TELENOR GROUP First 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 - First quarter 2019 1.2 million new subscribers and Organic subscription and traffic revenue sequential revenue stabilisation in growth of 1% and EBITDA growth of 2%* Myanmar Fibre momentum and mobile Double digit revenue growth in subscription and traffic revenue growth Bangladesh and Pakistan of 2% in Norway * Excluding Thailand Q1 2019 3
Financial performance in line with outlook for the year Organic S&T revenues growth (%) Opex* (NOK bn) EBITDA* (NOK bn) 9.8 11.6 1.4 11.2 0.1 9.7 0.5 0.1 -1% -3% 0.5 0.4 0.9 0.0 Mobile Fixed Fixed Group Group Q1 18 Q1 19 Q1 18 Gross profit Opex Q1 19 fibre legacy Q1 19 Q1 19 ex. Thailand Subscription and traffic revenue 1% reduction in opex driven by Excluding Thailand, organic EBITDA growth in line with full year outlook continued efficiency improvements growth was 2% * FX adjusted Q1 2019 4
Steady progress on growth and efficiency in Norway ARPU growth Stable subs and traffic revenues 2% underlying opex reduction NOK m Year on year change NOK m Mobile High speed fixed -2% 2.189 +2% +2% 2.153 360 366 25 11 77 322 315 97 48 20 9 Mobile Internet Fixed Data S&T Q1 18 Reported Transferred Q1 19 Q1 18 Q1 19 Q1 18 Q1 19 and TV legacy services growth businesses Growth in both mobile and high speed Strong fibre growth more than offset by Adjusted for transfer of businesses fixed broadband ARPU decrease in copper related products from Group, opex decreased by 2% Q1 2019 5
Maintaining our priorities for 2019 Back to growth in Thailand and Myanmar Strengthen positions within Internet of Things and the Business segment Continue to drive digital transformation, structural efficiency and further simplification Modernise infrastructure, including 5G readiness, and fibre roll-out in Norway Q1 2019 6
… with good progress in the first quarter Subscriber growth and revenue stabilisation in Myanmar Improving efficiency in Group functions Subscriber growth (‘000) Strongest subscriber • New initiative to modernise • 1,163 growth since Q2 2016 Group Functions NOK 500m 147 500m Stable subscription • Opex savings of NOK 500m, • and traffic revenues vs of which 300m in 2019 Q4 2018 -804 -1,047 Q2 18 Q3 18 Q4 18 Q1 19 Launch of IoT solutions in Bangladesh and Pakistan Good momentum on fibre roll-out in Norway Fibre connections (‘000) 244 B2B fleet tracking solution On track for 60,000 new fibre • • 232 218 connections in 2019 launched in Pakistan 209 Growth in fibre revenues of • IoT solutions in • 20% year on year Bangladesh with partners, both for B2C and B2B. Q2 18 Q3 18 Q4 18 Q1 19 Q1 2019 7
Consolidating the Nordic portfolio through acquisition of majority stake in DNA in Finland Good fit Attractive market Quality asset Value accretive Consolidating Nordic Finland is an advanced and An integrated challenger Value accretive transaction position and balancing growing market with solid track record and for Telenor - with synergies portfolio growth potential and growth opportunities Q1 2019 8
TELENOR GROUP First quarter 2019 Jørgen C. Arentz Rostrup, CFO 9
Continuing to modernise Telenor GROWTH EFFICIENCY SIMPLIFICATION 1% Mobile S&T revenue 1% opex reduction Further sell-down in VEON • • • growth New initiative to address Partial disposal of Wave • • 20% fibre revenue growth cost base in Group Money in Myanmar • in Norway Functions Finalised the sale of • 2.3 million new subscribers Improving operating model Telenor Banka in Serbia • • for tower infrastructure in Reviewing full or partial • Norway divestment of real estate portfolio in Norway Q1 2019 10
Stable revenues despite pressure from developed Asia, Myanmar, and fixed legacy services Total revenues (NOK bn) Organic subscription & traffic revenues growth (%) 28.1 0.0 27.7 27.6 27.5 27.2 3.5 0.7 1.1 0.8 0.8 1.4 0.1 0.0 Bangladesh Fixed fibre Scandinavia Fixed legacy Myanmar Malaysia Other/Elim. Q1 19 ex. Q1 19 incl. Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 & Pakistan mobile Thailand Thailand Reported revenues increased by 2% Strong growth in Bangladesh and Pakistan and good fibre momentum FX adjusted revenues remained stable 1% organic growth excluding Thailand Organic growth rate. Subscription & traffic revenues defined as revenues from mobile subscription & traffic, fixed internet & TV, retail telephony, data services and DTH Q1 2019 11
Net opex reductions in Q1 2019 of NOK 0.1 bn (-1%)* Opex by category (NOK m)* Opex development by country (NOK bn)* Salaries and -1% -72 Personnel 9.790 Operation and 6 maintenance 53 Sales, Marketing, -44 50 Commissions 92 101 Energy 47 47 9.679 Site rental 7 19 11 15 2 Other opex -109 Group -111 Q1 18 Sweden Thailand Denmark Norway Malaysia Bangladesh Myanmar Pakistan Other/ Q1 19 Elim. * FX adjusted Q1 2019 12
2% EBITDA growth excluding Thailand - in line with guidance Organic EBITDA growth 2018 EBITDA (NOK bn) 0.2 1.1 1.2 0.2 0.3 0.1 0.1 11.6 1.9 0.1 2.2 0.0 3.5 0.6 0.9 11.2 -3.5 Q1 2018 Scandinavia Pakistan Bangladesh Myanmar Malaysia Other Thailand Q1 2019 Bangladesh Pakistan Scandinavia Malaysia Myanmar Other Q1 19 ex. Q1 19 incl. Thailand Thailand Q1 2019 13
Net income of NOK 3.9 billion to equity holders of Telenor 3.35 0.8 5.0 0.1 0.1 2.66 2.0 0.2 3.9 0.1 0.2 0.5 Q1 2018 Gross profit Opex Depreciation Net financials Taxes Net profit from Associated Minorities Q1 2019 and discontinued companies amortisation operations Earnings per share Q1 2019 14
Free cash flow excluding M&A of NOK 1.5 bn Free cash flow (NOK bn) Leverage and distribution to shareholders FCF excl M&A and disposals 26.5 Net debt / EBITDA Stable net debt M&A and disposals compared to previous 0.9 0.9 quarter Expected increase in 0.5 2019 from: 3.0 DNA transaction 2.6 2.5 Share buybacks -0.1 4.7 3.9 Ordinary dividend 2.6 1.5 0.6 Committed to year on Q3 18 Q4 18 Q1 19 year growth in ordinary dividend Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Free cash flow to equity holders of Telenor ASA Q1 2019 15
Limited impact on net income from IFRS 16 IAS 17/IFRS 15 Impact IFRS 16 Revenues 27,709 (65) 27,644 Cost of goods sold (6,856) 125 (6,730) Operating expenses (9,679) 1,190 (8,489) EBITDA 11.175 1,250 12,425 Depreciation and amortisation (4,526) (1,124) (5,649) Financial income and expense 32 (243) (212) Profit before tax* 6,659 (117) 6,542 Net income 4,824 (80) 4,744 * including discontinued operations Q1 2019 16
Outlook for 2019 maintained 2019 YTD Organic growth 0-2% 1.4% Excluding Thailand in subscription & traffic revenues Organic EBITDA growth 1-3% Excluding Thailand 1.9% Including Thailand Capex excl. licences (NOK bn) 16-17 bn 4.0 bn Our Thai operation dtac will give financial guidance for 2019 at their capital markets day 4 June. Group revenue and EBITDA guidance will therefore include Thailand from Q2. 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. Q1 2019 17
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