TDC Group Annual Report 2019
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In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements Annual report 2019 Annual report 2019 1 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements Content Management’s review Financial statements TDC NET makes Denmark digital In brief 3 Consolidated financial with 5G TDC at a glance 4 statements 71 Letter from management 5 page 21 Five-year overview 8 Parent company financial statement 132 Who we are 9 Our structure 10 Other 155 Our business models 12 Management statement and Our people 13 independent auditor’s report 156 Terminology 160 Group strategy & performance 14 Organic figures 161 Group strategy 15 Group performance 16 Passionate Our business units 18 about TDC NET strategy & performance 19 entertainment TDC NET strategy 20 page 25 TDC NET performance 22 Nuuday strategy & performance 23 Nuuday strategy 24 Shortcut to reading the Annual Report Nuuday performance 26 ESG 31 Click on the tabs in the menu to navigate Enviromental impact 38 quickly to the tables of contents for the Digital Denmark 45 report and accounts, respectively. How We Do Business 51 CO2 neutral Click on words in italics for an explanation by 2030 in the Terminology section. page 42 Annual report 2019 2 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements In brief TDC at a glance 4 Letter from Management 5 Five-year overview 8 Annual report 2019 3 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements TDC at a glance TDC Group has been connecting Danes with each other and the world since 1882. Our business units Nuuday and TDC NET contribute to the digitalisation of Denmark. Nuuday delivers innovative digital customer experiences and entertainment, while TDC NET delivers the best mobile network and For the 5th 6 million fastest fixed connections. year in a row customer relations in Nuuday Our 2019 financials Our employees Our customers Our brands Revenue (DKKbn) Consumer 17.0 2,524 4.7m EBITDA (DKKbn) Business 6.5 4,515 1.4m Capital expenditure (DKKbn) 4.8 459 In headquarters Annual report 2019 4 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements Lasse Pilgaard Jens Aaløse Michael Parton Andreas Pfisterer Michael Moyell Juul Letter from Management Senior Executive Senior Executive Vice Chairman TDC NET CEO Nuuday CEO Vice President Chief Vice President Finance Officer A year of major trans- formation for TDC Group 2019 was a transformational year for TDC Group with a strong focus on bringing our strategy to life in order to create an innovative, open business model that will enable all of Denmark to benefit from the new digital era. Annual report 2019 5 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements Mission the new name and corporate identity of TDC NET TDC Group's mission is to build and support symbolizing the proud heritage that our infra- an innovative, open model that will ensure all structure carries. Key events 2019 of Denmark connects to the new digital opportunities. 2019 financial performance In 2019, we focused on building the TDC of the Q1 To achieve our mission, we have created two new future. We recognise that this transformation will companies, Nuuday and TDC NET, and defined require significant time and capital investments in their separate missions. Nuuday makes sense the short term but will ensure that we obtain a with technology. TDC NET connects Denmark, to long term relevant and sustainable business that benefit everyone. will benefit all of Denmark. Nuuday launch Launch of a new TV and streaming 2019 transformation & legal separation Our financial performance in 2019 was in line channel that delivers a mix of Following the takeover by the three Danish pen- with our expectations, as we ended the year with OpCo gets a new name Xee originals and popular sion funds ATP, PKA, PFA and infrastructure funds a 3.7% decline in organic EBITDA, DKK ~350m in Nuuday, and continues American TV series with exclusive managed by Macquarie Infrastructure and Real costs related to the separation of TDC Group, delivering digital services and sports rights to Premier League Assets in 2018, TDC Group started on a transfor- capital expenditure of DKK 4.8bn, and leverage of embracing all TDC Group´s matches etc. mational journey with the purpose of restructur- 3.6x for the year. retail customer focused ing our 138-year old company into two new com- brands. panies with separate identities and strategies. In A core part of our new strategy is to make the sig- TDC prepares for 2019, we fundamentally kicked off executing the nificant investments required to position both of transformation, which will carry on for the next our new business units for future growth. That is couple of years. why we are proud to have invested more than To build an advanced future DKK 1bn in fibre and 5G in 2019 and are excited mobile network in Denmark, TDC The journey accelerated in 2019 with significant to continue our major investments in critical acquired new mobile licences and milestones bringing the new strategy to life. The national infrastructure in 2020. established a new strategic key milestone of the year was the legal separa- partnership with Ericsson. tion of TDC Group in June 2019. TDC Group was 2019 commercial performance separated into three legal entities: TDC A/S, Internet & network Q2 Nuuday A/S, and TDC NET A/S. TDC A/S holds Internet & network revenue improved by 2.6% in key headquarter functions and all external debt 2019, driven by the consumer segment, partly financing. Nuuday A/S is the former business unit, offset by the business segment. The consumer Fiberkysten Legal separation OpCo, and TDC NET A/S is the former business segment growth was driven organically by an TDC NET and Nordkysten A critical strategic milestone is unit, NetCo. ARPU increase and inorganically by the acquisi- established a joint venture, reached with the legal separation tion of Hiper in December 2018. We continue to Fiberkysten, which started of the two business units Nuuday As a part of the transformation, the corporate focus on connecting Denmark and shaping the rolling out fibre in Q3. and TDC NET. identities of our two new companies were born. In next generation of nationwide, digital infrastruc- March, we launched the new name and corporate ture in Denmark. identity of Nuuday inspired by the bold, agile cul- ture, it represents. In November, we launched Annual report 2019 6 In brief Who we are Group strategy & performance TDC NET strategy & performance Nuuday strategy & performance ESG Financial statements Mobility services We are proud to announce that in 2019 we Mobility services revenue continued to grow in reached our ambition to reduce our CO emis- 2 2019 by 2.8% driven by higher ARPU in the con- sions by 70% from 2010 to 2020. We are even Q3 sumer segment and customer net adds in the prouder to have set new ambitious targets to Nuuday enters new business segment. We have maintained our lead- reduce our CO emissions further, by 50% from 2 strategic partnerships on ing market position and for the fifth year running 2020 to 2025, with an overarching target to content with TV2, Nordisk film we were awarded Denmark’s best mobile net- achieve CO2 neutrality by 2030. CO2 neutral and C More, to secure our flexible work. By upgrading our mobile network to 5G in TDC Group undertakes to be TV and streaming services of the 2020, we are demonstrating our dedication to 2020 transformation & investments 100% CO2 neutral and aligned future, high-quality content. keeping our leading market position. 2020 will be yet another year of transformation with the UN’s Business Ambition where we will continue to execute on our strategy for the 1.5°C pledge in 2030. TV to create a best-in-class digital service provider The TV market remains under pressure due to and a best-in-class network operator. In order to consumer streaming trends and higher content achieve that, we are planning to increase our Q4 costs. In 2019, we saw a 1.7% decline in revenue investments to DKK 5.5-5.9bn, driven by strate- driven by a decline in the customer base, partly gic investments in fibre roll-out and upgrading offset by an ARPU increase. Content costs in- our mobile network to 5G. As a result, we plan to creased as YouSee invested heavily in transform- roll out fibre to 100,000 households and invest ing from a traditional TV distributor into a digital DKK 2-3bn in fibre and 5G in 2020. entertainment provider, primarily from invest- ments in building up our own TV channel ‘Xee’ This will be a year where we continue our separa- and own content production with award-winning tion journey and continue to invest in the full NetCo changes name to TDC TV shows such as ‘31’ and ‘Sunday’. structural separation of Nuuday and TDC NET to ensure our two new companies have the best NET, which will shape the next ESG possible footing as independent market agents of generation of nationwide, digital TDC NET launches Denmark’s At TDC Group, we view sustainability as an inte- the future. infrastructure of Denmark. largest 5G pilot in Helsingør, gral part of our business as it is critical for build- where 40 mobile sites are now ing trust with society.