year-end report january – december 2020 q4...higher opex due to marketing and call center...

PRESIDENT & CEO

Q4AlliSON KIRKBY

Year-end REPORT January – December

2020

GROUP HIGHLIGHTS – Q4 2020

2

Mobile subscriptionrevenues

Service revenues

Adjusted EBITDA

EBITDA-cash CAPEX**

Operational Free Cash Flow YTD Q4

Q4 2020

% Change reported

% Change LFL* SEK billion

7.8

19.8

7.5

3.3

12.1

-4.5%

+4.0%

-5.5%

-18.6%

-3.8%

-1.1%

-2.1%

-6.6%

• COVID-19 impacted service revenues negatively by ~SEK 400 million, and EBITDA by ~SEK 200 million

• Excluding COVID-19 impacts, service revenues were in-line with last year and EBITDA declined by ~4% LFL

• A non-recurring pension benefit in the prior year negatively impacted the EBITDA comparison by ~1% LFL

• Cash CAPEX increased by SEK 0.3 billion due to network modernization

* LFL= like for like** Adjusted EBITDA less cash CAPEX excluding licenses and spectrum

Comments

DELIVERING ON PRIORITIES

3

CONNECTIVITY

CONVERGENCE

CUSTOMER EXPERIENCE

COST CONTROL

CAPITAL ALLOCATION

• Resilient business with stable service revenues, ex. roaming

• A strong quarter for B2B across our largest markets

• TV/Media recovery faster than expected

• Digital viewing and SVOD subscription growth particularly strong

• 5G roll-out accelerating across the Group

• Sweden awarded best mobile network for 4th consecutive year

• Sweden spectrum auction concluded with Telia acquiring the largest allocation

• New COVID-19 lock-downs impacted call center performance and retail footfall

• OPEX increased in line with our expectations

• BoD proposes 2020 annual dividend of SEK 2.00 per share (subject to AGM approval)

SWEDEN – Q4 2020

-1.8%

-8.4%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420

SERVICE REVENUES & ADJUSTED EBITDALike for like growth

Service revenues EBITDA

• Service revenue development improved sequentially

• EBITDA declined by SEK 309 million from

• Legacy revenue pressure

• Prior year pension refund

• Higher OPEX due to marketing and call center staffing

Highlights

Subs.(q-o-q)

ARPU(y-o-y)

+10k -5% -13k +2%

10

Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

ARPU(y-o-y)

0%

Subs.(q-o-q)

ARPU(y-o-y)

SUBSCRIPTIONS & ARPU developmentPostpaid subscriptions ex. M2M, q-o-q in 000’, ARPU based on postpaid mobile subscription revenues ex. M2M and roaming, in local currency

-1% -6%

Excl. Covid-19 impact

• Strong end to year in B2B Public & Key segment

• Continued growth in postpaid subscriptions

• Number of converged customers increased to 309k

• Best network* for the 4th consecutive year

• Telia awarded 120 MHz in the 5G auction

MOBILE

TV BROADBAND

4* According to Umlaut (formerly P3)

FINLAND – Q4 2020

-1.9%

-4.9%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420


Subs.(q-o-q)

ARPU(y-o-y)

-16k -7% +6k +2%

-13

Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

ARPU(y-o-y)

+3%

Subs.(q-o-q)

ARPU(y-o-y)



• Service revenue development improved sequentially

• B2B service revenue turned to growth

• EBITDA declined by SEK 62 million from

• Lower revenues

• Weaker equipment margin

0% -4%

MOBILE

TV BROADBAND

Highlights• Consumer mobile improving

• 5G coverage now at 40 percent of population

• 5G phones represent 40 percent of new handset sales

• ARPU improvement from 5G migrations

• Liiga remedies impacting TV subscriptions


5

NORWAY – Q4 2020

6

-2.1%

11.6%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420



Subs.(q-o-q)

ARPU(y-o-y)

-2k -5% +8k -1%

-11Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

ARPU(y-o-y)

+4%

Subs.(q-o-q)

ARPU(y-o-y)


0%

+14%

• Service revenue development driven by Mobile and B2B

• Strong EBITDA relative to a weak quarter in 2019

• Good progress on integration synergies and cost efficiencies

MOBILE

TV BROADBAND

Highlights• Mobile subscriptions down due to B2B

• Improved brand consideration post rebranding

• New mobile portfolio launched with promising early signs

• 100k subscriptions on premium service Telia X

• Added 5G coverage to Bergen – clear roadmap ahead


LED – Q4 2020

7

SERVICE REV. & ADJ. EBITDALike for like growth


• EBITDA growth from good revenue mix development with mobile growing 5% and a continued decline in low margin fixed transit revenues

SERVICE REV. & adj. EBITDALike for like growth

SERVICE REV. & ADJ. EBITDALike for like growth

Service revenues EBITDA Service revenues EBITDA

-0.6%

1.1%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420

-0.4%

4.1%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420

-6.2% -5.4%

Q419

Q120

Q220

Q320

Q420

Q419

Q120

Q220

Q320

Q420


Highlights

+1%

+5%

+3%

+7%

-2% +7%

• Mobile revenue pressure from roaming was offset by a solid development across most segments and continued good cost control

• Revenue development impacted by COVID and a more focused portfolio. Good cost control limited the impact on EBITDA

Excl. Covid-19 impact Excl. Covid-19 impact

TV AND MEDIA – Q4 2020

8

789

Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

Tv SUBSCRIPTIONSC More direct OTT subscriptions, in 000’

• Service revenue pressure continued to ease supported by better development of both advertising and subscription revenues

• EBITDA declined by SEK 255 million from the lower advertising revenues and higher content costs, compared to an all-time high quarter in 2019

Commercial share of viewing (CSOV)

Swedish linear CSOV, ages 15-64

47.1% 51.1%

Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

-4.9%

-56.1%

Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20



Highlights• Record high viewing and consumption on TV4 and TV4

Play - Time spent on TV4 Play up 32 percent in 2020, well ahead of the market

• Strong SVOD subscriber intake with a net gain of 142k

• Increased CSOV also for MTV in Finland

Service revenue bridge q4 2020Like for like

SERVICE REVENUES AND EBITDA – Q4 2020

9

EBITDA bridge Q4 2020Like for like, excluding adjustment items

UnderlyingQ4 19 COVID-19 Pension Q4 20

-6.6%

Mobile TVQ4 19 Broadband Other COVID-19

Q4 20

-2.1%

Excluding COVID-19 impact

• Stable revenue development excluding COVID-19

• Lower roaming and advertising revenues still the main effects from COVID-19

• Excl. COVID-19 EBITDA declined 4% mainly due to:

• Lack of pension refund, higher resource costs and legacy pressure in Sweden

• Lower EBITDA in TV and Media

OPERATIONAL FREE CASH FLOW Q4SEK billion

OPERATIONAL FREE CASH FLOW trendSEK billion, rolling twelve months

OPERATIONAL FREE CASH FLOW – Q4 2020

02468

101214

Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20

SEK 12.1

billion

Q42019

-0.8

0.0

EBITDA less

leasing*

-0.2Interest & tax

3.3

Workingcapital

-0.3

CAPEX Other Q42020

1.0

2.9

+1.9

• Lower EBITDA and higher lease repayments

• Lower interest partly compensated for higher taxes paid

• Strong benefit from working capital

* Repayment of lease liabilities10

net debt and leverage – Q4 2020

• Gross debt reduced by SEK 2 billion

• Cash flow from operations and Turkcellproceeds more than offset increased cash CAPEX and dividend distributions

• Leverage remained unchanged in the quarter at 2.55x

• Proforma leverage post the Telia Carrier transaction still estimated at 2.32x

• Telia Carrier transaction on track to close in Q2 2021

4.2

3.72.7

0.1

OtherTurkcell proceeds

2nd dividend

Q4 20proforma

69.2

78.3

Telia Carrier

proceeds

Q4 20CashCAPEX

-8.0

Q3 20

80.3

Operations Extra dividend

-4.6

-9.2*

2.55x2.55x

= Leverage ratio (multiple, rolling 12 months)

11

NET DEBT and leverage DEVELOPMENTSEK billion and leverage ratio

2.32x

* Equity value

Closing out 2020

12

• Q4 slightly ahead of our expectations

• Telco business resilient throughout 2020

• TV/Media unit recovering

• Supporting our communities remains a priority

• Good progress made on key priorities

• Connectivity

• Convergence

• Customer Experience

• Cost control

• Capital allocation

• Clear roadmap to create a better Telia and generate sustainable long term value

OUR VALUES OF

DARECARE

SIMPLIFY COULD NOT BE MORE RELEVANT

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 2019 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.

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year-end report january – december 2020 q4...higher opex due to marketing and call center...

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