TELENOR GROUP Second 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 - Second quarter 2019 Revenues of NOK 28.0 billion, with 40% Subscription and traffic revenue EBITDA margin improvement in Thailand and Myanmar Double digit revenue growth in 2% mobile ARPU growth and Bangladesh continued fibre momentum in Norway Q2 2019 3
Continued robust performance in Norway ARPU growth across mobile, fixed and TV Stable subscription and traffic revenues 1% underlying opex reduction NOK m Year on year change NOK m NOK Fixed broadband -1.3% Mobile +2% 2,218 +2% 8 2,190 383 20 374 79 330 323 104 32 3 4 Mobile Fibre Fixed Data S&T Q2 18 Reported Transfer Q2 19 Q2 18 Q2 19 Q2 18 Q2 19 internet legacy services growth from Group and TV Underlying opex reductions driven by In addition, 3% ARPU growth within 20% fibre growth more than offset by improvements in sales & marketing and TV services decrease in copper related products operation & maintenance Q2 2019 4
Good progress on Norway’s copper decommisioning roadmap Solid fibre roll-out momentum Fixed wireless product launched Cost phasing as previously communicated Subscriptions ‘000 253 244 232 218 2018 2019 2020 2021 2022 2023 Q3 18 Q4 18 Q1 19 Q2 19 Migration cost Copper cost Added 10,000 subscriptions in Q2 – in line Continued strong fibre roll-out momentum 10, 30 and 100 Mbit/s offered with plan Copper cost base of NOK 1.2 bn (2018) Geo locked Higher net adds expected in the second half Decreasing copper cost partly offset by 2,000 subs connected since launch of 2019 migration cost 5
Improved revenue trends in Thailand and Myanmar Myanmar Thailand Avg. daily subscription and traffic revenues (MMK million) Avg. daily subscription and traffic revenues (THB million) +12% 1.3% 2,407 166.2 2,220 164.3 2,151 164.0 Q4 18 Q1 19 Q2 19 Q4 18 Q1 19 Q2 19 Subscriber growth of 2.6 million year to date Solid postpaid revenue growth of 5% combined with improved Price floor regulation (Sep-18) impacting yoy growth prepaid development is supporting sequential improvement Q2 2019 6
Ongoing portfolio development in line with strategic ambitions Acquisition of majority stake in DNA in Finland Combination with Axiata in Asia Agreement with Finda and PHP to acquire Merger discussions announced 54% of DNA in Finland signed on 9 April on 6 May Approval from EU commission on 15 July Significant potential for value creation through USD 5 billion Closing of transaction in August after receiving all in estimated synergies customary approvals Aiming to conclude agreement in Q3 Mandatory tender offer for remaining shares to be offered at EUR 20.90 Regulatory approvals anticipated in 9-12 months following an agreement Q2 2019 7
TELENOR GROUP Second quarter 2019 Jørgen C. Arentz Rostrup, CFO 8
Steady execution on strategy to modernise Telenor GROWTH EFFICIENCY SIMPLIFICATION Q2 2019 9
Slight decline in subscription and traffic revenues Total revenues (NOK bn) Organic subscription & traffic revenues growth (%) 28.1 28.0 27.7 27.6 27.5 0.6 1.2 1.9 0.7 0.0 0.6 0.5 0.0 0.2 -0.7 Bangladesh Fixed fibre Fixed legacy Thailand Myanmar Malaysia Pakistan Remaining Q2 19 Q2 19 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 subs & traffic incl. excl. Thailand Thailand Reported revenues increased by 2% Strong growth in Bangladesh and continued fibre momentum in Norway Organic revenues grew 1% Pressure from developed Asia, fixed legacy and tax related effects in Pakistan Organic growth rate. Subscription & traffic revenues defined as revenues from mobile subscription & traffic, fixed internet & TV, retail telephony, data services and DTH Q2 2019 10
Underlying decrease in line with communicated ambition Opex by category (NOK m)* Opex by country (NOK bn)* NOK million Salaries and -79 -1% +2% Personnel 10.038 Operation and 55 maintenance Sales, Marketing, -137 Commissions 299 9.826 Energy 114 9.739 195 64 -72 Site rental 64 63 70 Other opex 33 37 30 20 Q2 19 -86 underlying Bangladesh one-off 299 Q2 18 Other Sweden Myanmar Denmark Bangladesh Pakistan Thailand Other/Elim. Q2 19 Bangladesh Q2 19 Q2 19 213 Units one off underlying * FX adjusted Q2 2019 11
EBITDA growth impacted by one-offs and tax related effects 2.6 0.3 0.4 1.7 1.0 -0.2 1.2 1.0 2.3 2.6 0.3 -3.8 Other Units Malaysia Norway Myanmar Pakistan Thailand Remaining Q2 19 Bangladesh Pakistan Q2 19 Q2 19 incl. one-off service Underlying Underlying Thailand charge excl. effect Thailand Q2 2019 12
Net income of NOK 3.1 billion to equity holders of Telenor NOK billion 0.8 1.1 2.14 1.79 0.6 3.1 0.6 2.6 0.4 0.3 Q2 2018 EBITDA before Other items Depreciation Net financials Taxes Net profit from Q2 2019 other items and discontinued amortisation operations Earnings per share Q2 2019 13
Free cash flow of NOK 1.6 billion YTD – negatively impacted by CAT settlement and capex phasing Free cash flow (NOK bn) Leverage and distribution to shareholders Net debt / EBITDA FCF excl M&A and disposals 26.5 NOK 7.3 billion pay- M&A and disposals 1.0 out to shareholders 0.9 in Q2 Dividend Share buyback 0.5 3.0 Share buyback 25% 2.5 completed 4.7 3.9 DNA acquisition to 1.5 0.6 -0.8 increase leverage by Q3 18 Q4 18 Q2 19 -0.1 -0.9 0.35x (54%) Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Free cash flow to equity holders of Telenor ASA Q2 2019 14
Outlook for 2019 updated, including Thailand Previous outlook New outlook YTD Organic growth 0-2% Around 2018 level -0.4% in subscription & traffic revenues Excluding Thailand Low single digit 1-3% Organic EBITDA growth -3.7% decline* Excluding Thailand 16-17 bn Capex excl. licences (NOK bn) 16-17 bn 8.1 bn *The outlook for 2019 is based on Group structure as of 30 June 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. Q2 2019 15
Reconciliation of previous and new outlook for 2019 Organic subscription and traffic revenues Organic EBITDA growth 0-2% Thailand Digi guidance Stable 1-3% Thailand Grameenphone Digi Other Low single inclusion revision (previous) (new) inclusion one-off guidance (previous) digit revision decline* (new) *The outlook for 2019 is based on Group structure as of 30 June 2019 and excluding M&A costs related to the acquisition of DNA and the planned merger with Axiata in Asia. Other EBITDA is linked to flat revenue development in Pakistan in Q2, loss of Komplett wholesale revenues and additional regulation on special numbers in Norway Q2 2019 16
Highlights - Second quarter 2019 Revenues of NOK 28.0 billion, with 40% Subscription and traffic revenue EBITDA margin improvement in Thailand and Myanmar Double digit revenue growth in 2% mobile ARPU growth and Bangladesh continued fibre momentum in Norway Q2 2019 17
TELENOR GROUP Second quarter 2019 Appendix 18
Geographic split of key financials in 1H 2019 Revenues EBITDA EBITDA - CAPEX 7% 5% 5% 36% 34% 30% 38% 34% 31% 27% 29% 24% 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. Q2 2019 19
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