TELENOR GROUP Third quarter 2019 Sigve Brekke, CEO 1
Disclaimer The following presentation is being made only to, and is only This presentation contains statements regarding the future in directed at, persons to whom such presentation may lawfully be connection with the Telenor Group’s growth initiatives, profit communicated (’relevant persons’). Any person who is not a relevant figures, outlook, strategies and objectives. In particular, the slide person should not act or rely on this presentation or any of its “Outlook for 2019” contains forward-looking statements regarding contents. Information in the following presentation relating to the the Telenor Group’s expectations. All statements regarding the price at which relevant investments have been bought or sold in the future are subject to inherent risks and uncertainties, and many past or the yield on such investments cannot be relied upon as a factors can lead to actual profits and developments deviating 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 comments in the presentation are related to Telenor’s underwrite, subscribe for or otherwise acquire securities in any development in 2019 compared to the same quarter of 2018 and company within the Telenor Group. The release, publication or accounting standards as of 31 December 2018, unless otherwise distribution of this presentation in certain jurisdictions may be stated. Outlook for 2019 is given on the IAS17/IFRS 15 accounting restricted by law, and therefore persons in such jurisdictions into standard. which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. 2
Highlights – Third quarter 2019 DNA acquisition completed Modernisation continues in Norway Merging satellite entertainment 5% mobile ARPU growth business with NENT Subscription and traffic revenue growth Challenging situation in Pakistan in Myanmar and Thailand Q3 2019 3
Modernisation yielding results in Norway ARPU growth across mobile and fixed Subscription and traffic revenue growth 5% opex reduction NOK m Year on year change NOK m NOK Fixed broadband -5% Mobile +7% 2,150 +5% 104 399 2,046 373 344 110 329 127 83 66 1.4% Mobile Fixed future Fixed S&T growth Q3 18 Q3 19 Q3 18 Q3 19 Q3 18 Q3 19 legacy Opex reductions primarily driven by Monetising on customer demands and 25% fibre revenue growth more than improvements in sales & marketing world’s fastest mobile network offset by decrease in copper related products Organic growth Q3 2019 4
Thailand returning to growth, backed by network performance Improved customer satisfaction Steady subs. and traffic revenue improvement Growth in % Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Network NPS on level with pre transition period Month on month improvement continues Improved survival rate and higher gross adds 4% ARPU growth in Q3 Q3 2019 5
Strong customer intake in Myanmar continues 3.6 million new subscribers in one year 2% subscription and traffic revenue growth Million MMK billion 2% 21.6 210 19.8 19.1 18.4 18.0 17.2 207 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q3 18 Q3 19 Solid subscriber trends continue Performance driven by subscriber growth, partly offset by ARPU pressure on voice services Annualisation of price floor regulation (Sep-18) Q3 2019 6
Challenging situation in Pakistan Challenging macro environment … and tougher priorities for consumers… impacts performance Subscription and traffic revenue growth (%) Development from Aug 2018 to Aug 2019 PKR/USD development Percentage points contribution to growth 0.010 1 23% 4 Electricity prices 0.009 0.9 5 0.008 0.8 14 25% 0.007 0.7 -15 Fuel prices Q3 19 Tax re- Reversal Q3 19 0.006 0.6 introduction Q3 18 Underlying Devaluations of more than 30% in 2 years Telenor stronghold in rural areas with more Unable to counteract effect of tax re-introduction Consumer wallets negatively impacted price sensitive customers Positive underlying growth, but ARPU increasingly under pressure Focus on cluster based performance improvements Q3 2019 7
Major steps taken to simplify and de-risk asset portfolio Disposal of India exit Financial services DNA Finland Online Classifieds announced Partnering with ANT Financial in (April -19) in Lat-Am (May -17) (Feb 17) Pakistan (March -18) Disposal of Central & VEON VEON VEON Merging DTH business Eastern European sell-down sell-down sell-down with Nordic assets (April -17) (Sep -17) (Mar -19) Entertainment Group (March -18) (Oct -19) 8
TELENOR GROUP Third quarter 2019 Jørgen C. Arentz Rostrup, CFO 9
Executing on our simplification agenda DNA acquisition completed Merging Nordic satellite entertainment assets Merging Canal Digital and Viasat Consumer assets in a non 97.96% ownership after MTO cash deal Expected delisting in Q1 2020 50/50 ownership Peak run-rate of synergies expected to be NOK 600m Closing expected in first half 2020 Q3 2019 10
Legacy and Pakistan putting pressure on subs. & traffic revenue growth Total revenues (NOK bn) Organic subscription & traffic revenue growth (%) Percentage points contribution to growth 29.5 28.1 28.0 27.7 27.6 0.4 1.1 0.6 1.0 1.0 0.3 0.2 0.0 -0.6 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Bangladesh Fixed fibre Norway Fixed legacy Pakistan Denmark Sweden Remaining Q3 19 mobile subs & traffic Reported revenues increased by 7% Growth in Bangladesh and Norwegian fibre and mobile from inclusion of DNA (Finland) and FX Pressure from fixed legacy and tax related effects in Pakistan Organic revenues remained stable Organic growth rate. Subscription & traffic revenues defined as revenues from mobile subscription & traffic, fixed internet & TV, retail telephony, data services and DTH Q3 2019 11
Stable opex development excluding M&A and DNA Opex by category (NOK m)* Opex by country (NOK m)* Salaries and 2 Personnel 9,919 Sales, Marketing, -119 Commissions Operation and 441 105 9,478 Maintenance 9,340 169 Energy 108 104 142 67 Regulatory -248 50 63 45 46 14 2 Site rental -52 CAT lease M&A Other opex 29 342 203 110 Group 138 ex. DNA DNA 441 Q3 18 Norway Myanmar Sweden Denmark BC Digi TP GP dtac Other/ Q3 19 DNA Q3 19 Elim. ex. DNA * FX adjusted Q3 2019 12
Organic EBITDA growth impacted by Pakistan and reversals last year Percentage points contribution to growth 0.1 0.6 0.7 0.9 1.3 1.0 0.9 -2.3 2.2 0.9 -1.6 3.5 4.8 -5.7 1.1 -7.3 Bangladesh Norway Myanmar Thailand Other Units Pakistan Remaining Q3 19 Non recurring M&A cost Q3 19 Q3 2018 Underlying Q3 2019 13
Net income of NOK -0.4 billion to equity holders of Telenor NOK billion 4.01 5.9 0.4 0.3 0.1 1.9 2.1 2.3 -0.30 0.1 -0.4 Q3 2018 EBITDA before Other items Depreciation Net financials Taxes Net profit from Remaining Q3 2019 other items and discontinued amortisation operations Earnings per share Q3 2019 14
Acquisition of DNA increasing leverage to 1.8x Free cash flow (NOK bn) Leverage and distribution to shareholders Net debt / EBITDA 26.5 FCF excl M&A and disposals M&A and disposals 1.8* DNA acquisition increased leverage by 0.65x (100%) 1.0 2.5 Share buyback >75% 4.7 2.8 completed 1.5 0.6 -0.8 -0.1 -0.9 Within targeted range of 1.5-2.0x -11.6 Q2 19 Q3 19 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 *Including 12 months rolling EBITDA for DNA (pro forma) Free cash flow to equity holders of Telenor ASA Q3 2019 15
Maintaining outlook for 2019 Excluding DNA YTD Organic growth Around 2018 level -0.4% in subscription & traffic revenues Low single digit Organic EBITDA growth -4.4%* decline* 16-17 bn Capex excl. licences (NOK bn) 11.9 bn *The outlook for 2019 is based on Group structure as of 30 September 2019 and excluding M&A costs related to the acquisition of DNA and the planned merger with Axiata in Asia. Subscription & traffic revenues from mobile, fixed and TV services, incl. Canal Digital DTH. Org. revenue growth in fixed currency, adj. for acquisitions and disposals. EBITDA before other items. Current Group structure and accounting standards as of 31 December 2018. **Excluding DNA Q3 2019 16
TELENOR GROUP Third quarter 2019 Appendix 17
Geographic split of key financials first 9M 2019 Revenues EBITDA EBITDA - CAPEX 7% 4% 5% 33% 36% 29% 28% 38% 31% 30% 23% 34% Scandinavia Scandinavia Scandinavia Emerging Asia Emerging Asia Emerging Asia Developed Asia Developed Asia Developed Asia Other Other Other EBITDA before other items. Capex excl. licences. Q3 2019 18
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