Title: TeliaSonera Interim Report Jan - Mar 2003
1Interim report January-March 2003 Anders
Igel President and CEO
2Strong earnings improvement
- January-March 2003 in brief
- Implemented efficiency measures are yielding
results - EBITDA excl. non-recurring items margin 37.2
(30.4) - Low CAPEX level
- Stronger free cash flow
- No non-recurring costs
CAPEX
Operating income excl. non-recurring items
EBITDA excl. non-recurring items
Free cash flow
SEK million
3Improved earnings
- EBITDA excl. non-recurring items
- SEK 1,590 million, Q1 2002-Q1 2003
SEK million
Other
Lower cost in Sweden mobile
Lower cost in Sweden fixed
Continued strong earnings in Norway mobile
Improvement in Denmark mobile
Consolidation of Fintur
Narrowing Carrier losses
Total
4Decisions and actions in problem areas yielding
results
- International Carrier
- Restructuring program ongoing
- Improved EBITDA, lower CAPEX
- Denmark
- Turn-around program yielding results
Q4 2002
Q1 2003
Q3 2002
Q4 2002
Q1 2003
Q3 2002
SEK million
SEK million
- International 3G
- No additional risk exposure
- Xfera guarantees reduced by 80
- Soneras Service Businesses
- Losses almost eliminated
5Kim Ignatius CFO
6Key figures
SEK million (except percentages and personnel) Jan-Mar 2003 Jan-Mar 2002 Change
Net sales 20,349 19,642 707
Growth in net sales () 3.6 n/c
EBITDA excl. non-recurring items 7,562 5,972 1,590
Margin () 37.2 30.4
Income from associated companies 23 2,419 -2,396
Operating income 3,227 4,625 -1,398
Operating income excl. non-recurring items 3,227 2,010 1,217
Income after financial items 2,711 4,674 -1,963
Net income 1,602 3,878 -2,276
CAPEX 1,676 2,653 -977
Free cash flow 3,897 -289 4,186
Average personnel 26,822 31,587 -4,765
7Net sales
SEK million Jan-Mar 2003 Jan-Mar 2002 Change Jan-Dec 2002
Sweden 10,486 10,578 -92 43,381
Finland 4,368 4,201 167 17,515
Norway 1,515 1,200 315 5,537
Denmark 717 711 6 2,783
Baltic 1,413 1,512 -99 6,309
Eurasia 558 - 558 847
International Carrier 1,492 1,628 -136 6,861
Holding 570 873 -303 2,737
Corporate 1 12 -11 21
Eliminations -771 -1,073 302 -5,012
The Group 20,349 19,642 707 80,979
8Operating income excl. non-recurring items
SEK million Jan-Mar 2003 Jan-Mar 2002 Change Jan-Dec 2002
Sweden 2,717 1,916 801 8,936
Finland 690 681 9 2,056
Norway 81 -74 155 -42
Denmark -202 -289 87 -2,234
Baltic 275 309 -34 1,537
Eurasia 133 18 115 -76
Russia 32 4 28 -43
Turkey 54 858 -804 -333
International Carrier -199 -510 311 -1,992
Holding -208 -730 522 -1,231
Corporate -182 -172 -10 -568
Eliminations 36 -1 37 -18
The Group 3,227 2,010 1,217 5,992
9CAPEX
SEK million Jan-Mar 2003 Jan-Mar 2002 Change Jan-Dec 2002
Sweden 601 1,122 -521 4,453
Finland 391 413 -22 2,151
Norway 161 212 -51 1,094
Denmark 74 289 -215 953
Baltic 132 286 -154 1,334
Eurasia 225 - 225 234
International Carrier 27 198 -171 1,117
Holding 61 130 -69 355
Corporate 4 3 1 19
The Group 1,676 2,653 -976 11,710
of net sales 8.2 13.5 14.5
10Cash flow statement
SEK million Jan-Mar 2003 Jan-Mar 2002 Change Jan-Dec 2002
Cash flow from operating activities 5,586 2,326 3,260 20,717
CAPEX (cash effect) -1,689 -2,615 926 -11,183
Free cash flow 3,897 -289 4,186 9,534
Other investing activities 404 1,075 -671 7,685
Cash flow before financing activities 4,301 786 3,515 17,219
Financing activities -5,401 -10,074 4,673 -21,889
Change in cash and cash equivalents -1,100 -9,288 8,188 -4,670
- Net debt reduced by SEK 3,427 million
11Balance sheet
SEK million Mar 31, 2003 Dec 31, 2002 Change
Total assets 198,661 205,370 -6,709
Shareholders equity 109,404 108,829 575
Net debt 34,648 38,075 -3,427
Equity-to-assets ratio1 54 52 2
Net debt-to-equity ratio1 32 36 -4
- High level of financial flexibility
- Retaining sufficient long-term liquidity
- TeliaSonera is one of the best rated telecom
operators in Europe
1) Equity has been adjusted by deducting the
proposed dividend.
12Anders Igel President and CEO
13Rapid integration of operations
- Three months after the merger
- Strategy in place and communicated
- One head office established and staffed
- New divisions of responsibility implemented
- Profit Centers organized and staffed
- Competence Centers structure introduced
14Several synergy initiatives taken during the
quarter
- Negotiations with suppliers
- Elimination of overlaps
- Corporate functions
- Network resources
- MMS platforms
- IT software licenses
- Roaming agreements
- Initiatives taken thus far are expected to yield
- Annual cost savings of SEK 436 million by the end
of 2005 - Annual CAPEX savings of SEK 127 million by the
end of 2005 - Synergies ahead of schedule
- Minor effect during the first quarter
15Continued stand alone improvements
- Efficiency improvements
- Sweden
- Efficiency programs last year yielding results
- Internet Business EBITDA positive
- Redundancies announced Number of job reductions
will be determined before summer - Finland
- Efficiency programs last year resulting in
maintained margins in mobile - Redundancy of approx. 400 jobs
16Enhanced customer focus
- Increase market shares - increase market efforts
In Sweden In Finland In other operations
- Norway
- Several market activities
- Denmark
- Market activities planned
- Baltic's
- MMS launched in Latvia
- Eurasia
- Strong growth
- Russia
- Over 600,000 new customers
- Turkey
- Retained leading market position
- Consumer segment
- Several new services
- Colour services
- Business segment
- Single point of contact
- Large Corporate segment
- Positive response to pan-Nordic services
- Operators segment
- Increased demand for mobile products
- Consumer segment
- New offers to counter market share drop
- Business segment
- Campaign starting to pay off
- Large Corporate segment
- Prestigious business agreements
- Operators segment
- Strong growth in fixed voice
17Profit enhancement
Improved profits and cash flow through
Three months after the merger
Realization of synergies
- Synergies ahead of schedule
- Rapid integration
- Stronger margins result of successful
efficiency improvements - Internet Services EBITDA positive
- Several initiatives of enhanced customer
orientation
Stand-alone efficiency improvements
Improving under-performing businesses
- International Carrier and Denmark improving
Profitable growth
- Enhanced customer focus
- New offerings and marketing efforts
18Outcome compared with outlook
Key figures Key figures Group level mid-term targets
Revenue Revenue Few percentage points growth annually 3.6
EBITDA excl. non-recurring items EBITDA excl. non-recurring items Increasing margin, approaching 34 37.2
CAPEX / Sales Few percentage points higher than 2002 (14.5) Few percentage points higher than 2002 (14.5) 8
Outcome Q1
- Increased market efforts will pressure margins
- Efficiency measures yielding faster results
- Sustainable mid-term EBITDA margin of 34
expected to be reached sooner - Full year CAPEX expected around 2002 level
- Dividend is doubled this year and stated policy
is to increase dividend yearly
19Focus going forward
- Commercial actions win back market shares
- Continued synergy realization
- Efficiency improvements
20Forward-looking statements
- This document contains statements concerning,
among other things, TeliaSonera's financial
condition and results of operations that are
forward-looking in nature. Such statements are
not historical facts but, rather, represent
TeliaSonera's future expectations. TeliaSonera
believes that the expectations reflected in these
forward-looking statements are based on
reasonable assumptions however, forward-looking
statements involve inherent risks and
uncertainties, and a number of important factors
could cause actual results or outcomes to differ
materially from those expressed in any
forward-looking statement, including
TeliaSonera's market position, growth in the
telecommunications industry in Europe, the
effects of competition and other economic,
business, competitive and/or regulatory factors
affecting the business of TeliaSonera and the
telecommunications industry in general.
Forward-looking statements speak only as of the
date they were made, and, other than as required
by applicable law, TeliaSonera undertakes no
obligation to update any of them in light of new
information or future events.
21The Nordic and Baltic telecommunications leader