Q2 by liwenting


									Interim report January-June 2003
   Anders Igel
   President and CEO

          July 31, 2003
Q2 in brief

• Rapid profitability improvement
• Cash flow more than doubled
• Fast integration
• Synergies ahead of plan
• Increased market focus is beginning to yield results
• Turnaround targets reached in Danish fixed business
  and in former Telia International Carrier

Strong earnings and cash flow development

• Record high EBITDA                                                                  Q2 2002
  margin excl. non-recurring                                                          Q2 2003
 items                                                   8,070                      SEK million

   – Group 40%                                   6,241
   – Sweden 45%                                                                            5,155
• Maintained investment
• Record high free cash                                               CAPEX

                               Operating         EBITDA                           Free cash flow1
                               income            excl. non-
                               excl. non-        recurring items
                               recurring items
                                                  1)   Cash flow from operating activities less CAPEX

Successful turnaround

International Carrier
• Restructuring program yields positive impact
• In April and May end-of-year target of positive
  EBITDA-CAPEX was reached
• Improved earnings in both the fixed and mobile
• End-of-year target of positive EBITDA for Danish
  fixed was reached in Q2

Full speed in integration and synergy implementation

• Successful integration is yielding results – Synergy
  decision making ahead of schedule
• The EU requirements have been met
  – ComHem sold, gain of SEK 1,811 million
  – Telia Mobile Finland sold, loss of SEK 108 million
  – Fixed and mobile networks legally separated from
    the retail business

More aggressive in the market

           • Start to offer
             bundled products
           • Telemarketing
             stepped up

Increased market efforts yield results

• Wide range of new offers and products launched with
  visible results by the end of the period
  – Reduced losses in Swedish consumer segment and held
    position in Finnish consumer segment
  – Strengthened position in Finnish and in Swedish Corporate
  – Improved position in Norwegian and Danish mobile market

• Combined strength, a winning factor for several large
  contracts – Contracts worth SEK 3 billion signed in
  Sweden during Q2
  – Metso
  – IBM/Posten
  – StoraEnso

Geographical focus

• Strengthening footprint in the markets where
  TeliaSonera currently operates

• Selected acquisitions in current
• Long term strong cash flow
  provides us flexibility to
  grow in the consolidation
  of the European telecom


We have reached previously stated mid-term
 targets earlier than expected
• Net sales for full year 2003 are expected to grow
  in line with the first half year
• CAPEX/Sales expected around 12% for 2003
• Operating income excl. non-recurring items for the
  second half year of 2003 is expected not to fully
  reach the level of the first half year

Focus going forward

• Commercial actions – win back
  market shares
• Continued synergy realization
• Efficiency improvements
• Strengthen existing geographical

Kim Ignatius

      July 31, 2003
Net sales change
                                                                                                SEK million

                                                         +626      -450

          Lower fixed                 Consolidation
          traffic volume              of Fintur
20,290   -160                                                                          +95     20,275
                             +197     -16        -50
                                                         Downsizing in Denmark,
                                                         International Carrier and
                                                         Holding decreases growth
    Correction of mobile     Continued strong
    revenue accruals         growth in Norway

Net sales Sweden   Finland   Norway Denmark     Baltic   Eurasia    Int.     Holding   Other   Net sales
Q2 2002                                                            Carrier                     Q2 2003

EBITDA excl. non-recurring items improvement + SEK 1,829 million

                                                                                               SEK million

                                                                        353       -250
                                       139        -73
         1,214     -3
                                                   Consolidation       Lower OPEX through
                                                   of Fintur           restructuring Carrier

                 • Release of interconnect provision SEK 400 million
                 • Effects from restructuring 2002 SEK 300 million
                 • Synergy benefits SEK 100 million
 6,241           • Lower cost related to SUNAB due to UMTS delay

EBITDA Sweden    Finland   Norway Denmark        Baltic   Eurasia       Int.     Other    EBITDA
Q2 2002                                                                Carrier            Q2 2003

CAPEX reflecting business needs

2003 level around 12% of sales                                                             SEK million

2,909   -498

                Tight CAPEX control                       Restructuring decreases
                                                          CAPEX in Denmark Fixed
                 +117      -26      -177                  and International Carrier

                                                      +154      -214
        Build out of broadband
        and backbone network
        to meet market demand                                              +13        -3    2,059

                          Lower CAPEX in Baltics.      Consolidation
                          Program in Lithuania to      of Fintur
                          reduce CAPEX.

CAPEX Sweden    Finland   Norway Denmark     Baltic   Eurasia    Int.     Holding Elim. and CAPEX
Q2 2002                                                         Carrier             other   Q2 2003

TeliaSonera January-June key figures

SEK million                                    Jan-Jun 2003   Jan-Jun 2002
  Net sales                                          40,624         39,932
  Growth in net sales (%)                               1.7             n/c
  EBITDA excl. non-recurring items                   15,632         12,213
  Margin (%)                                           38.5           30.6
  Income from associated companies                     -670         -30,676
  Operating income                                    5,971         -33,349
  Operating income excl. non-recurring items          7,190          2,810
  Income after financial items                        5,759         -33,585
  Net income                                          3,101         -23,632
  CAPEX                                               3,735          5,562

Synergies ahead of plan
                                  Impact of decisions taken during 2003
Decisions during Q2                                       Full run rate annual      Effect
                                  SEK million                  effect (by 2005)   in 2003
• Eliminate duplicate platforms   OPEX
  such as positioning services,     Product and service development       137          60
  e-mail, customer support          IT systems and infrastructure           36         20
  systems and voice over IP         Purchasing                            169        169
• Shared use of IT and              Network operations                    187          84
  systems within CRM                Corporate functions                   145        145
                                  Total                                   674        478
• Eliminate overlapping
  testing systems etc.
                                    Product and service development          4         33
• Renegotiation of supplier         IT systems and infrastructure           26         22
  agreements                        Purchasing                            225        265
                                    Network operations                      13         40
                                  Total                                   268        360

Continued efficiency improvements in Finland and Sweden

Integration and governance models significantly
  increase efficiency and eliminate overlaps
• Sweden
  – Estimated redundancy of approx. 1,500 employees.
    Approx. 700 employees remain affected by redundancy
  – A provision of SEK 374 million has been made
• Finland
  – Redundancy of 400 employees
  – A provision of SEK 15 million has been made

   Non-recurring items Q2 2003

Affecting operating                  Affecting financial        No effect on pro forma
income                               items                      profit & loss statement
Operating income excl.              Financial net excl.         Capital gain
 non-recurring items       3,963    non-recurring items -116     ComHem                 +1,811
Within income from                  Capital gains from
                                                                Capital loss Telia
assoc. companies                    financial items
                                                         +583    Mobile Finland           -108
     Capital gain Bharti            (Netia)
     Mobile                 +341
     Write downs (Infonet,          Write downs of
     Metro One, VCs)       -1,208   financial items
Write downs (synergy)        -29    (VCs)                -163

Provision for redundancy    -389    Financial net as
Other                        +66    reported              304
Operating income as
 reported                  2,744                                                     SEK million

Income taxes

• Effective tax rate (42% in Q2) is mainly increased
  by non-deductible Infonet write-down and by non-
  deductible goodwill amortization
• Deferred tax liability of SEK 12 billion mainly relates
  to Sweden
• Deferred tax benefit of SEK 16 billion mainly relates
  to European 3G and other write-downs in 2002.
  Some SEK 2 billion relates to restructuring of
  International Carrier and Denmark and can be used
  in Sweden.
• No significant cash payment for taxes in Finland for
  6 to 8 years is expected

Strong cash flow – Strong financial position
Strong cash flow strengthening financial position by reducing net debt

                                                                                   SEK billion
      38.1               -9.1

                                        +1.9             -2.3

     Net debt        Free cash flow   Dividend      Other (incl. gain     Net debt
   Dec 31, 2002      Jan-Jun 2003                  from divestitures)   Jun 30, 2003

       SEK million                               Jun 30, 2003      Dec 31, 2002
         Equity-to-assets ratio                          55%                 52%
         Net debt-to-equity ratio                        26%                 36%

Forward-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.

The Nordic and Baltic
telecommunications leader

        July 31, 2003

To top