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Q1 2007 FINANCIAL REPORT Lars-Johan Jarnheimer President and CEO

Quarterly report (Q1) 2007

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Presentation Tele2s Quarterly report, 2007 (Q1)

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Page 1: Quarterly report (Q1) 2007

Q1 2007FINANCIAL REPORT

Lars-Johan JarnheimerPresident and CEO

Page 2: Quarterly report (Q1) 2007

2

TELE2: Q1 2007 RESULTS

• Mobile revenues in Q1 2007 increased by 29 percent to SEK 5.2billion

• Strong broadband intake during Q1 2007, adding a total of 254,000new broadband customers

• Fixed telephony EBITDA margin improved to 14 percent in Q1 2007

SEK MILLION 2007 2006Q1 Q1

Continuing operationsOperating revenue 12,837 12,243Net customer intake (thousands) 281 617EBITDA 1,488 1,221

Page 3: Quarterly report (Q1) 2007

3

UP DATE ON THE CURRENT STRATEGICREVIEW• We will see result of the current strategic review in the

second quarter• The first transaction is likely in the next couple of weeks• The transaction between Tele2 and SFR will receive a

preliminary indication from the EU competition authoritiesin May

• There is now a firm action plan for the MVNO businesses

CurrentStrategicReview isprogressingaccording toplan

Page 4: Quarterly report (Q1) 2007

4

CONTINUED SHIFT TOWARDSINFRASTRUCTURE BASED SERVICES

Sales - Q1 2007

42%

19%

39%

Sales - Q1 2006

35%

14%

51%

Sales - Q1 2007

42%

19%

39%

Mobile Broadband (resale & direct access) Fixed telephony resale

Sales - Q1 2006

35%

14%

51%

Mobile Broadband (resale & direct access) Fixed telephony resale

Page 5: Quarterly report (Q1) 2007

5

EBITDA CONTRIBUTION WILL FOLLOWEBITDA contribution per segment

-500

0

500

1000

1500

2000

Q1 2007 Q1 2006

(SEK)

Mobile telephony Fixed telephony (resale & dial-up) Broadband (resale, direct & LLUB)

Page 6: Quarterly report (Q1) 2007

6

SEK MILLION 2007 2006Q1 Q1

Mobile TelephonyOperating revenue 5,219 4,038Net customer intake (thousands) 747 909EBITDA 1,088 746

CONTINUED STRONG PERFORMANCEIN MOBILE TELEPHONY

• Mobile revenues in Q1 2007 increased by 29 percent to SEK 5.2billion

• Russia and Baltic developing above expectations.Total customer base for the market areain excess of 10.8 million

• Mixed development in MVNO.• Clean up of customer base in the Nordic market area by

approximately 900,000 in Q2 2007

Page 7: Quarterly report (Q1) 2007

7

SEK MILLION 2007 2006Q1 Q1

Broadband resale, DA/LLUBOperating revenue 2,276 1,602Net customer intake (thousands) 255 144EBITDA -361 -295

STRONG BROADBAND INTAKE

• Strong broadband intake during Q1 2007, adding a total of254,000 new broadband customers

• Broadband is being evaluated market by market.– Italy showing strong gross margin development in the

quarter

Page 8: Quarterly report (Q1) 2007

8

TELE2 ITALY: DIRECT ACCESS

• Coverage improved to 40 % of Italian households.• Tele2 looks to expand beyond 50 %

• Up-selling from single to dual play services• Larger customer base leading to scale effects

ITALY DA

Q3 -06 Q4 -06 Q1 -07

Net Intake

ITALY DA

-120%

-100%

-80%

-60%

-40%

-20%

0%

20%

40%

60%

Q3 -06 Q4 -06 Q1 -07

Gross Margin 2

52 %

Page 9: Quarterly report (Q1) 2007

9

STABLE MARGIN – INCREASEDCOMPETITION

• Fixed telephony EBITDA margin improved to 14 percent in Q12007

• Higher level of competition from primarily mobile operators– Larger net customer outflow– Stronger ARPU decline than expected

• Cross selling still an important opportunity

SEK MILLION 2007 2006Q1 Q1

Fixed telephony resaleOperating revenue 4,796 6,017Net customer intake (thousands) -720 -436EBITDA 649 662

Page 10: Quarterly report (Q1) 2007

10

Q1 2007 SUMMERIZED

• Strong development in MobileTelephony, with a revenue growthof 29 % in Q1

• Continued strong broadbandintake during Q1 2007, adding254,000 new broadbandcustomers

• Improving EBITDA margins infixed line. However, competition isincreasing

– Important for Tele2 to moveswiftly into more infrastructurebased operations

Operating revenue*EBITDA*

Net intake (‘000)

TELE2: CONTINUED OPERATIONS

12,837

1,488281

12,243

1,221617

+5 %

+22 %-54 %

Q1 2007 Q1 2006MSEK

*Excluding non-recurring items

Page 11: Quarterly report (Q1) 2007

11

NO CHANGE TO FINANCIAL GUIDENCE ON 2007

• Outlook for 2007 remains unchanged:

“We expect significantly higher EBITDA and higher organicgrowth compared to 2006”

Page 12: Quarterly report (Q1) 2007

Q1 2007FINANCIAL REPORT

Donna CordnerEVP Corporate Finance & Treasury

Page 13: Quarterly report (Q1) 2007

13

FINANCIAL OVERVIEW FOR Q1 2007 –CONTINUING OPERATIONS

3 0%1,181CAPEX (MSEK)

-336 -54%281Customer Net Additions (thousands)

267 22%

594 5%

1,488EBITDA (MSEK)

12,837Revenues (MSEK)

Difference to Q1 2007Q1 2007

Page 14: Quarterly report (Q1) 2007

14

OPERATING REVENUE PER SEGMENTMOBILE

0

1 500

3 000

4 500

6 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

(MSEK) FIXED TELEPHONY RESALE

0

2 000

4 000

6 000

8 000

10 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

(MSEK)

BROADBAND RESALE

0

100

200

300

400

500

600

700

800

900

1 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

(MSEK)

DIRECT ACCESS & LLUB

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

(MSEK)

Page 15: Quarterly report (Q1) 2007

15

EBITDA AND NET INTAKE PER SEGMENTMOBILE

0

200

400

600

800

1 000

1 200

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

0

200

400

600

800

1 000

1 200

1 400

1 600

'000

EBITDA Net intake

FIXED TELEPHONY RESALE

0

200

400

600

800

1 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

-1 200

-1 000

-800

-600

-400

-200

0

200

400

600'000

EBITDA Net intake

BROADBAND RESALE

-300

-250

-200

-150

-100

-50

0

50

100

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

-100

-50

0

50

100

'000

EBITDA Net intake

DIRECT ACCESS & LLUB

-200

-150

-100

-50

0

50

100

150

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

-40

10

60

110

160

210

'000

EBITDA Net intake

Page 16: Quarterly report (Q1) 2007

16

P&L IMPACT FROM BROADBAND GROWTH

1,300 Direct access and LLUB (SEK)

NET INTAKE

335P&L impact from Broadband growth (MSEK)

42Broadband resale (’000)

211Direct access and LLUB (’000)

ACQUISITION COST1,450 Broadband resale (SEK)

1,500

250Q1 2007

39

113

2,050

Q3 2006Q4 2006

1,800

445

44

210

1,550

• Italy showing stronger intake of DA/ULL customers directly,rather than migrating customers from existing broadbandresale base

• Launch of broadband services in Portugal affecting SACnegatively.

Page 17: Quarterly report (Q1) 2007

17

MOBILE SALES +29 %MOBILE

0

1 500

3 000

4 500

6 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

(MSEK)

Sales

MOBILE

0

200

400

600

800

1 000

1 200

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

0

200

400

600

800

1 000

1 200

1 400

1 600

'000

EBITDA Net intake

Page 18: Quarterly report (Q1) 2007

18

RUSSIA SALES +135 %

• Net intake of 644,000 customers to a total of 7,1 million customers

• ARPU of 52 SEK in Q1 2007 compared to 42 SEK in Q1 2006

• EBITDA margin 28 %

Russia Mobile

0

200

400

600

800

1 000

1 200

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

Sales

Russia Mobile

-50

0

50

100

150

200

250

300

350

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

0

200

400

600

800

1 000

1 200'000

EBITDA Net intake

Page 19: Quarterly report (Q1) 2007

19

BALTIC MOBILE SALES +18 %Baltic Mobile

200

400

600

800

1 000

1 200

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

Sales

Baltic Mobile

0

50

100

150

200

250

300

350

400

450

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

0

50

100

150

200

250'000

EBITDA Net intake

• Revenue growth for the Baltic region was strong at 19 percent

– All 3 countries had double digit sales growth

• EBITDA for the Baltic region grew 25 percent

• In Lithuania Tele2 has been able to capture 11 percentof the corporate market

Page 20: Quarterly report (Q1) 2007

20

SWEDEN MOBILE SALES +8 %

• EBITDA-margin effected by higher marketing costs in Q1 2007• More than 48 000 post-paid net adds in Q1

Sweden Mobile

0

500

1 000

1 500

2 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

Sales

Sweden Mobile

0

200

400

600

800

1 000

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

-60

-40

-20

0

20

40

60

80'000

EBITDA Net intake

Page 21: Quarterly report (Q1) 2007

21

NORDIC EXCL. SWEDENMOBILE SALES +30 %

Nordic excl. Sweden - Mobile

0

200

400

600

800

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

Sales

Nordic excl. Sweden - Mobile

-60

-40

-20

0

20

40

60

80

Q4 Q1 Q2 Q3 Q4 Q1

2006 2007

MSEK

-60

-40

-20

0

20

40

60

80

100

'000

EBITDA Net intake

Page 22: Quarterly report (Q1) 2007

22

NET DEBTNet debt

0

3 000

6 000

9 000

12 000

15 000

18 000

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2005 2006 2007

MSEK

0,0

0,4

0,8

1,2

1,6

2,0

2,4

2,8

3,2

3,6

Net Debt Net Debt to EBITDA

Page 23: Quarterly report (Q1) 2007

23

DO NOT FORGET

• Conference call todayat 15.00 CETWeb-cast at www.tele2.com

• Q2 2007: 25 July 2007

Visit www.tele2.comContactsLars-Johan JarnheimerTelephone: + 46 (0)8 562 640 00President and CEO, Tele2 AB

Lars TorstenssonTelephone: + 46 (0) 702 73 48 79IR Director, Tele2 AB