TELENOR GROUP Fourth 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 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 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 2020 is given on the IFRS 16 accounting standard. 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 – Fourth quarter 2019 2% subscription and traffic Solid fixed momentum and revenue growth 4% mobile ARPU growth in Norway Modernisation driving Continued strong development in both 6% opex reduction Thailand and Myanmar Q4 2019 3
Continued strong performance in Norway ARPU growth across mobile and fixed Subscription and traffic revenue growth Solid EBITDA growth NOK NOK m Year on year change NOK m Fixed broadband Mobile Q4 18 2,647 +13% +4% Mobile & 52 129 420 110 fixed future 372 334 322 110 Copper Gross profit 66 +6% 52 Remaining 71 2.4% Opex 170 Q4 18 Q4 19 Q4 18 Q4 19 Mobile Fixed future Fixed S&T growth Q4 19 2,809 legacy Opex reductions primarily driven by Mobile ARPU growth driven by sale of Fibre and FWA revenue growth more improvements in sales & marketing adjacent services than offset by decrease in copper and operations related products 18k subscribers on FWA Organic growth Q4 2019 4
Solid growth in Finland Mobile subscription and traffic revenue growth of 8% Commercial launch of 5G, initially targeting FWA opportunities Integration going according to plan Delisting expected in Q1 2020 Q4 2019 5
Thailand delivering growth, backed by network performance Improving network NPS Significant increase in data usage Median data usage (GB) +72% 5.2 4.3 4.0 3.4 3.0 Jan-17 Jun-17 Jan-18 Jun-19 Jan-18 Jun-19 Dec-19 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q4 2019 6
Subscriber growth driving double digit growth in Myanmar Strong subscriber growth Voice decline Subs and traffic revenue growth yoy MMK bn +29% 22.3 21.6 -7% 19.8 15% 18.4 84 17.2 78 2% -9% -11% -11% Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 2018 2019 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 All time high subscriber base – 5 million 4% reduction in call minutes, despite Growth in subscriber base driving S&T added in 2019 subscriber base increase of 29% yoy revenues Voice ARPU reduced by 25% Q4 2019 7
Strong execution on a consistent strategy CMD 2017 2017 2018 2019 ambition Organic S&T revenue 1-2% 2.4% 0.2% 0.4% growth OPEX 1-3% 3.3% 3.0% 0.8% *) reduction Capex/sales Around 15% 15.4% 15.2% 15.0% * DNA acquired Sale of CEE > > India exit > A more Portfolio operations simplified Canal Digital/NENT > optimisation Veon sale > portfolio merger Partnership with Ant > Financial in Pakistan Sale of online > Merging online > classifieds Latin classifieds assets America with Carousell *Excluding DNA Q4 2019 8
Proposing ordinary dividend of NOK 12.4 bn to shareholders in 2020 4% growth in ordinary dividend per share Total remuneration (NOK bn) Total remuneration (NOK bn) 23.6 Proposing a dividend of NOK 8.70 per share for FY 2019, for approval by AGM 19.3 6.5 17.0 First tranche of NOK 4.40 in May, second 7.1 tranche of NOK 4.30 in October 5.0 5.2 Dividend yield of 5%, total payout of NOK 12.4 billion 12.4 12.1 12.2 11.8 2017 2018 2019 2020 Q4 2019 9
Priorities for 2020 Modernisation in Norway and roll-out of 5G • Continue recovery in dtac and Myanmar • Strengthen Nordic B2B • Step up on climate ambition • Manage business environment risk in Emerging Asia • Q4 2019 10
TELENOR GROUP Fourth quarter 2019 Jørgen C. Arentz Rostrup, CFO 11
Solid financial results for the quarter +2% -6% +5% Organic subs & traffic OPEX* Organic EBITDA revenues Q4 2019 12 * Excluding DNA
Returning to growth in organic subscription and traffic revenues Total revenues (NOK bn) Organic subs & traffic revenue growth (%) 0.8 Myanmar 31.8 +0.4% 0.8 Bangladesh 28.5 83.6 27.1 27.0 26.7 0.6 Thailand 0.3 Norway mobile 83.3 0.5 Fixed fibre & FWA (Nor) 0.3 Fixed legacy (Nor) Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 0.6 Pakistan 0.3 Sweden Reported revenues increased by 18%, 0.0 Remaining subs & traffic primarily from inclusion of DNA (Finland) 1.8 Q4 19 Organic revenues increased by 3% Percentage points contribution to growth 2018 2019 Organic growth rate. Subscription & traffic revenues defined as revenues from mobile subscription & traffic, fixed internet & TV, retail telephony and data services Q4 2019 13
Solid opex reduction of 6% in Q4 Opex by category (NOK m)* Opex by country (NOK m)* Salaries and 10,809 -95 Personnel Sales, Marketing, -183 -6% Commissions 10,400 Operation and 67 Remedy Q418 134 983 Maintenance 107 Energy 80 -241 170 89 44 217 35 57 9,826 Regulatory -244 12 Site rental -15 Other opex -185 Group -574 ex. DNA Q4 18 Thailand Norway Sweden Denmark Malaysia Pakistan Bangladesh Other/ Q4 19 DNA Q4 19 Elim. ex. DNA * FX adjusted Q4 2019 14
5% organic EBITDA growth Q4 2019 EBITDA growth (%) 2019 EBITDA growth (%) Bangladesh 1.1 Thailand 3.1 Other Units 0.6 Other Units 1.8 Norway 0.5 Norway 1.6 Sweden 0.2 Myanmar 1.2 Myanmar 0.3 Bangladesh 0.5 Malaysia 0.6 Denmark 0.3 Thailand 1.4 Sweden 0.4 Pakistan 2.2 Digi 0.6 2019 -2.6 Pakistan 2.2 M&A cost 0.4 Q4 19 4.6 2019 adj. -2.2 Percentage points contribution to growth Q4 2019 15
Net income of NOK 2 billion to equity holders of Telenor NOK billion 1.3 2.2 0.7 1.37 0.7 0.83 1.9 3.3 3.3 0.4 1.8 1.2 Q4 2018 EBITDA before Other items Depreciation Net profit from Net financials Taxes Minorities Remaining Q4 2019 other items and discontinued amortisation operations Earnings per share Q4 2019 16
Free cash flow before M&A of NOK 4.0 billion for 2019 NOK billion NOK billion 11.7 2018 2.5 2.6 CAT settlement 1.5 2.8 0.6 0.6 2.5 Tax Norway -0.8 -0.1 -0.9 2.1 Licence deposit Pakistan -8.7 0.5 Other FCF excl M&A and disposals M&A and disposals 4.0 2019 -11.6 Q418 Q119 Q219 Q319 Q419 Free cash flow to equity holders of Telenor ASA Q4 2019 17
Special items in Q4 India Grameenphone – BTRC dispute Telenor Microfinance Bank Disputed calculation of adjusted gross BTRC 1 has conducted an information Telenor Microfinance Bank (TMB) is a revenue between the industry and system audit of Grameenphone for joint venture company of Telenor Department of Telecommunication in 1997 to 2014. Group in Pakistan India Grameenphone received a demand TMB Management identified lending Supreme court decision in October notice from BTRC for NOK 8.9 2 billion irregularities in several branches of to BTRC and NOK 4.4 billion to NBR 3 the bank during autumn 2019 Telenor exposed through warranties to Bharti Telenor and Grameenphone find the Evaluation initiated and initial audit claim to be erroneous and screening of the portfolio conducted Accrual of NOK 1.7 bn in Q4 to multiple unjustified cases in India. Total accruals now Provision of NOK 0.5 bn has been amounting to NOK 3.4 bn The errors of the audit and absence of made in Q4 19 to cover potential loss a formal solution process creates significant uncertainty of the validity and outcome of the dispute 1. Bangladesh Telecommunication Regulatory Commission 2. (NOK 2.4 billion in principal and NOK 6.5 billion in interest) 18 3. National Board of Revenue
Technically translating leverage target to IFRS 16 3.0 IFRS 16 impact on Net debt / 2.5 EBITDA of 0.3x 2.3 2.1 2.0 1.8 0.3 Licence obligations still excluded 1.8 (0.3x) 1.5 1.0 New target range of 1.8-2.3x continuing current leverage policy 0.5 0.0 Pre IFRS 16 IFRS 16 ex. licence IFRS 16 obligations Q4 2019 19
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