COPENHAGEN, Denmark, July 27, 2000 (PRIMEZONE) -- Tele Danmark, the Danish-based European communications solutions provider, today reported first half net revenue growth of 18.9% to DKK 21,642m. Total operating income (EBIT) grew 14.4% to DKK 3,848m and net income grew 1.2% to DKK 1,936m. Pro forma earnings per share, i.e. excluding goodwill amortization, grew 7.0% to DKK 10.99. Excluding non-recurrent financial items and deficit in Ben, a fast growing Dutch cellular operator, net income grew 10.6% in the first half 2000.
The strong growth in net revenues was achieved through 5.5% growth in domestic net revenues and a continuing impressive 38.8% growth in net revenues from the international activities. Similarly, earnings before interest, taxes, depreciation and amortization (EBITDA) increased 7.6% for domestic and 35.4% for international activities. Total operating income in the domestic business grew 10.8% to DKK 3,432m, while total operating income from international operations grew 57.0% to DKK 416m.
The number of subscribers on a pro-rata basis increased 21.4% to 10.1m. Similarly, the number of cellular users grew 45.3% to 3.9m, Internet dial-up subscribers grew 92.1% to 47,000, landline customers increased 2.9% to 4.5m and the number of cable TV customers was unchanged at 825,000.
"During the first half of 2000, we achieved solid growth in revenues and operating income. We also expanded our customer base significantly and consistent with our growth strategy almost half of our total customer base is cellular and Internet customers " says Henning Dyremose, Chief Executive Officer.
Group overview
DKKm 2Q 2Q 1H 1H Change %
1999 2000 1999 2000 1H00 vs.
1H99
Net revenues 9,224 10,953 18,208 21,642 18.9
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 3,029 3,398 6,091 6,894 13.2
Total operating income
(EBIT) 1,651 1,855 3,363 3,848 14.4
Net financial
items 37 (261) (18) (416) NM
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------ ------ ------ ----- ------
Net Income 976 901 1,913 1,936 1.2
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Capital expenditure 1,740 1,826 3,031 4,087 34.8
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EPS (DKK) 4.51 4.16 8.84 8.94 1.2
Pro forma EPS (DKK) 5.23 5.20 10.27 10.99 7.0
Shares issued
(million) 216.5 216.5 216.5 216.5 NM
Domestic and International business continues to deliver strong earnings growth in 2Q00 emphasizing the solid financial performance of Tele Danmark. The growth is driven by the following facts:
-In the first half of 2000, the international revenues contributed 46.8% of total net revenues compared to 40.1% in first half 1999. Similarly, international EBITDA contributed 24.1% of total EBITDA compared to 20.1% in first half 1999. -In the first half of 2000, Tele Danmark passed a milestone by having over 10 million customers on group level. Almost half of these customers are within our focus growth areas of cellular and Internet. -Second quarter domestic net revenues grew by 4.3% compared to 2Q99 and similarly, EBITDA grew 6.2% and EBIT grew 9.3%. International growth was very strong as second quarter net revenues grew by 39.9% compared to 2Q99 and similarly, EBITDA grew 33.8% and EBIT grew 40.6%.
Net financial items decreased from DKK (18)m in 1H99 to DKK (416)m in 1H00. Out of the total reduction DKK 128m can be referred to non-recurrent financial items such as security and currency adjustments in domestic and international businesses and a non-recurrent income of DKK 40m in Telecom Invest A/S in 2Q99. Furthermore, equity consolidated enterprises increased deficit by DKK 49m, primarily because of NetCom ASA. The remaining DKK 221m can be referred to higher interest expenses in international operations, to an increase in net debt in Tele Danmark A/S and to increases in interest rates.
Domestic activities
DKKm 2Q 2Q 1H 1H Change %
1999 2000 1999 2000 1H00 vs.
1H99
Net revenues 5,486 5,723 10,910 11,511 5.5
Total revenues 5,844 6,105 11,604 12,246 5.5
Total operating expenses(3,472) (3,586) (6,739) (7,012) (4.1)
Earnings before interest, taxes,
depreciation and amortization
(EBITDA) 2,372 2,519 4,865 5,234 7.6
Depreciation,
amortization etc. (881) (889) (1,767) (1,802) (2.0)
Total operating
income (EBIT) 1,491 1,630 3,098 3,432 10.8
Financial highlights
Domestic net revenues increased to DKK 11.5bn, up 5.5% on first half 1999, driven by landline and Internet Dial-up subscriptions, international traffic, cellular traffic and data communications services. Domestic EBITDA increased 7.6% to DKK 5,234m in first half 2000 once again reflecting productivity improvements and higher volume.
In the second quarter of 2000, domestic net revenues increased to DKK 5.7bn, up 4.3% primarily driven by landline and Internet Dial-up subscriptions, cellular traffic and international traffic. Domestic EBITDA increased 6.2% to DKK 2.5bn in second quarter 2000.
Other operating income in second quarter includes the divestment of Trend Communication A/S worth DKK 27m as well as sale and lease back of cars and buildings worth DKK 11m and DKK 73m, respectively. The net income effect of these transactions equals DKK 94m. Adjusted for these items, domestic EBITDA grew 1.5% in 2Q00, strongly impacted by interconnect price reductions during the second half of 1999 and May 1, this year. Furthermore, business areas with relatively high margins, such as fixed line telephony and leased lines, are to some extent substituted by business areas with relatively low margins, e.g. interconnect traffic and international transit traffic.
Revenue growth
Cellular traffic revenues grew 33.5% to DKK 1,578m reflecting a combination of 33.9% growth in the number of cellular users, a trebling in SMS traffic and higher average prices per minute due to a relative increase of pre-paid customers in our customer base.
International traffic revenues grew 23.8% to DKK 1,129m as international transit traffic grew by 161%.
Data communication revenues grew 16.5% to DKK 473m due to high growth in Internet services such as web-hosting.
Landline and Internet dial-up traffic fell 12.6% to DKK 2,174m primarily as a consequence of significantly lower prices for interconnect minutes.
Traffic & subscriber growth
The total number of subscriptions in the domestic business grew 10.8% to 6.046m compared to end first half 1999. This reflects a 33.9% growth in the number of cellular users to 1.521m and a 71.7% growth in the number of Internet dial-up customers to 503,000, an unchanged number of cable TV customers and a decrease of 0.2% to 3.197m landline customers.
During the second quarter, we had a net growth of 131,000 new cellular customers compared to the end of first quarter 2000. Monthly average revenue per user (ARPU) was almost unchanged at DKK 226.
We experienced significant growth in volumes as landline traffic including Internet and interconnect traffic grew 27.4% compared to first half 1999. Similarly, cellular traffic grew 13.7% reflecting the high customer growth over the past twelve months.
ADSL Flat-rate Roll-out
During the second quarter, we introduced ADSL (broadband) at a flat rate in continuance of our metered ADSL service launched in July 1999. The flat rate service is available from DKK 399 to DKK 1,199 per month and essentially provides Internet customers with an "always-on" function. Our ISDN expansion over the past few years serves as a relevant precursor for the ADSL expansion as we had 305,000 ISDN customers by the end of first half 2000 - an increase of 81.5% compared to end first half 1999.
Duét15 and Duét45
In the second quarter, we combined the Duét service with the Mobil15 and Mobil45 service resulting in Duét15 and Duét45. For a monthly fixed fee our customer is provided a given number of minutes as well as the Duét convergence function, which keeps us in a leading position for further cellular penetration. By the end of first half 2000 Tele Danmark had 264.000 Duét customers, whereby the Duét product holds 17.4% of our cellular customer base.
New SMS services
In the second quarter, Tele Danmark introduced a range of new SMS content services. The new services includes individualised SMS- push services such as stock quotes, business- and sports news as well as telephone number of nearest taxi company. In the second quarter Tele Danmark achieved a total of 47m SMS messages- an increase of 240% compared to 2Q99.
International activities
DKKm 2Q 2Q 1H 1H Change %
1999 2000 1999 2000 1H00 vs.
1H99
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Net revenues:
Talkline 1,579 2,298 3,144 4,487 42.7
Other activities 2,159 2,932 4,154 5,644 35.9
Net revenues 3,738 5.230 7,298 10,131 38.8
Total revenues 3,954 5,468 7,644 10,500 37.4
Total operating
expenses (3,297) (4,589) (6,418) (8,840) (37.7)
EBITDA:
Talkline 88 119 166 214 28.9
Other activities 569 760 1,060 1,446 36.4
Earnings before interest, taxes,
depreciation and
amortization (EBITDA) 657 879 1,226 1,660 35.4
Depreciation,
amortization, etc. (497) (654) (961) (1,244) (29.4)
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Total operating
income (EBIT) 160 225 265 416 57.0
Financial highlights
International net revenues increased to DKK 10.1bn, up 38.8% on first half 1999. The most significant contributors to the strong development were Talkline, Ben and Connect Austria. International EBITDA increased 35.4% to DKK 1,660m primarily reflecting improved income from Talkline, Belgacom and Polkomtel. EBIT from International activities grew 57.0% to DKK 416m reflecting the high growth in a number of companies.
In the second quarter of 2000, International net revenues grew to DKK 5.2bn, up 39.9%. The most significant contributors to the strong development were Talkline, Ben, Connect Austria and Sunrise. International EBITDA increased 33.8% to DKK 879m and EBIT grew 40.6% to DKK 225m reflecting improvements in especially Talkline, Belgacom and Polkomtel.
Traffic and subscriber growth
The number of subscribers on a pro-rata basis grew 41.7% to 4.077m. In cellular, we saw an increase of 53.9% to 2.342m, in landline we saw an 11.7% growth to 1.291m and in Internet dial-up the number of customers grew 122% to 444,000. The growth in number of cellular customers was fuelled by strong net additions in Ben, Belgacom, Connect Austria and Polkomtel.
In Talkline, the number of cellular customers grew 22.5% to 1.128m compared to 1H99 and similarly, the number of landline customers grew 20.0% to 180,000 the number of Internet Dial-up customers was 115,000 by the end of second quarter.
The growth in number of Internet customers to 444,000 in the international units was achieved through a strong expansion in Contactel and Belgacom as well as a trebling in Talkline since the beginning of 2000.
3G Blue consortium gets a Dutch UMTS license for Ben
By the end of the second quarter, Tele Danmark signed a Memorandum of Understanding with Deutsche Telekom and Belgacom regarding a joint bid for a Dutch third generation cellular license. On 24 July 2000, 3G Blue acquired a license for a price of NLG 870m and subsequently 3G Blue will become operational under the brand name of Ben. Ben's GSM operation has 442,000 subscribers, which combined with the third generation license is a strong base for creating further value.
NetCom ASA
Late in the second quarter, Telia, the Swedish incumbent, announced that they had agreed with a number of shareholders to purchase their shares of NetCom ASA bringing Telia's holding in NetCom ASA above 50%. In July 2000, Telia forwarded a bid to all NetCom ASA shareholders. Tele Danmark controls 20.4% of NetCom ASA and if we decide to accept the Telia bid it would result in a pre-tax capital gain of DKK 1.7bn.
Talkline SMS content rollout
Talkline has rolled out a SMS content package that includes the entertainment feature MobilSjov known from Tele Danmark as well as a push service for sports news. During the second quarter Talkline had a volume of 49m SMS-messages, an increase of 118% compared to 2Q99.
Outlook
Based on Tele Danmarks results in the first half of 2000 we expect net revenues for 2000 to grow at a double digit rate. However, due to non-recurrent financial items and the financing of the expansion in the start-up cellular operators we expect net income for 2000 to be at the same level as in 1999.
Changed Accounting Policies
At the board meeting on 13 April, 2000, changes in accounting policies were agreed upon. All figures in this report is stated according to the changed accounting policies. The changes to accounting policies involve accounting for pension cost, computer software cost as well as statement of tax assets and tax liabilities. For further information about the changed accounting policies please refer to Tele Danmarks first quarter report 2000.
Safe harbour statement
Certain sections of this Earnings Release contain forward-looking statements that reflect the Management's current views with respect to certain future events and financial performance. Statements concerning the outlook naturally involve uncertainties, and consequently actual results may differ materially from those projected or implied in the forward-looking statements. Further, certain forward-looking statements are based on assumptions of future events which may prove not to be accurate.
Factors that may cause actual results to differ materially from those projected or implied in the forward-looking statements include, but are not limited to, economic trends and developments in financial markets; technological developments; changes in applicable Danish regulation and EU regulation; changes in interconnect rates; developments in competition within Domestic and international telephone services; introduction of and demand for new services and products; developments in the demand, product mix and prices in the cellular market, including marketing expenses; developments in the market for multimedia services; the possibilities of being awarded licenses abroad; developments in the Company's international activities, which also involve certain political risks; and investments and divestitures in Domestic and foreign companies.
Statements of Income
Tele Danmark Group 2Q 2Q 1H 1H Change %
DKKm 1999 2000 1999 2000 1H00 vs.
1H99
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Net revenues from domestic activities:
Landline and Internet dial-up
subscriptions 1,080 1,141 2,147 2,274 5.9
Landline and Internet
dial-up traffic 1,175 1,037 2,487 2,174 (12.6)
International traffic 470 543 912 1,129 23.8
Cellular subscriptions 151 157 326 324 (0.6)
Cellular traffic 642 822 1,182 1,578 33.5
Data communications
services, etc. 221 246 406 473 16.5
Leased lines 324 312 660 615 (6.8)
Operator services 171 147 333 300 (9.9)
Directory services 222 236 459 491 7.0
Cable television 227 291 449 573 27.6
Terminal equipment, etc. 699 646 1,335 1,313 (1.6)
Other domestic business
activities 104 145 214 267 24.8
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Net revenues domestic
activities, total 5,486 5,723 10,910 11,511 5.5
Net revenues international activities:
Talkline 1,579 2,298 3,144 4,487 42.7
Other international
activities 2,159 2,932 4,154 5,644 35.9
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Net revenues international activities,
total 3,738 5,230 7,298 10,131 38.8
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Net revenues Group 9,224 10,953 18,208 21,642 18.9
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----- ----- ----- ----- -----
Work performed for own purposes and
capitalized 355 282 658 621 (5.6)
Other operating income 219 338 382 483 26.4
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Total revenues Group 9,798 11,573 19,248 22,746 18.2
Total operating
Expenses (6,769) (8,175) (13,157) (15,852) (20.5)
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EBITDA, domestic
activities 2,372 2,519 4,865 5,234 7.6
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EBITDA, international activities:
Talkline 88 119 166 214 28.9
Other international
activities 569 760 1,060 1,446 36.4
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EBITDA, international
activities, total 657 879 1,226 1,660 35.4
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EBITDA, Group 3,029 3,398 6,091 6,894 13.2
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Depreciation, amortization and
writedowns etc. (1,378) (1,543) (2,728) (3,046) (11.7)
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EBIT 1,651 1,855 3,363 3,848 14.4
Net financial items 37 (261) (18) (416) NM
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Income before income
taxes 1,688 1,594 3,345 3,432 2.6
Income taxes (712) (693) (1,432) (1,496) (4.5)
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Net income 976 901 1,913 1,936 1.2
Balance Sheets 30 June
Tele Danmark Group (DKKm) 1H 1999 1H 2000
Assets
Intangible assets, net 8,745 10,574
Property, plant and equipment, net 24,261 26,420
Investments and other assets, net 1,422 3,877
Total fixed assets 34,428 40,871
Total inventories 929 1,096
Total accounts receivables 18,905 19,447
Marketable securities 232 267
Cash 940 886
Total current assets 21,006 21,696
Total assets 55,434 62,567
Liabilities and shareowners equity
Total shareholders' equity 26,140 27,789
Total provisions 7,598 7,149
Total long-term debt 7,042 12,339
Total short-term debt 14,654 15,290
Total liabilities 29,294 34,778
Total liabilities
and shareowners' equity 55,434 62,567
Statements of Cash Flow
Tele Danmark Group (DKKm) 1H 1999 1H 2000 Change %
1H00 vs.
1H99
Cash flow from operating activities 3,366 3,683 9.4
Cash flow from investing activities (2,858) (3,688) (29.0)
Cash flow from financing activities (207) (82) NM
Increase/(decrease) in cash and cash
equivalents 301 (87) NM
Cash and cash equivalents at June 30 1,172 1,153 (1.6)
Shareowner's Equity
Tele Danmark Group (DKKm) 1H 1999 1H 2000
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Shareowners' equity at January 1 after change in
accounting policies 24,328 25,86
Net income 1,913 1,936
Acquisition of treasury shares (110) (142)
Disposal of treasury shares 0 43
Currency translation adjustments 9 84
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Shareowners equity at June 30 26,140 27,789
Statistics
Group Subscriptions
Subscriptions ('000) 1H 1999 1H 2000 Change %
1H00 vs.
1H99
------- -------
Domestic:
Landline subscribers incl. wholesale 3,204 3,197 (0,2)
Cellular subscribers 1,136 1,521 33.9
Internet dial-up subscribers 293 503 71.7
Cable TV subscribers 825 825 0.0
Domestic subscriptions, total 5,458 6,046 10.8
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International:
Landline subscribers 1,156 1,291 11.7
Cellular subscribers 1,522 2,342 53.9
Internet dial-up subscribers 200 444 122.0
International pro rata subscriptions,
total 2,878 4,077 41.7
Group subscribers, total 8,336 10,123 21.4
Domestic traffic data
Traffic volume (million minutes): 1H 1999 1H 2000 Change %
1H00 vs.
1H99
Domestic landline traffic 10,420 13,275 27.4
International traffic 813 1,098 35.1
Cellular traffic 973 1,106 13.7
Number of employees
Tele Danmark A/S and fully owned 1H 1999 1H 2000 Change %
subsidiaries 1H00 vs.
1H99
Tele Danmark A/S 14,400 14,903 3.5
Subsidiaries 2,266 3,543 56.4
- of which in acquired enterprises 0 1,093 NM
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Number of employees 16,666 18.446 10.7
Key Figures 1995-99
Adjusted for changed accounting policies
Tele Danmark Group 1995 1996 1997 1998 1999 1H2000
Statements of Income DKKm
Net revenues 19,110 23,608 29,386 33,989 38,206 21,642
Total revenues 20,143 25,010 31,036 35,867 40,437 22,746
Total operating
expenses (12,299)(15,971)(21,162) (24,923) (28,201) (15,852)
Earnings before interest, taxes, depreciation
& amortization
(EBITDA) 7,844 9,039 9,874 10,944 12,236 6,894
Depreciation,
Amortization, etc. (3,620) (4,633) (5,265) (5,270) (5,583) (3,046)
Total operating income before
one-time items 4,224 4,406 4,609 5,674 6,653 3,848
One-time items, net 0 0 (2,292) 755 0 0
Total operating income
(EBIT) 4,224 4,406 2,317 6,429 6,653 3,848
Financial items,
net 1,148 520 21 (108) (215) (416)
Income before income
taxes 5,372 4,926 2,338 6,321 6,438 3,432
Income taxes (1,935) (1,916) (1,162) (1,888) (2,685) (1,496)
Net income 3,437 3,010 1,176 4,433 3,753 1,936
Balance Sheets DKKbn
Total assets 45.2 55.9 58.8 53.4 62.2 62.6
Total shareowners'
equity 30.9 32.7 32.1 24.3 25.9 27.8
Shares issued
(million) 262.0 262.0 262.0 216.5 216.5 216.5
Cash Flows DKKbn
Operating activities 8.0 7.5 7.7 9.0 8.5 3.7
Investing activities (3.5) (10.1) (8.9) (5.9) (11.3) (3.7)
Financing activities (3.2) (0.7) (1.0) (8.9) 3.0 (0.1)
Change in cash and cash
equivalents 1.3 (3.3) (2.2) (5.8) 0.2 (0.1)
Financial ratios
EPS before one-time items
DKK 13.12 11.49 13.24 15.94 17.34 8.94
Pro forma EPS 1)
DKK 13.93 13.20 15.57 18.82 20.52 10.99
Dividend per share
DKK 8.00 8.50 9.00 9.50 10.00 NM
Net interest-bearing debt
DKKbn (8.9) (2.6) 0.0 8.6 13.6 15.9
Operating profit margin
(EBIT-margin)% 22.1 18.7 15.7 16.7 17.4 17.8
Return On Equity
(ROE) % 11.6 9.5 3.6 15.7 15.0 7.2
Return On Capital Employed
(ROCE)% 2) 19.2 15.3 14.1 18.3 20.9 10.3
Other data, domestic activities
'000, end of period):
- Subscriber lines incl.
Internet dial-up 3,220 3,279 3,368 3,465 3,628 3,700
- Cellular
subscribers 550 806 894 995 1,311 1,521
- Cable-TV users 705 752 765 812 825 825
Traffic volume (million minutes):
- Total domestic landline
traffic 12,734 13,409 14,407 17,511 21,608 13,275
- International
traffic 1,175 1,302 1,396 1,506 1,698 1,098
- Cellular traffic 734 958 1,242 1,656 2,046 1,106
Number of employees 16,476 16,763 17,268 16,410 17,464 18,446
Capital expenditures
(DKKm) 3,424 10,669 9,314 7,983 11,525 4,087
USD/DKK exchange
rate 5.55 5.94 6.83 6.39 7.40 7.83
Note 1): Pro forma EPS is defined as net income before goodwill amortization related to acquisitions etc and one-timeitems.
Note 2): Return On Capital Employed (ROCE) is defined as income before income tax, one-time items and interest expenses divided by total shareowners' equity plus gross interest bearing debt.
Tele Danmark is the principal provider of a full range of telecommunications services in Denmark and holds significant interests in a range of telecom companies across Northern and Continental Europe. Domestic activities include landline and cellular telephone services, data communications, Internet, leased lines, cable television and directory services. By year-end 1999 the total number of employees in Tele Danmark A/S and fully owned subsidiaries was 17,464 and total assets were DKK 62.2bn. The Company was privatized in 1994 and today SBC Communications owns 41.6% of the shares, with the remaining shares held by individual and institutional shareowners all over the world. The market value of Tele Danmark's shares is presently approximately DKK 104.4bn (USD 13.1bn).
TLD Listings Shares: Copenhagen Stock Exchange. Reuters TLD.CO. Bloomberg TLD DC. Nominal value DKK 5. ISIN DK00-1020242-3. SEDOL 4889874. ADRs: New York Stock Exchange One ADR represents half of one ordinary share Reuters TLD.N. Bloomberg TLD US. SEC 1-12998. Half of one ordinary share. CUSIP 879242105. SEDOL 2883094.