TELENOR GROUP First quarter 2020 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 2020” 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 2020 compared to the same quarter of 2019, unless company within the Telenor Group. The release, publication or otherwise stated. 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 2020 2 % organic subs and traffic Continued mobile ARPU growth revenue growth and solid free cash flow in Norway Strong subs and traffic revenue Increased uncertainty driven by growth in Myanmar COVID-19 Q1 2020 3
Modernisation accelerates in Norway ARPU growth across mobile and fixed Subscription and traffic revenue growth Solid efficiency gains NOK NOK m Year on year change NOK m Fixed broadband Mobile Q1 19 2,018 +11% Personnel 25 +4% 420 Commissions and 378 33 335 107 322 market related 131 O&M 54 -4% 76 52 Infra inclusion 24 1.6% Remaining 2 Q1 20 1,928 Q1 19 Q1 20 Q1 19 Q1 20 Mobile Fixed future Fixed S&T growth legacy Solid opex reductions across the board Mobile ARPU growth continues to be Fibre and FWA revenue growth more driven by sale of adjacent services than offset decrease in legacy decline Fixed broadband ARPU growth driven 30k subscribers added on copper by fibre and FWA replacement products Organic growth Q1 2020 4
Subscriber growth driving double digit growth in Myanmar Strong subscriber growth Continuous data growth Subs and traffic revenue growth yoy Subs in million MMK bn Million GB +27% +25% 80 +131% 23.3 250 200 18.4 60 40 20 0 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q1 19 Q1 20 Q1 19 Q1 20 Continuing to add customers in a very Data volume increasing from a larger Growth in subscriber base and data usage competitive market subscriber base and voice to data transition driving S&T revenues Data revenue increase of 51% Q1 2020 5
COVID-19 impact from second half of March Key developments (March) Organic subs & traffic revenue growth (%) 2.4 1.8 Prepaid markets in Asia influenced by lock downs. Telco declared critical service -0.9 Roaming revenue decline of 50 % in March, additional pressure from tourist SIM in 0.5 -0.8 Thailand. 1 -0.2 So far limited impact on B2B segment Jan/Feb Dev. Emerging Nordics* March Q1 20 Asia Asia Development mainly driven by Asia, with app. 3 percentage points reduction in S&T growth in March Estimated total EBITDA effect March of 150 mill Relatively stable in Nordics. Contribution driven by B2B pressure in Sweden 2 Q1 2020 1. Roaming revenues ~1% of total revenues 6 2. B2B revenues almost entirely from the Nordics
Resilient despite top line uncertainty Uncertainty related to the duration of the COVID-19 situation driven by authority decisions. Lock downs influence Asian prepaid markets into Q2. Move towards alternative distribution channels, both digital and physical. Continue structural programmes and cash flow focus to support our dividend policy. Q1 2020 7
Modernisation enabling robust operations Strong digitisation drive Continuous data volume growth Network robustness Digital recharge growth NPS Q1 Thousand TB +18% (Grameenphone) 800 100% 700 of NOC’s 1) enabled +43% 600 to work from home Post-lock 0 down growth Jul 2019 Aug Sept Oct Nov Dec Jan 2020 Feb Mar Increasing network traffic from increased Significant recharge growth across digital Network NPS flat or improved in all markets consumption channels since lockdown Automation and AI/ML is enabling fully Video conferencing and delivery apps operational Network Operation Center with growing fast, driven by home office no or limited physical presence of people 1) Network operating centres Q1 2020 8 *AI = Artificial intelligence, ML = Machine learning
Executing on a firm strategic direction Responsible Growth Modernisation business Public-private cooperation • 18% increase in data • Increase in digital sales • consumption from Feb to Mar Mobility analytics • All call centers are fully • Value added services • enabled to work from home Free online education • Q1 2020
TELENOR GROUP First quarter 2020 Jørgen C. Arentz Rostrup, CFO 10
Delivering critical services in demanding times +2% Organic S&T* revenues -2% +3% OPEX** Organic EBITDA * Subscription and traffic revenues Q1 2020 11 ** FX adjusted ex. DNA
Maintained growth in organic subscription and traffic revenues Total revenues (NOK bn) Organic subs & traffic revenue growth (%) Myanmar 1.5 Grameenphone 0.7 31.7 31.0 28.4 Thailand 0.6 26.9 26.6 Norway mobile 0.2 Fixed fibre & FWA (Nor) 0.6 Fixed legacy (Nor) 0.5 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Sweden 0.5 Pakistan 0.7 Reported revenues increased by 16%, primarily from Other/Elim 0.0 inclusion of DNA (Finland) and FX Q1 20 Organic revenues increased by 1.5% 1.8 Percentage points contribution to growth Organic growth rate. Subscription & traffic revenues defined as revenues from mobile subscription & traffic, fixed internet & TV, retail telephony and data services Q1 2020 12
Solid opex reduction of 2% in Q1 Opex by category (NOK m)* Opex by country (NOK m)* Salaries and -77 9,493 Personnel Sales, Marketing, -2% -116 Commissions 8,715 949 Operation and 114 -55 Maintenance 34 40 70 8,544 33 18 12 19 3 Energy 65 Other opex 13 Group -171 ex. DNA Q1 19 Norway* Pakistan Denmark Sweden Digi Grameen- dtac Myanmar Other/Elim Q1 20 DNA Q1 20 phone ex. DNA * FX adjusted Q4 2019 *Underlying development adjusted for transfer of businesses between Telenor Norway and Other Units 13
Organic EBITDA growth of 3 % 0.6 0.1 0.6 0.8 0.6 2.6 0.7 0.8 0.4 2.0 Myanmar Norway* Bangladesh Thailand Denmark Sweden Pakistan Malaysia Other Q1 20 Percentage points contribution to growth Q1 2020 *Underlying development adjusted for transfer of businesses between Telenor Norway and Other Units 14
FX impacting net income to equity holders of Telenor NOK billion DNA 0.6 2.62 1.9 0.9 3.8 1.0 0.49 3.1 FX 0.7 0.5 Q1 2019 EBITDA before Depreciation and Net financials Remaining Q1 2020 other items amortisation Earnings per share Q1 2020 15
Free cash flow before M&A of NOK 2.7 billion Capex excluding licenses Free cash flow NOK billion NOK billion 3.8 2.6 5.6 2.7 1.6 2.8 4.1 4.0 0.5 3.7 -1.1 3.1 -1.1 -8.7 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 -11.7 Q119 Q219 Q319 Q419 Q1 20 Reduced capex from low investments in Bangladesh and Thailand Flexibility to adjust investment levels FCF excl M&A and disposals M&A and disposals Free cash flow to equity holders of Telenor ASA Q1 2020 16
FX exposure increasing net debt Significant weakening of NOK in Q1 Leverage Net debt / EBITDA 2.3 2.1 NOK 15 bn increase in net debt due to FX -17% -19% Leverage ratio unchanged with same FX rate on EBITDA 31.12.2019 31.01.2020 29.02.2020 31.03.2020 EUR USD Q4 19 Q1 20 Q1 2020 *Underlying development adjusted for transfer of businesses between Telenor Norway and Other Units 17 *
Outlook 2020 – COVID-19 increasing uncertainty Updated outlook 2020 Previous outlook • Q1 results in accordance with previous outlook 0-2% Lower subscription and traffic revenues compared to • previous guidance • COVID-19 increases uncertainty, Organic subscription and traffic revenue growth especially related to the Reduced EBITDA growth compared to previous guidance • duration of lock-downs 2-4% Capex/sales of around 13% Organic EBITDA growth • • Impact on prepaid markets in Asia and roaming revenue ~15% Capex focus and cost management to secure resilience in • cash flow Capex/Sales • Mid-term ambition maintained The outlook for 2020 is based on Group structure and accounting standard as of 31 December 2019. Subscription & traffic revenues from Q1 2020 18 mobile, fixed and TV services. Org. revenue growth in fixed currency, adj. for acquisitions and disposals. EBITDA before other items.
TELENOR GROUP First quarter 2020 Appendix 19
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