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Consumer fixed market in Sweden 26 June 2014
Mats Lundquist, Head of Broadband & TV, Telenor Sweden
Agenda
• Introduction
• Market overview
• Strategic focus
Focus areas Telenor
Sweden
• Improve customer experience
• Monetize mobile data
• Strengthen fixed 3-play position
• Continue operational excellence
improvement
3
Stable financial development despite competitive market
4
• Fixed decline in DSL and voice
• Fixed growth in 3-play over fibre
• Mobile revenue growth affected by lower
handset sales
2009 2010 2011 2012 2013
Fixed Mobile
3.4 3.0
3.1 2.9 2.9
7.6 8.3
8.9 9.4 9.2 22% 24% 24%
25%
30%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
0
500
1000
1500
2000
2500
3000
3500
4000
2009 2010 2011 2012 2013
EBITDA EBITDA %
• Cost efficiency program
• Mobile contribution
• Turnaround fixed
2.4 2.7 2.9
3.1
3.6
Telenor Sweden revenues (SEK bn) EBITDA (SEK bn) and EBITDA margin
Second largest operator with solid market positions
5
0.7m fixed BB subscriptions 23% revenue market share
1.8m subscriptions 19% revenue market share
0.7m subscriptions 22% revenue market share
Consumer mobile Business mobile Consumer fixed broadband*
*Incl. a
cquis
itio
n o
f T
ele
2’s
fib
er
and c
able
busin
ess
Telenor Telia “3” Tele2 Comhem Other
Overview of fixed in Telenor Sweden
6
340
521
675
Voice
TV
Broadband
+20
* Tele2 acquisition included from Q1 2014
Q1 2014: Revenues SEK 853 million (+27% YoY)*
Customers as of Q1 2014 (k)
vs Q1 2013*
+133
+231
Agenda
• Introduction
• Market overview
• Strategic focus
Market trends
1. Fibre growth with SDU as the next arena
after a period of consolidation
2. Continued shift from closed to open
business models
3. Major shift in TV Market – driven by OTT
and bundling of 3 play
4. Early signals of possible quad play
based on improved customer experience
of broadband, mobile and content
8
Fixed consumer decline explained primarily by voice
and DSL
9
0
5,000
10,000
15,000
20,000
25,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fixed Broadband - Fibre Fixed Broadband - Cable TV with Telecom OperatorsTV with other operators Fixed Broadband - xDSL Fixed Voice
Source: PTS
Swedish broadband development driven by fiber access*
10
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Fibre share of households Cable share of households
xDSL share of households Consumer Mobile Broadband "Household Penetration"
Other accesses (not paid for/dial-up) share of households
* Subscribers
** Homes connected with fibre out of 2.5 million MDUs and 2 million SDUs
Fibre household
penetration **
~50%
- MDU 75%
- SDU 15%
Source: PTS and Telenor analysis
Fibre growth in open networks
11
• Model established by public owned REOs
and metro networks. Followed by Telia
Open Fibre
• In MDUs, landlord makes investment in
in-house LAN and leases to
communication operator (CO) which
installs active equipment.
• CO runs and maintains network and signs
SPs.
• SPs offer a variety of products to the end
user. Few 3-play offerings.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2008 2009 2010 2011 2012 2013 2014
Closed Open Share open
Swedish fibre market (connections)
Source: PTS and Telenor analysis
12
Consumer fibre customer base and growth in 2013
0
200
400
600
800
1,000
1,200
2012 2013
Telenor 280k (+24)
Telia 329k (+66)
Tele2 117k (+14)*
Bahnhof 69k (+5)
Bredband2 89k (+6)
Alltele 67k (+2)
Other 154k (+25)
Comhem 35k (+27)
* Owned by Telenor since January 2014
Source: PTS
Fixed revenue growth
13
0.9%
-4.5% -7.1% -7.6%
-1.8%
-5.3%
-0.9% -0.3%
-24%
-20%
-16%
-12%
-8%
-4%
0%
4%
8%
12%
16%
2007 2008 2009 2010 2011 2012 2013 LTM Q114
Telia Tele2 Telenor Comhem
Telia reports strong customer numbers all over (broadband, TV and telephony)
Tele2 revenue decrease accelerates
Telenor has turned negative trend
Comhem is growing on revenues again after another strong customer growth quarter
*Telenor revenues include acquisitions retroactively.
Comments Q1 2014
Source: Annual reports
Agenda
• Introduction
• Market overview
• Strategic focus
Bredbandsbolaget’s brand position
15
Bredbandsbolaget is the main brand with a clear position
as a premium brand with strong customer experience.
Ownit brand used as an attacker brand for take over market.
Fastest
broadband
Most satisfied
customers
First with the
latest
Experience More
Brand Target Group: Maximalists
Increased scale in fibre and TV through acquisitions and
organic sales
16
395 385
544 580
730
25% 22%
29% 28% 34%
0%
25%
50%
75%
100%
0
100
200
300
400
500
600
700
800
900
1,000
2010 2011 2012 2013 2014
Telenor Fiber Universe (hc)
Telenor Fiber Universe Market share(%)
* Homes connected
** Including Canal Digital DTH
Source: PTS and Telenor analysis
Telenor fibre universe 2010-2014
Consumer fibre market share*
27%
34% 4%
35%
Telia Telenor Com Hem Other
Customer market share TV**
14%
18%
40%
28%
Telia Telenor Com Hem Other
Telenor #1 position within fibre
Telenor #2 position within TV
Telenor fibre universe (hc)
Telenor fibre universe market share (%)
Main strategic areas 2014
17
Brand preference consumer” Brand preference consumer”
Loved by customers Efficient operations
Internet for all - Home
• Increase penetration and ARPU
• Improve TV-offering
• Implement NPS
• Increase speed
• Integrate Tele2
• Improve delivery process
• Expand in open networks
• Develop SDU offer
Ambition to strengthen 3-play position
Improved TV-offering:
• New packaging in 2013
• Basic, Flex and Large through
own content agreements
• Premium packages through C
More and Viasat
• New IPTV platform in H2 2014
• Multiscreen in 2015
• SVOD in 2015
18
1-play 2-play 3-play
Fibre ARPU - Bredbandsbolaget
Distribution of fibre customer base
1 play
2 play
3 play
Focus areas Telenor
Sweden
• Improve customer experience
• Monetize mobile data
• Strengthen fixed 3-play position
• Continue operational excellence
improvement
19
Consumer fixed market in Sweden 26 June 2014
Mats Lundquist, Head of Broadband & TV, Telenor Sweden