Upload
others
View
5
Download
0
Embed Size (px)
Citation preview
Q2Interim report
January – June 2021
GROUP HIGHLIGHTS
2
• Growth in both service revenues and EBITDA
• Mobile subscription service revenues return to growth
• TV & Media recovery accelerated
• OPEX stable despite cost mitigation last year
• Stable CAPEX
• Strong OFCF generation, now SEK 6.1bn YTD
• Telia Carrier transaction closed
• Finland and Norway towers transaction announced
• Leverage at low end of the targeted range
* In reported SEK** Assumes the towers transaction was already closed June 30, 2021 (and compared to March 31, 2021 leverage including Telia Carrier proceeds)
OPEX change
Service revenues
Adjusted EBITDA
Cash CAPEX excl licenses & spectrum*
OFCF*
Q2 2021
Change LFL
vs Q2 2020 SEK billion
-0.2
18.9
7.7
3.4
2.1
0.0%
+3.2%
+1.9%
Proforma leverage** 2.07x
0.0
-6.6%
-0.22x
STRATEGY HIGHLIGHTS I
• Customer satisfaction and NPS broadly stable
• Converged customer base growing with low churn
• Sweden: added 25k converged customers
• Norway: added 7k converged customers
• Finland: added 32k converged customers
• One of only five global operators bundling Netflix
• Enterprise segment highlights
• Mobile growth driven by Sweden, Norway and the Baltics
• Sweden and Norway both sign largest deals ever, with Region Skåne and the Norwegian postal service
• TV & Media viewership continues to grow
• CSOV: Sweden +2.1ppt to 56.8%, Finland +2.7ppt to 43.2%
• C More OTT revenues grew by 75%
3
INSPIRING our Customers CONNECTING EVERYONE
• Network modernization and 5G roll-out continues
• 5G population coverage grew by 1/3rd
• 5G leader in Sweden, Norway, Estonia and Lithuania
• 5G now available in Sweden’s top 22 cities, and 3rd
party test proves Telia is clear 5G leader in Stockholm
• Speed records broken in both Finland and Sweden
• Sole 5G provider in Estonia
• Three independent surveys, incl umlaut, confirmed Telia to be the mobile network leader in Sweden
• Decommissioning legacy
• 47% of 3G traffic migrated to 4G vs. Q2 2020
• SEK 80m cost reduction in Sweden from legacy migration
• Telia Asset Management announced towers transaction with Brookfield and Alecta
STRATEGY HIGHLIGHTS II
• Transformation program progressing to plan
• Headcount reduction on track with 450 exited YTD
• IT transformation
• Supplier consolidation started, reducing first 29 to 4 strategic partners, worth SEK 750m over next 5 years
• Near-shoring initiative progressing well
• SEK 45m cost reduction in the quarter
• Product and process simplification
• Extended partnership with ServiceNow
• Increased use of common products
• >75 legacy systems and >20 product lines decommissioned
• TV & Media digitalization
• Digital ad revenues growing exponentially, +177%
4
Transforming to digital DELIVERING SUSTAINABLY
• Financial target progression
• Service revenues and EBITDA growth
• Roughly 75% of minimum dividend covered by H1 OFCF
• Stability in structural elements of FCF
• Balance sheet strength from Carrier proceeds and announced towers transaction
• Responsibly driving market growth through multiple levers
• Sustainability progress
• Selected as a European Climate Leader by Financial Times
• Launch of new pan-industry Eco Rating of mobile phones
• Awarded highest level (Golden) in Estonian Responsible Business Index
6 451 6 366 6 650 6 441 6 580
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Underlying
1 018 920 894 791 756
EO-items Roaming Copper legacy*
SWEDEN FINANCIALS
• Service revenues declined 1.8% (SEK 135m), of which copper related (SEK 171m)
• Underlying service revenues, ex copper and one offs, up 2.0%
• Consumer segment stable, with mobile growing 2.1%, excl 2020 one-offs
• Enterprise segment declined 1.4%, with mobile growing 2.5%
• OPEX reduced by 4.1%
• EBITDA stabilized, despite legacy declines accelerating
5 * Copper legacy = Fixed telephony and xDSL
Service revenuesReported currency, in millions, like for like growth
Service revenues splitReported currency, in millions, like for like growth
Adj EBITDAReported currency, in millions, like for like growth
7 469 7 286 7 544 7 233 7 336
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Consumer Enterprise Other
3 316 3 433 3 359 3 235 3 308
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Adj EBITDA
-1.8% +2.0% -0.2%
Q2 Highlights
SWEDEN KPIS
• Consumer postpaid base growing
• Enterprise base stable
• ARPU growth in both Consumer and Enterprise
• Solid growth in IPTV subs in both MDUs and SDUs
• ARPU back to pre-pandemic levels
6
• Consumer BB base relatively stable - fiber off-setting copper decline
• ARPU supported by xDSL pricing in June
Mobile postpaid subs and ARPUSubscriptions 000’, ARPU in SEK
Broadband subs and ARPUSubscriptions 000’, ARPU in SEK
TV subs and ARPUSubscriptions 000’, ARPU in SEK
929 946 960 977 994
337 309 282 259 232
309 310 315 314 314
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Fiber and FWA Copper
901 919 929 935 949
161 168 171 175 174
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Subscriptions ARPU
+7%
4 103 4 120 4 129 4 096 4 103
241 242 241 239244
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Postpaid ex M2M ARPU
Q2 Highlights
FINLAND
• Service revenues declined 1.6% (SEK 50m) due to mobile, regulation and ICT/Business solutions
• Consumer segment stable, TV growth offsets mobile decline
• Enterprise segment impacted by lower ICT business solutions, while mobile is stable
Q2 Highlights
• OPEX increased by 3.6% as certain cost items returned
• 5G subscriber base continues to grow, now at more than 100k
• CMore now Finland’s second largest pay streaming service (after Netflix)
7
Mobile postpaid subs and ARPUSubscriptions 000’, ARPU in EUR
2 774 2 763 2 750 2 747 2 779
19.1 18.9 19.3 18.8 18.8
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Postpaid ex M2M ARPU
Service revenuesReported currency, in millions, like for like growth
3 233 3 085 3 231 2 991 3 017
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Consumer Enterprise Other
-1.6%
Adj EBITDAReported currency, in millions, like for like growth
-9.1%
1 223 1 2801 154 1 070 1 046
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Adj EBITDA
NORWAY
• Service revenues declined 1.5% (SEK 43m) due to ICE contract (SEK 67m)
• EBITDA down 2.9% (44m) mainly due to ICE contract
• OPEX increased by 4.4% as certain cost items returned
Q2 Highlights
• Consumer growth is broad - mobile customer base and ARPU both growing, BB growing high single digits, TV +ve net intake
• Enterprise segment growth driven by mobile
• Enterprise customer wins: Norwegian postal service and renewal with national broadcaster NRK
8
Mobile postpaid subs and ARPUSubscriptions 000’, ARPU in NOK
1 860 1 857 1 846 1 864 1 879
266
277 273267 269
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Postpaid ex M2M ARPU
Service revenuesReported currency, in millions, like for like growth
Adj EBITDAReported currency, in millions, like for like growth
2 760 2 851 2 763 2 756 2 827
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Consumer Enterprise Other
1 5101 643 1 523 1 543 1 530
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Adj EBITDA
-1.5% -2.9%
LED MARKETS
Q2 Highlights
9
LithuaniaReported currency, in millions, like for like growth
EstoniaReported currency, in millions, like for like growth
DenmarkReported currency, in millions, like for like growth
Service revenues EBITDA Service revenues EBITDA Service revenues EBITDA
+3.7%+5.5% +6.1% +12.0% -1.2% -8.1%
804 780 788 781 811
Q220
Q320
Q420
Q121
Q221
375 380 370 368 370
Q220
Q320
Q420
Q121
Q221
655 649 643 642 665
Q220
Q320
Q420
Q121
Q221
281 302 281 292 299
Q220
Q320
Q420
Q121
Q221
992 966 965 921 937
Q220
Q320
Q420
Q121
Q221
255274 269
216 221
Q220
Q320
Q420
Q121
Q221
• Service revenues and EBITDA developing positively
• Growth of mobile (+5.2%) and fixed (+5.9%)
• Consumer segment growing 11% (driven by mobile), enterprise stable
• Service revenues declined as Fixed continues to burden
• Mobile turned to growth (2.1%)
• EBITDA temporarily impacted by lower equipment margin
• Service revenues and EBITDA developing positively
• Mobile turned to growth (1.9%) while fixed growth accelerated (8.8%)
• Growth in both consumer and enterprise segments
TV & MEDIA
Service revenuesReported currency, in millions, like for like growth
Q2 Highlights
10
Adj EBITDAReported currency, in millions, like for like growth
1 582 1 633
2 3401 904
2 271
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
TV Advertising Other
311249 200
120
575
Q2 20 Q3 20 Q4 20 Q1 21 Q2 20
Adj EBITDA
C More subs and ARPUDirect OTT subscriptions 000’, ARPU in SEK
+45.1% +84.7%
439 445 537 528 564
138 179217 210 202
116
144156
146163
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
SWE FIN DEN ARPU
• Service revenues grew 45.1% from growth in both Advertising (42.9%, SEK 454m) and Pay (57.7%, SEK 277m)
• EBITDA up SEK 264m as higher content costs were more than offset by revenue growth
• OTT subscriber growth from Sport, with strong ARPU trend
• Advertising recovery driven by demand returning, increased inventory and higher pricing
• Usage on digital platform continues to increase (+25%)
• UCL will drive increased content costs in 2nd half of 2021
Q2Interim report
January – June 2021
• Growth driven by TV & Media, but also improving trends in mobile
• Consumer service revenues grew by 0.5% excl. TV & Media
• Enterprise service revenues flat excl. TV & Media
• Service revenues growth YTD of +0.4%
SERVICE REVENUES
12
Service revenues bridgeLike for like growth
• Sweden impacted by legacy decline
• Pressure on mobile and fixed revenues in Finland
• Lower wholesale revenues in Norway
• Solid growth in the Baltics – strong recovery for TV & Media
19.1 18.7 19.8 18.7 18.9
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Consumer Enterprise Other
Service revenues developmentSEK in billions, in reported currency, like for like growth
+3.2%
2021: Flat to low single digit growth in stable fx excl. Telia Carrier (2020 base SEK 73.0bn)2021-2023: Low single digit growth in stable fx excl. Telia Carrier
OUTLOOK
+3.2%
OPERATIONAL EXPENSES
-4.0%-2.9%
2.9%
-3.0%
0.0%
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
13
• OPEX increase in Finland and Norway compensated by Sweden
• Impact from transformation and resource reduction increasingly visible ahead
• OPEX lower by 1.6% YTD
• Structural resource costs decline by SEK 100m offset by salary inflation, return of certain cost items and temporary investments in areas such as customer support
• Other cost reduction from lower IT and bad debt, partly offset by higher energy costs
OPEX bridgeLike for like growth
OPEX developmentOperational expenses, y-o-y, like for like growth
To reduce OPEX by SEK 2bn until 2023 and by SEK 4bn until 2025
+0.0%
EBITDA
14
• Sweden stable
• Finland hurt by lower revenues and higher OPEX
• Norway growing excluding wholesale burden
• TV & Media supported by revenue recovery
7.7 8.27.5 7.2 7.7
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
+1.9%
• EBITDA growth driven by service revenues and improved equipment margin partly offset by higher content costs
• EBITDA growth YTD of +2.0%
Adjusted EBITDA bridgeLike for like growth
Adjusted EBITDA developmentSEK in billions, in reported currency, like for like growth
2021: Flat to low single digit growth in stable fx excl. Telia Carrier (2020 base SEK 29.8bn)2021-2023: Low to mid single digit growth in stable fx excl. Telia Carrier
OUTLOOK
+1.9%
CASH CAPEX
15
• Cash CAPEX R12 to net sales at SEK 13.4bn or 15.1%
• Cash CAPEX to gradually increase going forward
• Main risk relate to COVID-19 delays and supply chain issues
• Increase in mobile network activities related to modernization and 5G but delayed impact on cash CAPEX
• Decline in fiber related investments in Sweden
• Slight increase in prod dev/IT due to transformation related investments
15
12
13
14
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
13.43.4
3.0
4.2
2.83.4
Q2 20 Q3 20 Q4 20 Q1 21 Q2 21
Mobile NW Fixed NW Prod dev/IT Other
Cash CAPEX by typeReported currency in SEK billion, excluding licenses and spectrum fees
Cash CAPEX developmentReported currency in SEK billion, excluding licenses and spectrum fees, R12
2021: Around SEK 14.5-15.5bn (excl. Telia Carrier and license and spectrum fees)2023: Return to around 15% of net sales by 2023 (excl. Telia Carrier and license and spectrum fees)
OUTLOOK
OPERATIONAL FREE CASH FLOW
02468
101214
Q2 19 Q4 19 Q2 20 Q4 20 Q2 21
Operational free cash flow Ex NWC contr.
12.7
• Strong cashflow R12 driven by working capital contribution
• Cash flow excl working capital R12 still in line with minimum dividend commitment of SEK 8.2bn
• Operational free cash flow YTD of SEK 6.1bn
16
• Phasing effects impacting both tax and interest costs
• Other increased due to business transformation and M&A
• Net working capital impacted by vendor financing
Operational free cash flow bridgeReported currency, SEK billion
Operational free cash flow developmentReported currency, SEK billion, R12
8.2
Minimum dividend level
2021-2023: The operational free cash flow is expected to cover the minimum dividend commitment throughout the periodFrom 2022: Operational free cash flow excl change in NWC is expected to cover the minimum dividend commitment
-6.6%
TOWER TRANSACTION SUMMARY
• Transaction fully in line with plans from the Investor Brief in January
• Crystalizing infrastructure value
• Bringing in operational excellence from experienced partner
17
RATIONAL
TRANSACTION DETAILS
TIME LINE
• Brookfield and Alecta acquired 49% of Telia Company’s tower business in Finland and Norway
• The price for the 49% equals a full enterprise value of EUR 1,524
• The EV corresponds to an EV/EBITDA of 27x 2020
• Total cash proceeds to Telia Company amounts to EUR 722 million
• Net debt to EBITDA for Telia Company including tower proceeds 2.07x
• The transaction involves 4,700 number of towers with total revenues of EUR 88m and EBITDA of EUR 56m in 2020 (post leasing)
• Impact on Telia Company operational free cash flow will be marginal
• The transaction is expected to close in the fourth quarter of 2021 and is subject to regulatory approval
NET DEBT AND LEVERAGE
• Positive impact on net debt and leverage Q2 from Telia Carrier proceeds
• Excluding Telia Carrier proceeds net debt is fairly unchanged as first dividend tranche was paid in Q2
• Proforma leverage Q2 of 2.07x (including the tower proceeds)
= Leverage ratio (multiple, rolling 12 months)
18
Net debt and leverage developmentReported currency, SEK billion and leverage ratio
Net debt/ adjusted EBITDA in the range of 2.0-2.5x
2.52x
2.07x
-8.0
2.32x
2021-2023 2021
CASH CAPEXReturn to around 15% of net sales by 2023 (excl.
Telia Carrier and license and spectrum fees)
Adjusted EBITDA Low to mid single digit growth in stable fx excl. Telia
Carrier
SERVICE REVENUESLow single digit growth in stable fx excl. Telia
Carrier
SERVICE REVENUESFlat to low single digit growth in stable fx excl.
Telia Carrier (2020 base SEK 73.0bn)
CASH CAPEXAround SEK 14.5-15.5bn (excl. Telia Carrier and
license and spectrum fees)
Adjusted EBITDA Flat to low single digit growth in stable fx excl.
Telia Carrier (2020 base SEK 29.8bn)
OUR OUTLOOK (UNCHANGED)
19
Q2Interim report
January – June 2021
Q2 2021 IN SUMMARY...
21
• Continuing to deliver in line with expectations and outlook
• Mobile returned to growth in 6 out of 7 countries
• Good momentum in Sweden, Norway and the Baltics
• TV & Media recovery accelerating, and preparing for full potential
• Good progress made on our strategic priorities
• Telia Carrier transaction closed
• First tower transaction announced
• Outlook for 2021 unchanged
• Clear roadmap to create a Better Telia and generate attractive shareholder returns
INSPIRING OURCUSTOMERS
CONNECTING EVERYONE
TRANSFORMING TO DIGITAL
DELIVERING SUSTAINABLY
Q&a
DISCLAIMER & FORWARD-LOOKING STATEMENTS
This document contains the use of alternative performance measures (APM’s) to provide readers with additional financial information that is regularly reviewed by management, such as adjusted EBITDA, CAPEX and operational free cash flow. These APM’s should not be viewed as a substitute for Telia Company’s IFRS based figures, but as a complement. APM definitions can be found in Telia Company’s interims reports and Annual and Sustainability Report 2020 and may be defined differently by other companies and are therefore not alwayscomparable to similar measures used by other companies. Telia Company’s management considers these APM’s combined with IFRS performance measures and in conjunction with each other, the most appropriate way to measure the performance of Telia Company.
Statements made in this document relating to future status or circumstances, including future performance and other trend projections are forward-looking statements. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Telia Company.