Telenor – Fourth Quarter 2005 Group Overview Jon Fredrik Baksaas President and CEO 13% Underlying growth in Group revenues
Growth from Q4 2004 to Q4 2005 adjusted for change in currencies, acquisitions and disposals Q4 2005 Strong revenue and EBITDA growth
Revenues (NOKm)/EBITDA % • Revenue growth of 26% 19 474 • EBITDA margin before other items 15 512 increased from 33.0% to 35.1% 33,1 % 34,5 % • Record high subscription growth in mobile operations Q4 2004 Q4 2005 • Increased economic exposure in DTAC to 69.3% EBITDA CAPEX • Strengthened Nordic position 6 722 6 436 5 134 • Proposed dividend of NOK 2.0 per 4 122 share
Q4 2004 Q4 2005 A strong position in Scandinavia
Norway Denmark Sweden
Mobile No. 1 No. 2 No. 3
Broadband No. 1 No. 3 No. 2 Scandinavia – No. 1 in Broadband
Norway Denmark Sweden
Market position No. 1 No. 3 No. 2
Subscriptions 531k 134k 478k
Retail market share 53% 11% 26%
Telenor estimates Broadband market: Cable, LAN and DSL. Including Glocalnet in Sweden and OE Kabel in Denmark Fixed Norway – Reduced margins Revenues (NOKm)/ EBITDA%
4 353 4 367 4 282 4 163 4 151 4 186
• Revenues down 3.8%
• Underlying EBITDA margin* 36 % 36 % 35 % 35 % 33 % down from 33% in Q404 to 31% 33 % in Q405 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
EBITDA CAPEX - Increased corporate cost 1 523 1 570 1 532 1 438 distribution: 1 pp. 1 354 1 377
-Operational challenges: 1 pp. 917
503 463 457 412 • Maintaining cost reduction 346 337 ambitions Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Change in accounting treatment
* adjusted for changes in accounting treatment and one-time effects Fixed Norway - Continued broadband growth
Total Market - Telephony Subscriptions xDSL subscriptions
819 2 185 2 173 2 159 2 149 2 143 750 694 110 146 634 235 302 308 316 316 209 313 562 192 172 109 145 97 87 77 91 1 798 1 757 1 706 1 664 1 623 444 475 385 415 326
Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
TEL retail TEL wholesale External VoIP Other op Retail Wholesale LLUB
Total Market: Telenor estimates xDSL: Tiscali from wholesale to retail from Q1 2005 57%
Growth in Mobile subscriptions
Growth from Q4 2004 to Q4 2005 based on 100% of all mobile companies Mobile Operations Continued high subscription growth
Total Consolidated
Total Pro Rata 100% figures (all companies) Subscription figures in millions
82,7 74,5 67,1 60,1 52,7 45,2 42,2 41,4 34,5 31,2 27,8 27,9 24,8 24,8 21,3 21,4 19,0 16,5
Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Mobile operations Norway - Strong revenue growth
Revenues (NOKm)/ EBITDA%
3 235 3 121 3 009 2 963 3 049 2 838 • Mobile revenues increased by 10%
38 % 39 % • EBITDA increased by 6% 37 % 35 % 35 % 37 % • Net adds of 58k postpaid
subscriptions in Q4 Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
• Market share at 56% EBITDA CAPEX
1 218 1 186 1 119 • ARPU stable at NOK 317 1 103 1 066 1 001
461 332 343 220 186 172 194
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Renewal of GSM licence Mobile operations Sweden Proforma Figures*
Revenues (NOKm)/ EBITDA% excluding MVNO provision 1 672 1 653 1 411 1 452 1 449 1 436 • Net adds of 26k subscriptions in Q4
• Stable 15% market share 25 % 17 % 14 % 15 % 3 % • EBITDA margin reduced mainly due 9 %
to increased acquisition costs Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
• Cost reductions to improve margins Reported EBITDA CAPEX
469 410 401 • Ambition of 15% EBITDA margin in 361 2006 249 247 173 122 137 92
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
-229 -333
*Telenor Mobile Sweden + Vodafone Sweden Not audited and subject to change Mobile operations International – High growth potential
Expected subscription growth by • Solid positions in strong 2008 (mill) * growth markets
• Present in countries with a total population of 650 million
• Total market is expected to grow by 80 million new subscriptions by 2008
Hungary Malaysia Thailand Bangladesh Ukraine Pakistan Russia
Market Position: No. 2 No. 3 No. 2 No. 1 No. 1 No. 4 No. 1
*Source: Average of Ovum oand Strategy Analytic Mobile operations Kyivstar – Record high subscription growth
Revenues (NOKm)/ EBITDA% 2 390 2 076 • 3 million net adds in Q4 to almost 14 1 643 million subscriptions 1 229 1 184 1 163 63 % 60 % 57 % • Revenue growth of 85% in local 54 % 55 % 55 % currency
• Strong underlying EBITDA margin of Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
54% EBITDA CAPEX 1 359
• ARPU slightly reduced compared to 1 1481 106 1 024 Q3 2005 911 919 890 772 735 687 712 632
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Mobile operations GrameenPhone – More than 6 million subscriptions
Revenues (NOKm)/ EBITDA%
850 • Record high subscription growth 775 705 of 1.3 million in Q4 640 598 570 • Stable market share at 62% 64 % 59 % 57 % 51 % 54 % • Strong subscription growth and 47 % subsidies reduce EBITDA margin Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 • Underlying EBITDA margin 40% 1 153 in Q4 EBITDA CAPEX 511
• Strong subscription growth 590 496 482 455 418 441 dilutes ARPU 383 338 329 334 357
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
Change in accounting treatment MMoobilebile operaoperattionsions PakistanPakistan –– IIncreasingncreasing ARPUARPU andand marketmarket shareshare
Revenues (NOKm)/ EBITDA%
140 • Increased market share by 2 pp. to 9% 76 48 • 668k subscription net adds to 1.9 million in Q4 • Improving network coverage and Q2 05 Q3 05 Q4 05 quality – present in 200 cities EBITDA CAPEX
• ARPU increased by 20% from Q3 496
in local currency 299
Q2 05 Q3 05 Q4 05 -91 -134 -133 -172 Mobile operations DTAC – ARPU increased in Q4
Revenues (NOKm)/ EBITDA% 1 872 1 709 1 718 1 657 1 634 1 581
• 14% revenue growth in local currency
• ARPU growth of 5% in local currency 38 % 37 % 38 % 38 % 38 % 38 % • Stable EBITDA margin Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 • Stable market share at 28%
EBITDA CAPEX
713 625 646 655 630 589 561
418
284 215 219 128
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
Revenue figures according to Thai GAAP for trend purposes Financials CFO Trond Westlie Growth in EPS
EPS growth from 2004 to 2005 Reported P&L (NOK million)
NOKm Q4 2005 Q4 2004 2005 2004 Revenues 19 474 15 512 68 927 60 591
EBITDA 6 722 5 134 23 836 21 535
EBIT 2 949 (1 055) 11 705 7 367
Profit before Taxes 2 666 (1 130) 12 591 9 874
Net Income 1 001 (430) 6 952 6 093
EPS (NOK) 0.59 (0.25) 4.06 3.49 Revenue development (NOK million)
Strong subscriber Q4 2004 15 512 growth 272 Mobile Norway Strong Sonofon subscriber growth Kyivstar 1 206 Consolidated from Nov 1st Digi 448
Grameen 280 Acquisition of B2 DTAC 1 191
Remaining Mobile
FIXED 244
Broadcast
Q4 2005 19 474 EBITDA development (NOK million)
Q4 2004 5 134 Restructuring
Mobile Norway
Sonofon 292
Kyivstar 647
Digi
Pannon Provision in Mobile GrameenPhone Sweden in Q4 04 DTAC 445 Revenue loss Remaining Mobile 223 and Margin decline Fixed Norway 193
Other/Elim
Q4 2005 6 722 CAPEX (NOKm) - adjusted for lease
• Reclassifications to lease 8000 6 436 increased CAPEX by NOK 1.1 7000 billion in Q4 6000 1 054 5000 4 122 • Increased CAPEX driven by high 4000 subscriber growth 3000
2000
• Stable 2005 Capex/sales 1000
adjusted for lease 0 Q4 '04 Q4 '05 Proforma Net Debt to EBITDA of 1.1
(NOK million)
15 20 25 30 35
Net Debt 30 Sept 2005 21,8
DTAC/UCOM 10,0
Net investments 4,9
Finance lease Grameen 0,5
Taxes paid 0,6
Unpaid licence fees 0,4
Net interest 0,4
EBITDA 6,7
Accruals 0,8
Net Debt 31 Dec 2005 31,1 Proposed dividend of NOK 2 per share
2.00 • 33% growth in dividend 1.50 • 3.0% dividend yield 1.00 • 49% of net income 0.45 0.35 0.30 • Pay out ratio of approx 82% of net income including share buy back in 2005 2000 2001 2002 2003 2004 2005 Proforma figures 2005 37000
32000 EBITDA (NOKm) Revenues (NOKm) / EBITDA % 27.2 27000 90000 60,00 % 23.8 82.0 22000 80000 50,00 %
17000 BB/CC/Glocalnet 70000 68.9 Vodafone S 40,00 % 12000 DTAC 2005 Reported 2005 Proforma 34,8 % 33,5 % 60000 Group excl. Acq. 30000 30,00 % EBITDA margin 50000 25000 CAPEX (NOKm) 20,00 % 40000 20000 19.1 16.4
15000 30000 10,00 % 2005 Reported 2005 Proforma 10000
5000 2005 Reported 2005 Proforma
• Proforma: Includes estimated figures for DTAC, Vodafone Sweden, Bredbandsbolaget Cybercity and Glocalnet for the period 1 January – 31 December 2005. Outlook 2006
• Revenues: Growth of 25 – 30% • EBITDA margin: Around 33% • CAPEX/Sales: Above 20% Telenor – Fourth Quarter 2005 Telenor – Fourth Quarter 2005 Broadcast - Continued revenue growth
Revenues (NOKm)/ EBITDA%
1 466 1 375 1 390 1 401 1 392 • Revenue growth of 7% 1 330
• DTH subscriber growth of 30k to 906k in Q4 32 % 27 % 29 % 28 % 24 % 23 % • EBITDA margin down due to Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 higher sales and marketing and content cost EBITDA CAPEX • Increased EBIT 716
425 380 411 394 332 331
133 96 116 71 47
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Mobile operations Malaysia - A fantastic quarter
Revenues (NOKm)/ EBITDA%
1 452 1 285 1 161 1 048 1 004 1 034 • Strong growth in market share
• 36% revenue growth in local 43 % 44 % 44 % 43 % 44 % 44 % currency Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 • Stable EBITDA margin
EBITDA CAPEX
• 3G application submitted in 632 560 574 November 499 453 451 443 427
310 228 178 108
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Mobile operations Sonofon - Increased margin
Revenues (NOKm)/ EBITDA%
1 356 1 334 1 266 1 308 1243 1 193 • Net adds of 23k subscriptions in Q4
• Mobile revenues increased by 22%
24 % in local currency 21 % 21 % 23 % 23 %
• Stable market share at 27% Q3 04 Q42 % 04 Q1 05 Q2 05 Q3 05 Q4 05
• EBITDA margin 23% EBITDA CAPEX • Capex increase due to UMTS 757 license (NOK 520m)
520
308 307 308 260 253 140 137 102 76 16 28
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Mobile operations Pannon - Strong margin development
Revenues (NOKm)/ EBITDA%
1 583 1 565 1 552 1 510 1 498 • Revenue growth of 9% in local 1 415
currency 41 % 36 % 37 % 32 % 34 % • 73k net adds in Q4 28 %
• EBITDA margin growth of 6 p.p. Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05
• Stable ARPU EBITDA CAPEX
• Market share stable at 34% 820
650 561 534 517 484 420
243 261 150 121 109
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Fixed Denmark Revenues (NOKm) / Cybercity – Continued growth EBITDA %
164 141 142 131 123 • Proforma annual revenue growth 114 of 37% in local currency 30 % • XDSL market share increased 33 % 32 % 33 % 32 % 34 % from slightly above 13% to close to 15% in 2H05 Q3 Q4 Q1 Q2 Q3 Q4 • 13k net adds broadband 2004 2004 2005 2005 2005 2005
subscriptions in Q4 EBITDA CAPEX
• 8.1k net new VoIP customers in 57 48 49 Q4 45 43 45 40 40 38 37 39 29
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 Fixed Sweden Broadband and VoIP dynamics Revenues (NOKm) / EBITDA % 720 709 694 660 683 677
• Proforma annual revenue growth in
B2 of 27% in local currency 27 % • Residential broadband market share close to 23%
9 % 10 % 10 % • One-time effect on EBITDA in Q4 8 % 6 % Q3 Q4 Q1 Q2 Q3 Q4 • 18k net adds broadband 2004 2004 2005 2005 2005 2005
subscriptions in Q4 EBITDA CAPEX 268 • 13.3 net new VoIP subscriptions in 255
Q4 183 155 159 141 142
67 68 72 52 40
Q3 04 Q4 04 Q1 05 Q2 05 Q3 05 Q4 05 ARPU development in mobile operations (NOK)
Telenor Mobil - Sonofon Kyivstar Pannon Norway
95 328 184 318 308 314 317 297 253 171 166 243 246 162 162 229 157 219 207 68 66 62 64 53
Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005
Digi.Com DTAC GrameenPhone Promonte
110 69 71 139 100 102 68 67 103 98 99 65 65 129 92 126 87 115 81 107 95 69 65 56
Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 MoU/APPM development in Mobile Operations
MoU APPM (Local currency)
Telenor Mobil - Sonofon Kyivstar Pannon Norway
108 191 149 145 195 103 143 187 182 183 186 131 184 127 151 153 125 182 139 95 95 43,10 91 175 90 39,30 37,30 35,80 36,31 33,89 0,77
1,75 1,75 1,70 1,61 1,69 1,72 0,60 0,55 0,49 0,49 1,40 1,35 1,29 1,26 0,45 1,24 1,19
Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005
Digi.Com DTAC GrameenPhone Promonte
249 250 234 113 231 109 223 105 175 241 91 92 237 87
170 170 153 169 126 132 223 223 165 163 3,60 3,40 3,40 3,22 3,14 3,10 2,80 2,92
0,35 1,89 2,21 0,36 0,36 0,34 0,33 0,34 1,76 1,90 0,15 0,15 0,15 0,15 0,15 0,13
Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 Q3 Q4 Q1 Q2 Q3 Q4 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 2004 2004 2005 2005 2005 2005 International mobile associates
(100% figures in NOK millions according to local GAAP) Subscriptions ('000) 1) Revenues YTD EBITDA YTD 2) CAPEX YTD Net debt 3)
Sept 30 %-change Sept 30 %-change Sept 30 %-change Sept 30 Sept 30 2004 2005 2004/2005 2004 2005 2004/2005 2004 2005 2004/2005 2004 2005 2005
Europe
One (Austria) 1 455 1 612 11 % 4 491 3 985 -11 % 1 350 1 078 -20 % 402 321 5 207
Russia 4) VimpelCom 20 545 40 053 95 % 10 252 14 652 43 % 5 114 7 334 43 % 5 353 5 993 12 674
1) Subscription figures based on companies own counting methods 2) EBITDA consists of earnings before interest, tax, depreciation and amortization excluding gains/(losses) from sales of fixed assets and operations 3) Net debt consists of long term and short term interest-bearing debt minus cash. Closing exchange rates used 4) VimpelCom CAPEX excludes acquisitions of new entities. 2004-figures are restated. Net Interest-bearing debt in partly owned companies
NOK million Ownership Q4 2005 Q3 2005 Q4 2004 interest
DiGi.Com 61.0% -1,581 -1,022 48
DTAC 69.3% 6,529
Kyivstar 56.5% 2,146 1,987 1,443
GrameenPhone 62.0% 749 358 -6
EDB Business 51.8% 449 705 628 Partner