STRATEGY UPDATE 29 JANUARY 2021 - Telia Company
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
S T R AT E G Y U P D AT E 2 9 J A N U A R Y 2 0 2 1
Time Topic
11:00 – 11:20 Introduction & Q4 update
11:20 – 13:00 Strategy update and financial ambitions
13:00 – 14:00 Q&A
2
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1
Q4 % Change % Change
SEK billion Comments
2020 reported LFL*
• COVID-19 impacted service revenues
Service revenues negatively by ~SEK 400 million, and EBITDA
by ~SEK 200 million
• Excluding COVID-19 impacts, service
Mobile subscription revenues were in-line with last year and
revenues EBITDA declined by ~4% LFL
• A non-recurring pension benefit in the prior
year negatively impacted the EBITDA
Adjusted EBITDA comparison by ~1% LFL
• Cash CAPEX increased by SEK 0.3 billion
due to network modernization
EBITDA-cash CAPEX**
Operational Free Cash
Flow YTD Q4
4 * LFL= like for like
** Adjusted EBITDA less cash CAPEX excluding licenses and spectrum
• 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)
5
Like for like growth Excl. Covid-19 impact Postpaid subscriptions ex. M2M, q-o-q in 000’, ARPU based on postpaid mobile subscription
revenues ex. M2M and roaming, in local currency
ARPU
(y-o-y)
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Subs. ARPU Subs. ARPU
(q-o-q) (y-o-y) (q-o-q) (y-o-y)
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
19 20 20 20 20 19 20 20 20 20
Service revenues EBITDA
• Service revenue development improved sequentially • Strong end to year in B2B Public & Key segment
• EBITDA declined by SEK 309 million from • Continued growth in postpaid subscriptions
• Legacy revenue pressure • Number of converged customers increased to 309k
• Prior year pension refund • Best network* for the 4th consecutive year
• Higher OPEX due to marketing and call center staffing • Telia awarded 120 MHz in the 5G auction
6
* According to Umlaut (formerly P3)
Like for like growth Excl. Covid-19 impact Postpaid subscriptions ex. M2M, q-o-q in 000’, ARPU based on postpaid mobile subscription
revenues ex. M2M and roaming, in local currency
ARPU
(y-o-y)
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Subs. ARPU Subs. ARPU
(q-o-q) (y-o-y) (q-o-q) (y-o-y)
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
19 20 20 20 20 19 20 20 20 20
Service revenues EBITDA
• Service revenue development improved sequentially • Consumer mobile improving
• B2B service revenue turned to growth • 5G coverage now at 40 percent of population
• EBITDA declined by SEK 62 million from • 5G phones represent 40 percent of new handset sales
• Lower revenues • ARPU improvement from 5G migrations
• Weaker equipment margin • Liiga remedies impacting TV subscriptions
7
Like for like growth Excl. Covid-19 impact Postpaid subscriptions ex. M2M, q-o-q in 000’, ARPU based on postpaid mobile subscription
revenues ex. M2M and roaming, in local currency
ARPU
(y-o-y)
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Subs. ARPU Subs. ARPU
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 (q-o-q) (y-o-y) (q-o-q) (y-o-y)
19 20 20 20 20 19 20 20 20 20
Service revenues EBITDA
• Service revenue development driven by Mobile and B2B • Mobile subscriptions down due to B2B
• Strong EBITDA relative to a weak quarter in 2019 • Improved brand consideration post rebranding
• Good progress on integration synergies and cost • New mobile portfolio launched with promising early signs
efficiencies
• 100k subscriptions on premium service Telia X
• Added 5G coverage to Bergen – clear roadmap ahead
8
Like for like growth Excl. Covid-19 impact Like for like growth Excl. Covid-19 impact Like for like growth Excl. Covid-19 impact
Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4 Q4 Q1 Q2 Q3 Q4
19 20 20 20 20 19 20 20 20 20 19 20 20 20 20 19 20 20 20 20 19 20 20 20 20 19 20 20 20 20
Service revenues EBITDA Service revenues EBITDA Service revenues EBITDA
• EBITDA growth from good revenue • Mobile revenue pressure from • Revenue development impacted by
mix development with mobile roaming was offset by a solid COVID and a more focused
growing 5% and a continued decline development across most segments portfolio. Good cost control limited
in low margin fixed transit revenues and continued good cost control the impact on EBITDA
9
Like for like growth C More direct OTT subscriptions, in 000’
Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Q1 20 Q2 20 Q3 20 Q4 20 Q1 20 Q2 20 Q3 20 Q4 20
Service revenues EBITDA Q4 19 Q1 20 Q2 20 Q3 20 Q4 20
Swedish linear CSOV, ages 15-64
• Service revenue pressure continued to ease supported by • Record high viewing and consumption on TV4 and TV4
better development of both advertising and subscription Play - Time spent on TV4 Play up 32 percent in 2020, well
revenues ahead of the market
• EBITDA declined by SEK 255 million from the lower • Strong SVOD subscriber intake with a net gain of 142k
advertising revenues and higher content costs, compared
to an all-time high quarter in 2019 • Increased CSOV also for MTV in Finland
10Like for like Like for like, excluding adjustment items
-2.1% -6.6%
Excluding COVID-19 impact
Q4 19 Mobile Broadband TV Other COVID- Q4 20 Q4 19 Underlying COVID-19 Pension Q4 20
19
• Stable revenue development excluding COVID-19 • Excl. COVID-19 EBITDA declined 4% mainly due to:
• Lower roaming and advertising revenues still the main effects • Lack of pension refund, higher resource costs and
from COVID-19 legacy pressure in Sweden
• Lower EBITDA in TV and Media
11SEK billion, rolling twelve months SEK billion
+1.9
14 3.3
2.9
12
-0.3 0.0
10
8
1.0
6
-0.8
4
2 -0.2
0 Q4 EBITDA Interest Working CAPEX Other Q4
2019 less & tax capital 2020
Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20 Q3 20 Q4 20 leasing*
• Lower EBITDA and higher lease repayments
• Lower interest partly compensated for higher taxes paid
• Strong benefit from working capital
12 * Repayment of lease liabilities• Gross debt reduced by SEK 2 billion
SEK billion and leverage ratio
• Cash flow from operations and Turkcell
proceeds 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
Q3 20 Operations Cash 2nd Extra Turkcell Other Q4 20 Telia Q4 20
CAPEX dividend dividend proceeds Carrier proforma
proceeds
= Leverage ratio (multiple, rolling 12 months)
13 * Equity value• Q4 slightly ahead of our expectations
• Telco business resilient throughout 2020
• TV/Media unit recovering
OUR VALUES OF
• 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 COULD NOT BE MORE RELEVANT
sustainable long term value
14S T R AT E G Y U P D AT E 2 9 J A N U A R Y 2 0 2 1
Most digitalized region Relative resilience to COVID-19 Most business friendly region
Digital Economy and Society Index 2020 caused recession Ease of Doing Business Index 2020
– EU and Norway 2020 Real GDP development – EU and Norway
Finland 73 Denmark 85
Sweden
Norway Norway
Denmark Nordics Sweden
Sweden & Baltics EU Lithuania
Estonia
Estonia Finland
Lithuania -3%
EU -4%
-7%
37 66
Source: European Commission Source: World Bank Source: World Bank
16
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Trends we Technology New ways of All-in on Ecosystem Security Customer
see advancements working streaming development concerns experience as a
differentiator
What we Telia has increased Reliable network and Compelling Customers need a Synergies between Focus on NPS
believe relevance as a relevant services provide content key to one-stop- connectivity and drives customer
digitalization partner customer value differentiate shop/aggregator security life time value
17
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1
THROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
THROUGH OUR…
Accelerating the connected lives of Accelerating customer loyalty and Growing the digital infrastructure of
everyone revenue growth beyond connectivity the Nordic and Baltic region
B Y E X C E L L I N G AT …
S O T H AT W E H AV E T H E …Connectivity Experiences Infrastructure
From a position of strength… …we will grow even further
• Best network in core markets, even in high-stress • 5G roll-out enabling new monetization opportunities
COVID-19 times
• Scale private networks (EMN) and grow IoT
• Connectivity business resilient despite COVID-19
• FWA based on 5G, further fiber roll-out and Docsis 3.1
• At the forefront of new technologies upgrade in Norway
• Converged and integrated single network across • Virtualized core and network function (telco cloud)
Telia Company
• RAN modernization program and legacy phase-out
• Potential to recoup almost SEK 1 billion revenue from
roaming with the return of travel
23
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Connectivity Experiences Infrastructure
Consumer
Hub for better connected living
Video services Smart Family Digital subscription eSport Smart Wifi
• On-demand digital viewing • 300% YoY growth • Smooth and simple mobile • Telia eSport series launched • 2.3m managed CPEs as
up 30% • 40% non Telia customers user experience in holistic across all Nordic countries base for Smart Wifi growth
• SVOD service growth app • >65,000 registered users • Smart Wifi launched in
of 20% • NPS 60 for Telia Dot • 6x increase in watched Norway, Sweden & Finland
minutes 2019 to 2020
SVOD=Subscription Video On Demand
24
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Connectivity Experiences Infrastructure
Enterprise
Digitalization partner of choice
Contact Center / ACE Security Telia One
• 20% Nordic market • Full security suite + DDOS • Orchestration platform and full ICT portfolio
share protection combined with connectivity
• NPS > 45 • Identity services
• Only Telco partner with • Professional and managed
Google AI CC services
IoT and EMN Crowd Insights
• 40% of revenues non- • Anonymized and
connectivity aggregated mobility data
• Multi-billion SEK upside for decision making
in augmenting core • Named digital project of
• Significant revenue the year in Sweden CIO
growth in EMN by 2025 awards 2020
EMN=Enterprise Mobile Networks
25
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Connectivity Experiences Infrastructure
…
Fiber
Approximately 4,500,000 homes
passed across five markets
Towers
Approximately 9,000 towers and 3x
as many sites across six markets
26
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Connectivity Experiences Infrastructure
…
What
• Creating a new business line that will own and
manage selected assets in Telia Group
Ongoing assessment of infrastructure assets with initial
• Portfolio will comprise assets that can be owned focus on towers in markets where we act as a challenger
partly by third parties
• Proactively identify relevant partners
Telia Asset Management
Why
Active management of infrastructure assets to:
– Crystalize infrastructure value TowerCo Latvia Finland- FiberCo
– Accelerate funding for investment, and bring Joint fiber NW
further operational excellence from partners
– Dedicate focus in strategy and resources,
centralizing key capabilities
27
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1THROUGH OUR…
B Y E X C E L L I N G AT …
With brands and Through the most trusted, To be simpler, faster, Through an accountable
experiences that go reliable and efficient data driven and with lower and empowered
beyond connectivity modern networks cost organization
S O T H AT W E H AV E T H E …THROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
Inspire Connect Transform Deliver
Starting point Growth levers
• Largest telco customer base in the Nordics and Baltics • Reinventing customer experience and restoring differentiation
… to increase CLV and support price premium
• Leadership in Sweden, Lithuania and Estonia, strong
challenger positions in the rest • Owning the home with more4more while pushing connectivity
… to strengthen cross-selling and customer loyalty
• Convergent position in 5 out of 6 markets
enabling cross-sell and increased loyalty • Digitalize businesses with superior network and relevant services
… to increase revenue in all business segments
• Leading Nordic media house with all time high share of
viewing and growing SVOD • Developing TV and Media to full potential post COVID-19
… to monetize engagement and drive access
• Leading ICT position in Finland, Sweden and Baltics
Unlocking growth across all our markets (1-3%)
• Best NPS in Sweden and Baltics among Telco brands
• Starting to monetize 5G
CLV = Customer Lifetime Value
30
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Market leader Challenger Structural opportunity
Market Market Market
Market share (%) position Market share (%) Market share (%)
position position
Mobile 35 #1 Mobile 32 #2 Mobile 19 #3
Broadband 32 #1 Broadband 26 #3 Broadb… 4 #5
TV 18 #2 TV 21 #3 TV 1 #4
Market Market Market
Market share (%) position Market share (%) position Market share (%) position
Mobile 29 #2 Mobile 37 #2 Mobile 47 #1
Broadband 52 #1 Broadband 18 #2 Broadband 0 n/a
TV 36 #1 TV 21 #2 TV 0 n/a
Market Market
Market share (%) Market share (%) position
position
Mobile 49 #1 Mobile 0 n/a
Broadband 52 #1 Broadband 58 #1
TV 38 #2 TV 43 #1
Note: 2019 market shares, TV includes IPTV and cable TV
31
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Reinventing customer experience
• Great products with emotion through media
• Seamless journeys across platforms
• Personalized experience through analytics
• Differentiating through a premium brand
Customer experience as key differentiator
32
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Starting point Growth strategy
• Network leadership 1. Reinventing customer experience
… through automation, digitalization and personalization
• Strong digital portfolio
2. Growing the number of convergent households
• Best in class TV proposition … by cross-selling and leveraging media assets
• Aggregator of content and partner services 3. Extending mobile leadership and monetizing 5G
… through customer upsell and VAS
• Increasingly launching new digital services
4. Growing TV and Media
…through stronger content portfolio and access with content
5. Accelerating broadband leadership
… through fiber, OCN, FWA and XDSL migration
Telia Life Users Gross intake vs previous Mitt Telia app rating, 6. Increasing brand consideration and preference
year in IPTV since launch up from 2.2 in 2019.
of sport package … through a refreshed brand portfolio and strategy
OCN = Open City network
~ ~
Of BB on converged offer, ARPU uplift in Telia Dot growth YoY
strong potential for further Finland from 5G 2018-2020
penetration
33
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Starting point Growth strategy
• Convergence offerings launched across all key markets with good • Expanding convergence through all channels
traction … with a modularized portfolio
• Customer satisfaction is improving • Driving personalized convergence
…utilizing analytics for automated cross and upselling
• Benchmarks indicate significant growth potential
• Driving engagement
… by combining our media assets with access
Convergence rate fixed/mobile Customers on Mobile churn based on
% of fixed broadband customers convergence offering customers engagement
FR BE NL
– Telia Sweden – Telia Sweden
+70% -60%
-60%
50%-60+%
~25%
Untapped Value accretive 2019 2020 Single mobile Convergence
potential convergence players offerings
34
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Starting point Growth strategy
• High quality product and services portfolio 1. Reinventing customer experience
…through digital customer journeys and intuitive tools
• Trusted partner for digitalization and efficiency
2. Growing connectivity business in fixed and mobile
• Addressing growing demand in multiple new areas … through convergence, quality differentiation and more4more pricing
3. Accelerating horizontal solutions and managed services
… through modularized SME/SOHO portfolio and cross selling in large/public
4. Addressing potential in selected vertical solutions
… through combining our capabilities with industry solution partners
5. Monetizing 5G and ICT capabilities and developing new revenue fields
… through innovation and co-development (IoT, private networks, analytics,…)
6. Lifting group synergies for multinational customers and global partnerships
…through leveraging our market access and ICT competence (e.g. Cygate)
Strategic Partners
~
Telia Ace market Telia named three times in Nordic Municipalities Telia ICT Service Customer rating for YoY growth for
share in the Nordics Gartner’s Magic Quadrant now using Telia Crowd NPS in the Baltics ITdeptaaS ITdeptaaS
during 2020 Insight
35
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Starting point Growth strategy
• Leading ICT position • Becoming the most relevant ICT hub in the Nordics
… through orchestrating partner services along our premium connectivity
#1 in Finland, Estonia, Lithuania
• Further building our position as digitization partner of choice
• Growing ICT market in Nordics, well above Europe average … through a modularized ICT portfolio, trust and know-how
• Strong competence through previous acquisitions (e.g. Cygate)
Finland example
ICT market growth per country
Europe (CAGR 2020-2022) • ICT market leader in Finland through Telia
One – ICT orchestration
• One of few market players with certified
Europe Average Google, Microsoft and Apple partnerships
• Secured several major customer contracts
Securing ARPU Increasing relevance Increasing loyalty
Source: IDC With lowered price With increased share-of- With longer customer
erosion wallet contracts
36
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Starting point Growth strategy
• Record high viewership • Market leading reach
… combining linear with rapidly growing digital inventory
• Strong and growing AVOD base1
• Accelerate transition from linear to digital
• Linear advertising recovering from COVID-19
Ads … leveraging new analytics based concepts
Digital advertising revenues
Commercial share of YoY increase in TV4 online growth 2020 to 2025
viewing in Sweden time spent 2019-2020
• Solid SVOD offerings, through CMORE & Telia TV • Growing CMORE stand alone and in
Telia customer base
• Key sports rights secured, including SHL and UCL2
• Leadership position enables cross-sell
and customer lifetime value
SVOD
CMORE user base growth Viewers of first-of-a-kind in IPTV gross intake H2
YoY 2019-2020 Europe movie release 2020 vs H2 2019
1. AVOD = Advertising Video on Demand
2. SHL = Swedish Hockey League; UCL = UEFA Champions League
37
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Improved mobile experience Convergence New revenue streams
including 5G modernization
Mobile ARPU Mobile churn based on customers engagement
- Telia Finland – Telia Sweden BROAD ICT PORTFOLIO
+EUR 3 -60% IOT UCC
CLOUD DATA SECURITY
Single mobile Convergence
EMN PARTNERS
churn offering churn
Non 5G ARPU 5G ARPU IT SERVICES Further expanding…
Customers on convergence offering
– Telia Sweden
ALSO SUPPORTIVE FOR OTHER REVENUE
+70%
5G pop cov 2023
2019 2020
Better user experience drives improved Reduce churn Capture a higher share of wallet
ARPU Cross sell and deep sell through expanding beyond
connectivity such as ICT, IoT, EMN
38
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Legacy and regulation been a clear Burden set to ease COVID-19 impact
drag on revenues since 2016 coming years
Share of service revenues Service revenue change Service revenues
% SEK in billions SEK in billions
19 25 -0,2 CAGR 21-23
-0,3 -0,3
-0,6 0,0
14 7 -0,7 -0,1
-0,1
-0,1 0,5
67 68 -0,2
0,7
0,8
2016 2020 2019 2020 2021 2022 2023
Roaming Ad rev Pay-TV
Core Legacy, OTC and regulation Other Legacy Regulation
Core includes mobile, broadband and pay-TV
Less burden from fixed telephony, Pay-TV likely to recover sooner than
Legacy includes fixed telephony
interconnect and Special numbers advertising and roaming
Other increase related to advertising
39
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Low single digit growth 2021-23
Illustrative, excl. Telia Carrier
Increase share
Reduce churn and
Improve of wallet
increase upsell
TV to recover faster ARPU potential
Less burden than roaming and
ahead ad revenues
Service Legacy and COVID-19 Improve mobile Convergence New revenue Service revenue
revenues 2020 regulation recovery experience streams ambition
incl. 5G monetization
40
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1THROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
Inspire Connect Transform Deliver
Starting point Value creation levers
• Established leader in network quality • Continued gigabit network buildout and
• 5G launched in all countries, first with FWA in many modernization
• Best 4G in SE, LI, EE – at par in others … to keep and extend our leadership position in network
• 2.9 million homes connected with Fiber/ HFC quality
• 5G roll-out in full motion based on fully standardized • Fully utilize our software based networks
site types across footprint & strategic partnership with … for best time to market, network and service quality,
Ericsson and Nokia advanced applications and to support minimal cost / GB
• Common virtualized core network implemented across • Continued drive to retire legacy and realize benefits –
Telia, full separation of services from transport established copper in Sweden, 3G shut down in all countries, legacy
(hyperscale architecture) platforms
… to improve efficiency, customer experience and
• Legacy shutdown well under way (copper, 3G, legacy
monetization
network nodes) but hard work ahead
(e.g. B2B customer migration) • Partner approach and implementing Value Based
Investments, establish separate Infra Cos
… to crystalize infrastructure value and accelerate
investments
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Market leader Challenger
Maintain network leadership position Take leadership role when it matters
90%
>90% 99% 99% 95% 95%
5G population 55% 50% 40% 30%
coverage* 20% 28% 27%
2021 2023 2021 2023 2021 2023 2021 2023 2021 2023 2021 2023
4G population
coverage 2020 99.5% 99.5% 99.8% 99.6% 99.6% 99.9%
Fully standardized configurations across markets; efficient roll-out process in place
* Note that there are local regulatory variations in how 5G population coverage is being measured
43
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Benefits
Enterprise site Access network Transport and Core Network
aggregation
• Quality of Service - built for
redundancy and capacity
Dedicated high availability • 24/7 monitoring
Telia core site
• Security - enterprise
Local core specific APN
• Platform for further use
cases within IoT, Edge
Cloud, Industry 4.0
5G-ready mobile network from Telia to Boliden Aitik
44
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Growth in active IoT SIMs Recurring IoT VAS revenues Split of connectivity and other
# of connections SEK millions IoT revenues
% of total IoT revenue
OTHER
+62%
IOT
+14% 40%
60%
CONNECTIVITY
2019 2020 2019 2020
45
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Fixed broadband Fixed Wireless Access
Million homes connected1 000’ connections2
2.9
2.5
~250
~50
2018
1 2020
2 2023
3 2018
1 2020
2 2023
3
1. Own infrastructure only, excluding ADSL
2. FWA outdoor and indoor service; not including mobile broadband / mifi
46
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Covered earlier in this section
One converged IP/Optical
architecture separating service Service enablement Benefits
nodes from transport pipes factory (100% cloud)
• Better quality: 40% less
downtime, 50% less defects
ACCESS NETWORKS TRANSPORT & CORE NETWORK • Speed of deployment: network
AGGREGATION function from >1 year to ~weeks,
customer time to market from >18
SERVICE ORCHESTRATION
toInspire Connect Transform Deliver
Legacy fixed (copper) Legacy mobile (3G) Legacy network systems
# copper central offices, Sweden % voice traffic, Sweden % service nodes
4000 100% 100%
90% 90%
3500
80% 80%
3000
70% VoLTE 70%
2500 60% 60%
2000 50% 50%
40% 40%
1500
30% 3G 30%
1000
20% 20%
500 10%
10%
Copper central offices Legacy nodes
2G
0 0% 0%
2018
1 2 2020
3 4 5 2023
6 7 8 2026
9 2018
1 2020
2 2023
3 2018
1 2020
2 2023
3
48
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1THROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
Inspire Connect Transform Deliver
Starting point Value creation levers
• Past initiatives unsuccessful, too narrow in focus A customer experience-led transformation
… customer experience led transformation kicked-off … driving future products, processes, analytics, IT and operations
• Legacy products and un-leveraged scale • Products-as-a-platform across Telia, radical legacy take-
… market leading products, 15% legacy retired out
… to enable fast time-to-market, scalability and efficiency
• Complex and manual processes • Process simplification, digitization and automation
… encouraging results in front- and back-office … to enable a lean Telia, real-time and high quality
• Value from data not yet unlocked • Real-time analytics for pervasive data-driven decisioning
… strong analytics team and technology foundation … to unlock full value of data for improved top and bottom line
• Highly complex IT landscape and technical debt • Digital IT as future proof and lean business enabler
… favorable starting position for radical IT transformation … to deliver delightful digital customer experiences at lowest
with common team and common delivery cost
50
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Assessment & progress Transformation target
• Multiple legacy products • Radical product portfolio cleansing
… cleansing started, ~15% already decommissioned … decommission further 50%, unlock IT efficiency
• Overlapping product portfolio • Target product portfolio
… confusing to customer, unleveraged scale … covering connectivity & experience, best partners
• Many bespoke product implementations • Product-as-a-platform
… 15% of portfolio already common & scalable … configure price, promotion, bundle rather than build
• Gaps in customer journey for key products • Market leading products
… hard to discover, buy, pay, and get help … highest NPS for all products in target portfolio
• Customer experience not fully visible • Customer centric service management
… due to systems vs. journey focus … insights driven e2e journey, continuous improvement
51
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Assessment & progress Transformation target
• Complex processes with process gaps • Radical process simplification
… +10% sales efficiency, -90% response time1 … -20% cycle time, -50% error rate
• Low degree of digitization and automation • Digitization and automation
… now established automation centre of excellence … 100% digitized and zero touch
• Lack of process standardisation • Harmonized processes across the group
… 90% service assurance processes standardised … fully implemented across all domains
• Data and analytics largely not used • Intelligent automation
… strategic partnership with ServiceNow … personal and adaptive, leveraging AI/ML
• Not set-up for improvement • Continuous improvement culture
… deployed standard process tool (ARIS) … LEAN six-sigma across Telia
1. B2B Sweden
52
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Assessment & progress Transformation target
• Gaps in utilizing insight for better experiences • Brilliant customer experiences leveraging our data
… connected sources to data lake e.g. TV, network … 100% personalization, market leading channel NPS
• Commercial opportunities not fully captured • Full monetization of customer conversion potential
… launched personalization in B2C Sweden and … scale NBA/NBO 100% across Telia
Finland
• State of art analytics tools and processes
• Heavy reliance on traditional tools … made available to all staff
… >20% of staff using insight dashboards
• Telia as a data native organization
• Analytics expert capacity not matching demand … 100% of staff working with relevant insight & data
… onboarded 300 analytics experts to date
• Complete roll-out of target architecture
• Incomplete technical analytics foundation … cloud, common data lake, real-time
… common data lake established, retired legacy
DWHs
NBA/O = Next Best Action/Offer
53
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Assessment & progress Transformation target
• Insufficient market and customer focus • End-to-end customer journey focus
… 65% projects agile resulting in 30% better efficiency … 100% SAFe/agile & CI/CD based
• Organically grown IT, vertical integration • TMForum compliant target architecture
… 95% of customers migrated to target B2C Sweden … implemented cloud native, leverage open source
• Many legacy systems • Radical legacy drive out
… 90% identified, first 5% decommissioned … 90% decommissioned
• High degree of customization • Configuration, modularization, openness to partners
… radically limited, delivered 70 common APIs … microservices, 100% APIs, external exposure
• Fragmented supplier landscape • Radical supplier consolidation
… started focus on strategic partners … few strategic suppliers scaled across footprint, long
tail reduced by >50%
• High dependency on external workforce
… integrated Telia IT, 15% of externals already insourced • Strategic workforce planning
… rightsized external share, maximized near-shoring
SAFe = Scaled Agile Framework , CI/CD = Continuous integration/Continuous delivery
54
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Main cost reduction drivers Transformation driven OPEX* reduction to 2023
SEK in billions
R S O
MANUAL WORK AUTOMATED WORK ✓ ✓
MANY PRODUCTS FEW PRODUCTS ✓
COMPLEX IT MODERN AND SIMPLIFIED IT ✓ ✓ ✓
ANALOGUE CUST. INTERACT. DIGITAL CUST. INTERACT. ✓ ✓
MASS COMMUNICATION TARGETED COMM. ✓ ✓
EXPANDING OVER HEAD REDUCED OVER HEAD ✓ ✓
NON-DATA DRIVEN DATA DRIVEN ✓ ✓ ✓
R = Resource costs Resources Sales & Other Total OPEX
Marketing OPEX reduction
S = Sales & Marketing
by 2023
O = Other OPEX
Target reduction in resources of which 1k in 2021
Restructuring costs to increase by around SEK 0.5 billion per year
*OPEX is defined as indirect costs, i.e. excluding COGS (such as network, equipment and content)
55
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Main CAPEX efficiency drivers Transformation driven OPEX* and CAPEX
reduction to 2023
• Standardization and simplification SEK in billions
• Leverage insight and analytics
• Improved planning
• Stringent prioritization
Resources Sales & Other Total OPEX CAPEX Total
Marketing OPEX reduction efficiency transformation
by 2023
*OPEX is defined as indirect costs, i.e. excluding
COGS (such as network, equipment and content)
56
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Main components and benefits Increased CAPEX 2021 - not above past levels
Excl. Telia Carrier
• Network modernization
Coverage
17%
Connect
MOBILE • 5G roll-out 15%
• Partly replacing
ARPU uplift 17%
NETWORK 16%
coverage/capacity investments
Reduced churn
• Copper legacy shut down Footprint
• Continued footprint growth
Connect
FIXED • Selective fiber deployment with Customer base
NETWORK partners
OPEX reduction
• Modernize and simplify IT
Products
Transform
• Convergence capabilities
PRODUCT • Digitalize customer journeys
Cust. experience
DEV./ IT • New and common product 2019 2020 2021 2023
platforms
OPEX reduction Mobile NW Fixed NW Prod dev/IT Other
• Strengthen analytics capabilities
x CAPEX/Net sales
Investment program subject to rigorous benchmarking and focus on returns
57
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1THROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
Inspire Connect Transform Deliver
Starting point Value creation levers
• Limited coordination and control, reducing • Strengthened Leadership Team
clarity in strategy execution and roles .... with track record of delivering at successful, agile, digital telcos
• Not enough structural cost reductions, with • Strengthened strategy execution
significant gaps across units vs. our peers … by building best in class operational and executional excellence
• Footprint refocused • Bold CX-led transformation program
… enabling significant structural cost take out, and a platform for
• Engaged and motivated employees and growth
strengthened executive team
• Ambitious ESG agenda
• Authentic track record in ESG agenda … now fully incorporated into our Purpose and our Strategy
59
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
60
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
…
Strategy Operationalization Transformation
• Purpose led • Clear accountability • Customer and business driven
• Focused • Performance management • Leadership led
• Commercially anchored • Sense of urgency • Holistic and cross-functional
• Agile execution with all countries
61
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
… …
Select examples
Inspiring our Customers Connect Everyone Transform to Digital Deliver Sustainably
✓ Climate-neutral in own ✓ Digital inclusion: ~120,000 ✓ Development of processes ✓ Highest rating (AAA) by
Where we are
operations persons reached in 2020 and incentives MSCI ESG Research
✓ Strong supply chain and ✓ Advancing towards top tier ✓ 40% women in top
customer focus positions management
• Zero CO2 and zero waste by • Leave no-one behind: One • Proactive management of • Human Rights Impact
Where we are 2030 – including our Science million reached by 2025 risks and opportunities in Assessments in business
going Based Targets product development decisions
• Leadership position in
• Sustainable brand through protecting and empowering • Environmental assessments • 50/50 gender balance by
sustainable growth children online ahead of investments 2025 in top management
(Sustainable Brand Index)
• Top-tier positions in Privacy & • Securing the right incentives • Up- and re-skilling initiatives
Security and skills
• Top-tier rated ESG rankings
Committed to deliver strong contributions to several Sustainable Development Goals:
62
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
…
Inspire our customers Connect everyone Transform to digital Deliver sustainably
6
Low single digit growth in stable
5 fx excl. Telia Carrier
1bn
4 2bn
3
1bn
2 4bn Low to mid single digit growth in
1 2bn stable fx excl. Telia Carrier
0
OPEX CAPEX Trans- OPEX Trans-
reduction efficiency formation reduction formation
by 2023 by 2023 by 2023 to 2025 by 2025
Return to around 15% of net sales
OPEX CAPEX
by 2023 (excl. Telia Carrier and
license and spectrum fees)
SEK 2bn lower OPEX by 2023 Low single digit serv. rev. growth
Low single digit Cash CAPEX to increase 2021
SEK 4bn lower OPEX by 2025 Low to mid single digit adj.
service revenue growth Return to 15% of net sales 2023
Plus SEK 1bn CAPEX efficiency EBITDA growth
63
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Low single digit growth in stable fx excl. Telia Flat to low single digit growth in stable fx excl.
Carrier Telia Carrier (2020 base SEK 73.0bn)
Low to mid single digit growth in stable fx excl. Telia Flat to low single digit growth in stable fx excl.
Carrier Telia Carrier (2020 base SEK 29.8bn)
Return to around 15% of net sales by 2023 (excl. Around SEK 14.5-15.5bn (excl. Telia Carrier and
Telia Carrier and license and spectrum fees) license and spectrum fees)
64
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
OpFCF 2016-2020 2020 2021 2022 2023 Comment
• Service revenue growth and cost
ADJ EBITDA 30.7 =▲ ▲ ▲ reductions
• CAPEX increase in 2021 from
CASH CAPEX -13.5 ▼ = ▲ modernization/5G/transformation
- efficiency gains impact in 2023
OTHER -8.2 = = = • Higher restructuring compensated
by pension and lease repayments
STRUCTURAL PART OF • Minimum dividend coverage from
8.9 ▼ ▲ ▲ 2022
CF
Cash flow
WORKING CAPITAL 3.2 ▼ ▼ ▼ contr from wc
2016 2017 2018 2019 2020
EBITDA-CAPEX* NWC contr Other
OP FCF 12.1 • Minimum dividend covered all years
*Cash CAPEX excl. licences for spectrum
▲ = Increased YoY cash flow contribution
▼ = Decreased YoY cash flow contribution
65
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Leverage target Sustainable financial management
Net debt to EBITDA
• On a journey to become a fully sustainable credit
investment
• Green bond framework launched in Oct 2019
• First ever Nordic Telco Green Bond Hybrid transaction
in Feb 2020
• First Green Bond Report to be released in Feb 2021
66
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Dividend policy: Considerations
• Cash dividends for Telia shareholders to reflect
anticipated growth in profits over the medium term
• Dividend policy compatible with robust budgeted free
cash flow and with targeted leverage levels
• OpFCF expected to cover the minimum level through out
the 2021-2023 period
• Structural part of OpFCF to cover the minimum dividend
as of 2022
67
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1Inspire Connect Transform Deliver
Net debt to EBITDA
Low single digit growth 2.0-2.5x
Credit rating
A- to BBB+
Low to mid single digit growth
DPS floor of 2.00 with an
ambition for low to mid
single digit growth
Return to around 15% of net sales
68
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1S T R AT E G Y U P D AT E 2 9 J A N U A R Y 2 0 2 1
• Focused footprint in a dynamic region
• New, and strengthened leadership
• Clear roadmap to deliver
• Multiple levers enable a return to growth
• CX-led transformation will create significant value
• Further upside from infrastructure
• Potential for attractive shareholder returns
70
S T R A T E G Y U P D A T E 2 9 J A N U A R Y 2 0 2 1THROUGH OUR…
B Y E X C E L L I N G AT …
S O T H AT W E H AV E T H E …
Most loyal customers The home of the most Consistently delivering to Empowering the societies
across the Nordics & engaged employees the most satisfied of the Nordics & Baltics
Baltics ShareholdersTHROUGH OUR… B Y E X C E L L I N G AT … S O T H AT W E H AV E T H E …
S T R AT E G Y U P D AT E 2 9 J A N U A R Y 2 0 2 1
You can also read
