TELENOR GROUP – FIRST QUARTER Sigve Brekke, CEO
DISCLAIMER The following presentation is being made only to, and is only This presentation contains statements regarding the future in connection with the Telenor Group’s growth initiatives, profit directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a figures, outlook, strategies and objectives. In particular, the slide “Outlook for 2018” contains forward-looking statements regarding relevant person should not act or rely on this presentation or any the Telenor Group’s expectations. All statements regarding the of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold future are subject to inherent risks and uncertainties, and many in the past or the yield on such investments cannot be relied upon factors can lead to actual profits and developments deviating as a guide to the future performance of such investments. substantially from what has been expressed or implied in such statements. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to The financial figures presented are based on the accounting principles for the Group’s segment reporting. See note 7 in underwrite, subscribe for or otherwise acquire securities in any Telenor’s interim report for further information. company within the Telenor Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. 2
HIGHLIGHTS FIRST QUARTER 2018 • REVENUES EBITDA NET INCOME 2 million new subscribers and 1% growth in subscription and traffic revenues 27.6 27.1 • Good progress on efficiency agenda, 11.3 resulting in 7% opex reduction 10.5 5.0 • 10% organic growth in EBITDA 4.2 • A leaner and more focused Telenor Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 Financials in NOK bn. EBITDA before other items. Organic growth rates. Currency-adjusted opex 3
Q1 2018 GOOD PROGRESS ON 2018 PRIORITIES • Drive digital transformation to ensure future growth and customer experience • Continue delivering on cost agenda, building on 2017 momentum • Maintain market positions in Norway • Secure spectrum and infrastructure solution in Thailand 4
CONTINUING TO DRIVE TRANSFORMATION Common Delivery Centre for Asia Business model simplification • • Common IT & Network delivery centre Telenor Sweden continuing its positive NPS journey after business +15 pp • Three business units to be onboarded model simplification YOY by July • Number of price plans in Sweden reduced by 80% Stepping up Global procurement Digitalizing customer journeys • Delivering Global Category • +11m MyTelenor users Management through Telenor • Procurement Company (TPC) Contextual marketing engine live in six markets • Targeting to manage 75% of external spend in 2020 • Driving digital distribution 5
MAJOR STEPS TAKEN TOWARDS PORTFOLIO SIMPLIFICATION Telenor India Online Classifieds Financial services Bharti Airtel to take Monetizing Lat-Am and Partnering with ANT Financial ownwership (Feb 17) strenghtening Asian to develop FS in Pakistan ownership (May 17) (Mar 18) Veon Veon Exiting CEE Sell-down (Apr 17) Completes sell-down Sells CEE assets (Sep 17) to PPF (Mar 18) 6
Q1 2018 A STRONG PORTFOLIO WITH SIGNIFICANT OPPORTUNITIES STRONG MARKET POSITIONS with STRONG PERFORMANCE ORGANIC DEVELOPMENT - mobile data, fibre to the home, IoT , selected digital positions INORGANIC OPPORTUNITIES -within core telecom business & core geographies 7
Q1 2018 REVENUE RENEWAL AND SOLID COST MANAGEMENT YIELDING 7% EBITDA GROWTH IN NORWAY ARPU (NOK/month) Opex (Last 12 months, NOK bn) EBITDA (NOK bn) 9.5 Mobile High-speed fixed 9.3 9.3 9.2 9.1 2.8 362 348 7% -5% 317 305 4% 4%* 2.6 Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Gross profit Opex Q1 18 • • • 1% organic growth in subscription and 7% EBITDA growth and EBITDA margin 5% opex decline last 12 months traffic revenues of 44% • Underlying workforce reduction of around • Added 8,000 new fibre connections, taking 500 last 12 months total base to 203,000 *Q1 17 mobile ARPU negatively impacted by data-roll over effects of NOK 9 8 EBITDA before other items
Q1 2018 EFFICIENCY IMPROVEMENTS IN SWEDEN AND DENMARK Sweden Denmark Opex (NOK m) Revenues (NOK bn) and EBITDA margin Opex (NOK m) Revenues (NOK bn) and EBITDA margin 3.2 3.1 1.2 1.2 1,067 512 1% -1% 1,008 503 33% 20% 30% 18% -8% -8% Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 • • 8,000 new fibre connections, total base of 572,000 1% organic growth in mobile subscription & traffic revenues • • Continued NPS improvement last four quarters More efficient operation, lower sales & marketing cost and workforce reductions Opex reduction, currency-adjusted Organic growth in subscription and traffic recvenues 9
Q1 2018 SECURED ACCESS TO 2.3 GHZ SPECTRUM IN THAILAND ARPU and postpaid growth EBITDA improvement Spectrum and infrastructure ARPU (THB) Postpaid share of subs. EBITDA (NOK bn) and EBITDA margin Spectrum band Bandwidth (MHz) Expiry Year & traffic revenues 54% 2.1 850 MHz 2x10 2018 245 47% 1.7 230 1800 MHz 2x25 2018 6% 43% 2100 MHz 2x15 2027 35% 2300 MHz 1x60 2025 Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 • • • 6% ARPU growth, driven by increased 21% organic EBITDA growth Approved and signed agreement with TOT share of postpaid subscribers following solid cost control on 2.3 GHz collaboration • • 1% decline in subscription and traffic 2.1 GHz network densification continues • revenues from lower prepaid base Working on commercial tower lease with CAT after concession expiry in September 10
Q1 2018 BACK TO GROWTH IN MALAYSIA Subs. and traffic revenue growth Revenues (NOK bn) & EBITDA margin Spectrum and network 3.2 2% 3.0 2% -2% 46% 45% -5% -7% -7% Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q1 17 Q1 18 • • • Strengthened EBITDA margin and Solid spectrum portfolio after securing Double-digit postpaid and prepaid 4% organic growth in EBITDA 2.1 GHz spectrum internet revenue growth • • Supporting growing data demand with 400,000 4G subscribers added, total robust 4G+ network 4G base of 6.6 million Organic growth in subscription and traffic recvenues 11
Q1 2018 LAUNCHED 4G SERVICES, STRENGTHENING SUPERIOR NETWORK POSITION IN BANGLADESH Subscriber growth (m) Revenues (NOKbn) & EBITDA margin 4G launch in February Net subscriber adds 3.3 New data users 3.0 2.1 1.9 6% 1.1 58% 58% 0.7 Q1 17 Q1 18 Q1 17 Q1 18 • • • Healthy subscriber growth, and 1.1 million 6% revenue growth amidst competitive Secured spectrum and launched 4G services growth in active data users pressure and 4G promotions • Robust 4G rollout ensuring seamless • • Smartphone penetration still below 30% Month-on-month revenue improvement experience; >4,800 4G sites on air by July • • Stable 58% EBITDA margin and 1% Affordable 4G handset portfolio to drive data organic growth in EBITDA usage Revenues (NOK bn) EBITDA margin (%) Organic growth in subscription & traffic revenues 12
Q1 2018 MAINTAINING MARKET SHARES AND MARGINS IN PAKISTAN AND MYANMAR Pakistan Myanmar ARPU (MMK) Revenues and EBITDA margin Avg. daily subs & traffic revenues Revenues and EBITDA margin (PKR m) 2.0 238 1.8 1.7 230 224 5,015 1.6 4,587 4,541 2% -4% 49% 48% 43% 43% Jan-18 Feb-18 Mar-18 Q1 17 Q1 18 Q1 17 Q4 17 Q1 18 Q1 17 Q1 18 • • Added 1.0 million subscribers and maintained market share Maintaining market share and NPS leadership while preparing for new entrant’s launch • Focus on 4G network rollout and data monetisation • • Growth in unique users partly compensating for price erosion Month-on-month revenue improvement • Ookla speed test confirming Telenor’s solid data position Revenues (NOK bn) EBITDA margin (%) Organic growth in subs & traffic revenues 13
CONTINUING TO EXECUTE ON OUR 2020 STRATEGY SIMPLIFICATION GROWTH EFFICIENCY WINNING TEAM RESPONSIBLE BUSINESS 14
TELENOR GROUP – FIRST QUARTER Jørgen C. Arentz Rostrup, CFO
HIGHLIGHTS FIRST QUARTER 2018 • REVENUES NET INCOME EBITDA 2 million new subscribers and 1% growth in subscription and traffic revenues 27.6 27.1 • Good progress on efficiency agenda, 11.3 resulting in 7% opex reduction 10.5 5.0 • 10% organic growth in EBITDA 4.2 • A leaner and more focused Telenor Q1 17 Q1 18 Q1 17 Q1 18 Q1 17 Q1 18 Financials in NOK bn. EBITDA before other items. Organic growth rates. Currency-adjusted opex 16
Q1 2018 CREATING A LEANER TELENOR Impact on key 2017 metrics from CEE disposal and Financial Services partnership in Pakistan: Employees (Dec 2017, ‘000) Revenues (NOK bn) Opex (NOK bn) EBITDA (NOK bn) 124.8 112.1 49.0 44.7 44.7 40.4 29.7 21.8 Reported Re-presented Reported Re-presented Reported Re-presented Reported Re-presented 17
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