The Convergence of Fixed, Mobile and Internet Services in the Home - Bruce Horowitz, TeliaSonera
TeliaSonera Finland
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Transcript of TeliaSonera Finland
May 19, 2003
Anni VepsäläinenPresident TeliaSonera Finland
2TeliaSonera Finland
TeliaSonera Finland
• Telecommunications leader in Finland
• High margins, strong cash flow
• Passion for customers and profits
• Capitalize on cross selling opportunities
• Increase fixed to mobile voice migration
• Grow broadband services
• Leading the mobile services market
Profitable growth with customer orientation
3TeliaSonera Finland
Key financials
SEK million Full year 2002 Q1 2003
External net sales 17,295 4,264
Operating income1) 2, 056 690
EBITDA1) 6,869 1,823
Margin 39.2% 41.7%
CAPEX 2,151 391
Number of employees (end of period) 6,235 6,200
Product area / External net sales Q1 2003
• Mobile communications
63%
• Fixed communications
37%1) Excluding non-recurring items
4TeliaSonera Finland
Mobile communications
• Increasing voice usage
• Subscription growth
Fixed line
• Decreasing number of subscriptions
Internet & Data
• Strong growth in broadband
• Dial-up connections migrating to broadband
Other
• Terminal sales
Revenue development Q1 2003
Revenue change Q1 2003 compared to Q1 2002 (SEK million)
0
Mobile
Fixed subscr. & VAS
Internet & Data
Other
Fixed traffic charges
Total
+33 -11+18
+87 -8118
Total external sales
SEK million
+2.8%4,1464,264
ChangeQ1 2002Q1 2003
5TeliaSonera Finland
Telecom market environment 2002
Telecom business by ‘functions’ 2002
Market share in value 2002 Characteristics• 179 companies with license to operate• Total turnover EUR 4.6 billion • Amount of personnel 19,800
Competition• Three largest players: Sonera-group,
Elisa-group, Finnet-group• Sonera market leader
Trends• Communication continues to grow• Service usage via Internet – need for
broadband connections• Mobile terminal and service development
– mobile data usage grows rapidly• Offerings from products to selling
services
Sonera 48%Elisa 34%
Others 1%
Finnet 17%
Internet 5%Long-dist 1%
Local calls 17%
Mobile 43%Other 34%
6TeliaSonera Finland
Market share development
0%
20%
40%
60%
80%
Q1 01 Q1 02 Q1 03PSTN MobileInternet DatacomBroadband
Market share1 % • Market leader in mobile, Internet and broadband subscriptions and corporate datacom services
• Market share loss in mobile due to tough competition
– Loss of price and offer sensitive customers
• Several actions to turn the negative trend
1) Value, estimates.
(historical data n/a)
7TeliaSonera Finland
SegmentConsumer
SegmentBusiness
• Broadening customer relationships
• Packaged services (mobile broadband, VoIP)
• Market leader in 3G services• Efforts to reverse the market share development
• Remarkable improvement in customer service levels
• One customer relationship• Tailored messages to sub-segments (by age & behaviour groups)
• Remarkable improvement in customer service levels
• One customer relationship, “one stop shopping”
• Tailored messages to sub-segments (by industries)
• Combined services• Implementing B2B strategy: Managed services
• Improving and modernizing the sales culture
• More customer benefits, quality and value for money, competitive price level
• Establish a task force to win customers from competitors, when launching MNP
• Sales activities and customer service
• Solutions for business customers’ business processes
• Establish a task force to win customers from competitors, when launching MNP
SegmentLargeCorporate
• One customer relationship
• Understanding customers’ business processes
• Sales activities and customer service
• Solutions for corporate customers’ business processes
• Combined services• Implementing B2B strategy: Managed services
• Improving and modernizing the sales culture
Segment based activities to improve business performance
Churn managementCustomer orientation Growth
8TeliaSonera Finland
• Implement the competence centre structure
– Group wide and national level
• Fine tune steering model
• Develop leadership and managerial practises
• Implement personnel restructuring plan
• Focus product portfolios
• Decrease number of technical platforms
• Manage All-IP evolution
• Utilize our own services
Developing personnel and leadership
Improving efficiency Delivering synergies
Continued efficiency measures
9TeliaSonera Finland
Increased mobile usage
143 155 153 153 151147149150139
0
50
100
150
200
250
Q1 01 Q1 02 Q1 03
ARPU
40 42 41 40 3839404139
0
10
20
30
40
50
Q1 01 Q1 02 Q1 03
MoU
EUR
minutes
Churn 15.8% in Q1 2003
10TeliaSonera Finland
Non-voice growth
12.5% 12.8%
0%
2%
4%
6%
8%
10%
12%
14%
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03
Non-voice as % of revenues
• Colour screen, polyphonic ring tones, cameras and other advanced terminal features becoming more common
• New mobile services launched, e.g. popular ice-hockey service
• Promising development in GPRS subscriptions due to terminal development and new services
• SMS usage saturated
• Non-voice % stable due to SMS price erosion
137
26
0
50
100
150
Q1 02 Q2 02 Q3 02 Q4 02 Q1 03
GPRS subscriptions (thousands)
11TeliaSonera Finland
Sonera Colour: a new range of services for MMS phones
In April 2003 most diversified range of multimedia services on the Finnish market were launched:
• MM-Ice Hockey services• Internet Chat• Sonera Plaza auction• WAP-news• Traffic information• etc.
12TeliaSonera Finland
Fast broadband expansion
0
50
100
150
200
250
300
Q12001
Q22001
Q32001
Q42001
Q12002
Q22002
Q32002
Q42002
Q12003
Consumer broadband Dial-up
Number of consumer broadband / Dial-up customers (thousands) • Increasing customer need
for services via Internet
• Strong growth in broadband market
• Number of dial-up subscriptions decreasing
• Market leader in broadband and dial-up Internet connections
• Own network in rural areas, challenger in big cities
13TeliaSonera Finland
Continued strong mobile margin
443 430
1,374 1,393
0
500
1,000
1,500
2,000
Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003
Fixed Mobile
• Strong margins despite tough competition
• Seasonal fluctuations due to the campaigns
Operating income1 (SEK million)
690681
0
500
1,000
1,500
2,000
Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003
Total
1) Excluding non-recurring items
EBITDA1 (SEK million)
14TeliaSonera Finland
CAPEX
CAPEX as % of salesCAPEX (SEK million)
• Tight CAPEX control
• Transmission CAPEX booked into fixed
• UMTS will increase CAPEX1) Excluding non-recurring items
191
185 200
228
0
100
200
300
400
500
600
700
800
Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003
Fixed Mobile
15.1%
6.9% 7.3%
11.9%
0%
5%
10%
15%
20%
25%
30%
Q1 2002 Q2 2002 Q3 2002 Q4 2002 Q1 2003
Fixed Mobile
15TeliaSonera Finland
Regulatory issues 2003-2004
• New Communications Market Act includes extended network access rules (MVNOs)
• Uncertainty of possible new SMP obligations by the National Competition Authority (NRA)
• Mobile number portability (from 7/2003)
• New Communications Market Act includes an obligation to provide bit stream access – may open up new geographic areas for broadband
• NRA demands lower mobile termination tariffs
• Finnish Parliament has proposed a study on the Finnish fixed-to-mobile interconnection model
• Finnish Competition Authority is investigating operators’ pricing of ADSL products
16TeliaSonera Finland
Summary
TeliaSonera Finland is the market leader in telecom industry
• Profitable Growth
• Customer Orientation
• Improved Efficiency
• Strong player in Finland
• Growth saturated, but opportunities exists
– Mobile voice and data usage growing
– Fast broadband growth
• Improvement in integration of service offering and user interface an opportunity
• ICT-strategy implementation
• Increasing attention to internal efficiency, rationalizing program will continue
17TeliaSonera Finland
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.
Forward-looking statements
May 19, 2003
The Nordic and Baltic telecommunications leader