprint • Enabling digital ways of but keep contact to fight COVID-19 working and home schooling • Securing vital access to information and entertainment PROOF ROOF P POI OINT OF OF B BEST N NETWORKS ORKS In Internal al me meas asureme ments t tak aken Increase in traffic 20-70% • Managing network • Risk management teams in place usage increase 30-50% • On top of this 10-20% handling 25% Staff Supply Networks Security increased traffic for wellbeing chain & TV Data in fixed Data in mobile Voice in Telia Carrier networks networks mobile networks 4

  5. MOBILE REVENUES SHOW POSITIVE GROWTH mobile e ser ervice e rev even enue gr e growth Mo MoBile Bile ar arpu Grow rowth Like for like growth In local currency, pre and postpaid, y-o-y SWEDEN NORWAY 0.9% +1. +1.2% 2% +3.5% +3. 5% FINLAND LIT EST DEN +3. +3.9% 9% +5.3% +2.8% -0.9% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Sweden supported by additional migration and B2B • ARPU growth in 5 of 6 markets • Strong B2B development in Norway • Overall the result from price initiatives and good work on upsell • Between 4-7 percent growth in the Baltics 5

  6. GOOD MOMENTUM IN FIXED BROADBAND Fix Fixed br d broadban adband s d servic ice revenue growt wth KEEPIN ING T THE HE FR FRONTRUNNER P POSTIO ION WIT ITHIN HIN FIX FIXED Like for like growth Like for like growth 3.3% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Sweden and Norway main drivers behind solid • OCN* penetration Q1 increased by 60,000 y-o-y, development 40 percent up • Sweden: ARPU uplift and fiber intake • New co-operation in Finland to speed up SDU fiber roll-out • Norway: Good subscription development 6 * Open city networks

  7. Ebitda growth in traditional telco EB EBITDA bridge ge q1 2020 1 2020 - Group roup EB EBITDA bridge ge Q1 2020 1 2020 - TV an and d Me Media dia SEK billion, like for like, adjusted EBITDA SEK billion, like for like, adjusted EBITDA -1.4% -5.1% 0.1 0.3 -0.1 -0.2 7.3 -0.3 Pension refund, Liiga write-down -0.2 and sold receivables 0.0 Q1 Telco Items Q1 20 TV & Media Q1 20 19 business affecting (ex. TV Q1 Run-rate Market and Q1 comparability & Media) 2019 into 2020 COVID-19 2020 • Run-rate into 2020 lower as communicated • The traditional telco business grew EBITDA by 1.7 percent • COVID-19 impacting an already slightly weaker advertising market 7

  8. TV & MEDIA – AN EVEN STRONGER TOTAL TV POSITION Lin Linear ar cs csov – TV4 an and d mt mtv Digit Dig ital al cs csov – tv tv4 Mar Market p posit itio ion Commercial Share of Viewing, ages 15-64 Commercial share of viewing, ages 3+ +4.2 -0.1 +1.5 INCREASED total tv 68.3 64.1 46.3 46.2 MARKET SHARE DESPITE 40.1 38.7 = + A LARGE DISTRIBUTOR DECIDING NOT TO OFFER PART OF OUR CONTENT TO ITS CUSTOMERS Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 19 19 19 19 20 19 19 19 19 20 Source: MMS, Finnpanel Source: MMS 1.8 million total viewers including record high digital 8 consumption

  9. good B2C mobile & broadband revenue growth Fixe xed broa roadband re revenue ue g grow rowth – b2c Mob obile sub ubscri ription on re revenue ue g grow rowth - B2C In local currency, external service revenues In local currency, external service revenues 5.3% 3.0% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Added 3,000 B2C subs. net Q1 2020 (26,000 in • Continued B2C ARPU growth fiber) • Subscription fees supported by migrations • Fiber price increase in Q2 2019 pushed revenue growth into positive territory • XDSL price increase Q4 2019 amplified growth 9

  10. OUTLOOK FOR 2020 (updated) OPERATIONAL FCF* SEK 9.5-10.5 BILLION (PREVIOUSLY: SEK 10.5-11.5 BILLION) ADJUSTED EBITDA* NO GUIDANCE DUE TO LOW VISIBILITY (PREVIOUSLY: TO GROW 2-5 PERCENT) 10 * Based on the Group structure at year-end 2019 (i.e. including the segment TV and Media established in December 2019) and adjusted EBITDA in stable FX

  11. Q1 Interim REPORT JANUARY – March 2020 Douglas lubbe cfo

  12. REVENUES AND EBITDA DECLINED DUE TO TV AND MEDIA 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 -1.0% -5.1% Q1 SWE FIN NOR DEN LIT EST TV & LAT Telia Other Q1 Q1 19 SWE FIN NOR DEN LIT EST TV & LAT Other Q1 20 19 Media Carrier 20 Media • Growth in Sweden due to mobile and broadband • Lower pension benefit impacted Sweden • Fixed telephony continued down in Finland • Norway and Finland impacted by one-off items • Mobile growth in Norway offset by decline in TV • Revenue pressure and higher costs in TV & Media • TV and Media fell from pressure on advertising • Positive growth in the traditional telco business 12

  13. GRADUALLY IMPROVING B2B TREND CONTINUES B2B 2B ser ervice e rev even enue d e dev evel elopmen ent – all all mar markets Organic growth 2018 & like for like growth 2019/2020 • Sweden and Norway main drivers • Dedicated work on the propositions yielding -0.9% • Continued good traction in ICT and IoT Q2 18 Q3 18 Q4 18 Q1 19 Q2 19* Q3 19 Q4 19 Q1 20 Q1 2020 Q1 2020 Q1 2020 • Sweden: Product launches, NPS improvement -1.2% +2.3% -0.4% • Norway: Good development within Public and SME (-1.5% FY19) (-2.5% FY19) (-0.7% FY19) • Finland: ICT growth supported 13 * Q2 2019 positively impacted by one-off like revenues in Sweden

  14. COST AGENDA 2020 STILL IN FOCUS OPEX EX d dev evel elopmen ent External expenses, like for like, including an estimated 2% cost inflation • OPEX increased 3 percent largely due to: • Less pension refund contribution in Sweden 3% 4% • Overall increased need of staffing in customer care 2% • Higher credit losses in particularly Norway and Sweden 0% • IT and resource costs in TV and Media -2% • Adjusted for pension refund OPEX grew by ~2 percent -4% • Activities ahead -6% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Resources in all markets - both employees & consultants • Marketing spend to be calibrated • Common Products and Services to step up in H2 • The longer the pandemic lasts the execution risk increases 14

  15. Improved revenue trend Adj Adjusted E d EBIT BITDA DA DE DEVELO LOPME MENT SER ERVICE E REV EVEN ENUE D E DEV EVEL ELOPMEN ENT In local currency, external service revenues Like for like growth excl. IFRS 16 impact 2019 B2C excl. fiber OTC B2B B2C Pension refund and easy +1.2% comparison +0.7% 6% 2.4% B2B 3% -1.2% B2C -0.7% Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 • Stable trend in B2C and less drag from OTC Q1 • Sweden slightly negative as revenue growth and cost measures were offset by mainly • Sequential improvement in B2B driven by mobile • less pension benefit (SEK 100 million) • higher resource costs in customer service • Growth of 2.4% if adjusting for pension 15

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