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TeliaSonera AB TLSN
Q2 2013 Earnings Call Transcript

Transcript Call Date 07/17/2013

Jesper Wilgodt - Head of Investor Relations: Okay, welcome everyone to the presentation of TeliaSonera's Second Quarter Results. I'm Jesper Wilgodt, Head of Investor Relations. With me today to present, I have our CEO, Per-Arne Blomquist; and also our CFO, Christian Luiga. After those presentations, we will have a Q&A session. By that, I would like to handover to Per-Arne, please.

Per-Arne Blomquist - Acting President and CEO: Thank you. Well, first of all, I would like to say that I'm satisfied with the quarter; it's a decent quarter. We have a stable underlying top line development. We are taking care of the cost in a good way. We are executing on our cost efficiency program. But perhaps even most important, we have also addressed a couple of issues during this quarter that is important for the industry.

First of all, new pricing models, more pricing, and where we try to monetize on data and also the coverage issue around 4G and also fiber. I think that the high-speed Internet access would become more and more important going forward, and we have tried to deal with that now in the first initial stage in this quarter.

Finally, last but not least, of course, the sustainability issues are important for us, and I will come back to that later on in my presentation.

If I go back a year, I felt a bit uncomfortable with the development of both top line and cost. We have had previously a good spread between the cost development and also the income development and that was narrowed and that was the reason why we started to work with the cost efficiency program that was launched at the end of 2012.

You can now see the effects of this where we have cost coming down and also that our income is moving in the right direction, i.e., upwards. That has also meant that we have changed negative trend that we had during 2012 with four consecutive quarters of decreased margins.

Now, we have the first quarter and the second quarter, where you could see that stable top line and improved cost situation creates a better EBITDA margin. If you look at the 34.8%, that is I would guess among the best margins in Europe when it comes to a multi-market operator. Yes, we have certain domestic operators that might have higher, but this is I think among the best in Europe. It’s a effort and achievement just to keep it at this level and try perhaps increase it slightly, but just to keep it around 35% takes certain effort.

We have talked about our revenue side; and sometime I feel that this industry is a bit too depressed about the outlook. Yes, I agree, we have voice that is going down with 11%, messaging is going down, but what we also can see here is that mobile data continues to grow. It's 60%, more than 60%, then you can ask yourself in what industry do you have volume development on 60%. So I'll claim that for the last couple of quarters, we are actually a part of a growth industry and it is up to us as an industry player to make sure that we can monetize on that growth. That's our ambition and also our task to do.

We have tried to do that in different ways. We have taken the first step as major operator in Europe to look at this from a different way; i.e., we have started with flat fees for voice and messaging, but the end user to customer will then pay for the data usage. We are pricing data in a different way.

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