STRATEGIC DIRECTION Sigve Brekke, Group CEO
CMD 2017 TELENOR IS COMING FROM A STRONG POSITION • A diversified portfolio with strong market CUSTOMERS Scandinavia 214 million mobile positions in Europe and Asia subscribers • Strong operations based on quality networks and mass-market distribution MARKET POSITION capabilities #1 or #2 in 12 of 13 • Majority ownership enabling strong Central & markets Eastern Europe governance and global scale benefits • Growth above peers, with solid profitability in most markets Mature Asia Emerging Asia 2
CMD 2017 WE HAVE DELIVERED GROWING REVENUES AND EBITDA, SUPPORTING A COMPETITIVE DIVIDEND PAYOUT Revenues (NOK bn) EBITDA (NOK bn) Dividend payout (NOK bn) 131 128 50% 46 44 111 45% 104 102 38 40% 36 11.7 33 11.3 35% 11.0 10.6 30% 9.3 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 3
CMD 2017 KEY OPERATIONAL TRENDS IN 2016 Scandinavia Central and Eastern Europe • Migration to new mobile tariffs with • Focus on value customers, included EU roaming building on 4G network positions • Fibre step-up in Norway and Sweden • Competitors going FMC • Continued intense competition in • Healthy cash flow margins Denmark Emerging Asia Mature Asia • Solid revenue growth, fueled by • Double-digit revenue growth increasing data usage in postpaid segment • Substantial network rollout • Intense prepaid competition • Myanmar turning cash flow positive • Focus on pre-to-post migration 4
CMD 2017 AN INCREASINGLY GLOBAL AND DIGITAL WORLD REPRESENTS NEW OPPORTUNITIES • Global operating models for products, network and IT • Digital customer interactions • MORE SIMILAR THAN DIFFERENT Improved customer insight through multiple digital touchpoints • Software defined networks and cloud-based IT platforms • Growth opportunities in digital areas adjacent to core telecom business DIGITAL BEHAVIOR CONNECTED WORLD 5
CMD 2017 STRATEGIC DIRECTION TOWARDS 2020 Strategic direction • Capture growth opportunities • Step up efficiency measures through digitizing core and leveraging scale • Ensure a responsible business conduct Value creation for shareholders • Focus on cash flow generation • Prioritization to secure healthy returns • Year-on-year growth in dividend 6
KEY DRIVERS FOR VALUE CREATION TOWARDS 2020 PRIORITIZATION GROWTH EFFICIENCY 7
KEY DRIVERS FOR VALUE CREATION TOWARDS 2020 PRIORITIZATION GROWTH EFFICIENCY 8
CMD 2017 POTENTIAL FOR CONTINUED MOBILE REVENUE GROWTH Increasing real mobile penetration More affordable smartphones Increasing data usage Bangladesh: Smartphone price (USD) Bangladesh Norway: Domestic ARPU (NOK) Bangladesh: Smartphone penetration (%) Norway: Median usage (MB/month) Pakistan 280 230 257 52% 51% 244 801 228 218 44% 25% 37% 150 22% 503 17% 319 60 40 33 7% 156 61 2012 2016 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 9
CMD 2017 ENSURE RELEVANT CUSTOMER OFFERINGS THROUGH A COMBINATION OF OWN AND PARTNER PRODUCTS Telenor products within Preferred partner for third parties’ digital 3 core categories products, provided 1 CONNECTIVITY through open APIs TELENOR- 2 COMMUNICATION THIRD PARTY OWNED PRODUCTS PRODUCTS 3 Main integration layer STORAGE TELENOR GLOBAL BACKEND between business (ConnectID, Connect Payment, Direct units and owned and Operator Billing, Offer API) partner products 10
STRENGTHEN FIBRE POSITIONS IN NORWAY AND SWEDEN Fibre footprint (m homes) and market share (%) • Rapid growth in fibre in both Norway and Telenor Norway Telenor Sweden Sweden towards 2020 2.8 • Stepping-up fibre rollout to strengthen 2.0 market positions • Solid fibre business cases in both markets, with 5-6 years payback in both markets 0.8 26% 0.3 • Exploring FMC opportunities 19% 2016 2020 2016 2020 11
CMD 2017 EXPLORE EARLY POSITIONS ON FIBRE IN EMERGING ASIA, UTILIZING EXISTING MOBILE INFRASTRUCTURE Strong rationale to take early positions: • Low and fragmented fixed line penetration • Growing urban middle class • Leverage on fibre access to buildings for roof-top base stations Fibre pilots launched in Myanmar : • Ambition to roll out in 3 major cities in 2017 and 8 cities by 2020 • Estimated total market size of around USD 250 million in 2020 12
CMD 2017 SELECTED ADJACENT DIGITAL AREAS TO DRIVE GROWTH AND SUPPORT CORE TELCO BUSINESS Mobile financial services Online classifieds Internet of Things Relevante bilder til illustrasjon? Relevante bilder til illustrasjon? • Stand-alone growth area with • • Potential digital sales channel for Closely linked to core enterprise churn-prevention effect on core mobile services segment in Scandinavia • • business Positions in Asia and LatAm Building on strong IoT and • #1 position in Pakistan through through JVs with Schibsted, enterprise position in Norway • Easypaisa and Tameer Bank Naspers and SPH Telenor Connexion well • • Launched services in Myanmar in Aiming to strengthen position in positioned within fleet 2016, aiming for #1 position South East Asia management and tracking 13
KEY DRIVERS FOR VALUE CREATION TOWARDS 2020 PRIORITIZATION GROWTH EFFICIENCY 14
CMD 2017 STRENGTHEN OUR EFFICIENCY AGENDA, AIMING FOR NET OPEX REDUCTIONS TOWARDS 2020 • Opex development (NOK bn) Move customer care and sales towards digital channels • Realize scale potential within network and IT through a more global operating model 51 49 42 • Reduce regulatory cost by moving from concession to licence 40 40 regime in Thailand • Continuous improvement through prioritization, simplification and right-sizing 2012 2013 2014 2015 2016 Savings potential within all key opex areas 15
CMD 2017 CUSTOMER CARE AND SALES WILL MOVE TO DIGITAL CHANNELS, PROVIDING SIGNIFICANT COST EFFICIENCIES Digital customer care Digital sales and marketing • • Shift over 300 million calls to digital self-care, Reduce commissions by moving transactions aiming for 80% reduction in calls by 2020 from physical point-of-sales to digital channels • • Establish the MyTelenor app as the primary digital Increase efficiency in remaining physical care channel in all business units distribution through digitizing interactions with retailers and customers 16
CMD 2017 ADVANCED ANALYTICS WILL BE KEY CAPABILITY TO REACH GROWTH AND EFFICIENCY AMBITIONS Aggregated data Own services Own & oper. Own digital verticals Integrated partner services 2nd/3rd party Open ad eco-system Aggregated inventory 17
CMD 2017 REALIZE SCALE POTENTIAL WITHIN NETWORK AND IT Network • Launch global / regional network operating model • Software defined networks • Improved asset efficiency through better asset utilization and adoption of new technologies • Capex efficiency through standardized, shared/common solutions IT • Launch global/regional IT operating model in Asia & Europe • Standardize and virtualize IT applications • Establish API gateway in all business units 18
KEY DRIVERS FOR VALUE CREATION TOWARDS 2020 PRIORITIZATION GROWTH EFFICIENCY 19
CMD 2017 TAKING STEPS TOWARDS A MORE SIMPLIFIED PORTFOLIO • VimpelCom exit commenced in 2016 • No further capital to be allocated to India • Review of less strategic assets • Selective and disciplined M&A, focused on strengthening core positions and capabilities 20
CMD 2017 STRATEGY AND EXECUTION: FOCUS ON DIGITIZING CORE BUSINESS DIGITIZING THE CORE PRODUCTS SUPPORTING OUR TELCO OFFERING NEW DIGITAL BUSINESSES 21
CMD 2017 A FOCUSED STRATEGIC APPROACH IN OUR GEOGRAPHIC CLUSTERS Strong integrated fixed & mobile premium positions Lean mobile-only positions in Norway and Sweden in Central & Eastern Europe Rich digital mobile-only Strong mobile positions in positions in Mature Asia, Emerging Asia, with targeting digital generation opportunistic approach to segment selective fixed positions 22
CMD 2017 STEPS TAKEN TO SECURE EXECUTION OF STRATEGY • New organizational model to drive Products and Customer Group CEO Finance Interaction transformation and focus resources Service and Operations People • Global operating model to leverage Transformation Corporate Affairs scale Digital Businesses • Strengthened performance management Central & Eastern Scandinavia Mature Asia Emerging Asia Europe • In-house capabilities within advanced analytics 23
CMD 2017 VALUE CREATION TOWARDS 2020 • Continued revenue growth and increased cost efficiency, driven by digitizing core business • Focus on simplification and prioritization of resources • Building a solid foundation for continued value creation for our shareholders 24
STRATEGIC DIRECTION Sigve Brekke, Group CEO
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