Morgan Stanley TMT Conference, Barcelona November 2006 1
Contents Elisa today Finnish telecoms market Q3 2006 and financial highlights, and Elisa s segment review Execution of the strategy Outlook for 2006 2
Elisa at a glance Full range of telecom services No 1 fixed network operator No 1 broadband operator No. 2 mobile operator in Finland and in Estonia Offering Pan-European and global scope through partnerships Vodafone and Telenor Revenue per segment in Q3 2006 Fixed 39% Mobile 61% Shareholder structure, 30 Sept 2006 Market cap 3.3bn Foreign owners 58.6% (45) Households 25.6% (32) Domestic institutions 15.8% (23) 3
Finnish telecom market Market shares in Q3 2006 Others 5% DNA 18% Elisa 39% Welho* 6% Elisa 35% Finnet companies 25% TeliaSonera 43% TeliaSonera 29% Mobile operators 1) Fixed broadband operators 2) 1) Company data 2) Company data and Elisa estimates * Cable-TV company 4
Financial highlights Elisa Q3 2006 highlights Sale of 3G service bundles progressed well Churn decreased further to 11.7%, mobile ARPU decreased slightly from the previous quarter Lower Saunalahti interconnection fee Both mobile and ADSL subscription bases increased Broadband market growth has slowed down Revenue and EBITDA improved clearly Financial position remained stable 5
Financial highlights Target to increase profitability Revenue and EBITDA-% 371 391 385 391 333 339 333 351 333 336 326 343 348 382 387 32 % 22 % 23 % 25 % 26 % 29 % 31 % 32 % 30 % 28 % 27 % 27 % 32 % 30 % 26 % Q1 2003 Q2 2003 Q3 2003 Q4 2003 FAS Q1 2004 IFRS Q2 2004 Revenue, EURm Q3 2004 Q4 2004 Q1 2005 Q2 2005 Q3 2005 Q4 2005 Rolling 12 mths EBITDA-% excl. one-offs Q1 2006 Q2 2006 Q3 2006 6
Financial highlights Financial position is strong Net debt and Cash flow 890 790 767 742 722 654 660 690 590 580 513 462 489 490 390 290 354 363 293 293 381 336 190 90-10 -10 Q1 2003 25 21 Q2 2003 Q3 2003 69 Q4 2003 9 88 71 Q1 2004 Q2 2004 Q3 2004 FAS IFRS Net debt, EURm 146 Q4 2004 26 Q1 2005 136 Q2 2005 Cash flow, EURm 1 Q3 2005 146 Q4 2005 13 Q1 2006 29 36 Q2 2006 Q3 2006 7
Segment review, mobile business Lower churn, ARPU at the same level Churn 11.7 % (27.2*) Shift from price competition to service competition ARPU EUR 30.5 (31.2*) Lower Saunalahti interconnection tariff ARPU and value added services 31,2 30,4 31,3 30,5 28,0 1 483 3G service bundles increase use of services Growth in network usage MOU grew by 35% and SMS 38% (increased Saunalahti traffic) Growth excluding Saunalahti 17% and 32%, respectively 17 % 17 % 17 % 17 % 17 % Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 * excluding Saunalahti ARPU, Share of non voice services 8
Segment review, mobile business Lower interconnection fee affected ARPU ARPU (EUR) and annualised churn (%) 50 45 40 35 30 25 20 Usage (min/sub/month) 240 220 200 180 160 140 120 15 10 5 0 Q1/01 Numberportability Q2/01 Q3/01 Q4/01 Q1/02 Q2/02 Q3/02 Q4/02 Q1/03 Q2/03 Q3/03 Saunalahti started to grow ACN entered the market Q4/03 Q1/04 Q2/04 Several new players in the market TeliaSonera acquired ACN Q3/04 Q4/04 Q1/05 ARPU Churn Usage Elisa acquired Saunalahti 9 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 100 80 60 40
Segment review, fixed network business Broadband growth has slowed down Broadband subscriptions growth 39% y-o-y Broadband growth 7,000 subscriptions in Q3 520 000 420 000 320 000 Elisa as a market leader in slower growth subscription market Broadband subscriptions 459 827 472532 479586 420 465 345 898 220 000 Elisa introduced broadband service package to the market 120 000 Decrease in analogue lines continued 20 000 analogue lines decreased by 11% and ISDN channels -80 000 by 19% 37 715 39 011 39 362 12 705 7 054 Q3 2005 Q4 2005 Q1 2006 Q2 2006 Q3 2006 Subscriptions Net adds 10
Segment review, fixed network business Growth in subscriptions has stopped Thousands 1 600 1 400 1 200 1 000 800 600 400 200 0 Q1/04 Q2/04 Q3/04 Q4/04 Q1/05 Q2/05 Q3/05 Q4/05 Q1/06 Q2/06 Q3/06 Traditional analogue ISDN Cable TV Broadband 11
Strategy execution 2005-2003 - Integration of One Elisa Strengthening market position in core markets New markets and new services 12
Strategy execution Productivity improvement Significant profitability improvement Installation and maintenance outsourcings Financial administration outsourcings Reduction in personnel costs Changes in broadband pricing Customer orientation 3G service bundles and wider service offering Device management solution to corporate customers Elisa TV in mobile terminal: 8 TV channels Broadband service bundles HSDPA launch in Estonia Simplification of structure Tender offer of Lounet shares Sale of TV business in Jyväskylä 13
3G service bundles success story Sale of 3G packages has progressed well Significant amount of new subscriptions is 3G service bundles ARPU much higher than in traditional subscriptions Share of data is significant Currently about 220,000 3G customers in Finland, estimated amount at the year end more than 300,000 Elisa completed the world s first commercial UMTS900 call Ad example: Nokia N70 including 400 minutes per month + data and SMS 14
Finnish mobile users are going to use familiar internet applications % of users 70 60 50 40 30 20 10 The most popular mobile services 0 email Internet Map services Navigation News Weather TV Search Videocalls Music No usage Usage in March 2006 Usage in October 2006 Plans for usage in October 2006 15 Source: Soprano Oyj esearch
Multimedia computer 3G, WLAN, DVB-H H and other wireless services enable these services Pictures Email Music Internet Applications Games Presence Home Calendar Maps 16 Source: Nokia / Anssi Vanjoki 28.3.2006
Most comprehensive mobile TV in Finland always in your pocket 8 different TV-channels in your mobile 17
Device management solution Full service for mobile handset delivery and management Also possibility for remote services 18
Outlook for 2006 Challenging market Competition remains challenging More focus on services Clear improvement in result Revenue will clearly grow EBITDA and EBIT excluding non-recurring items will improve clearly Q4 EBITDA and EBIT slightly lower level than in Q3 increased market activities seasonality in personnel costs Stable CAPEX and cash flow CAPEX 13-15 per cent of revenue Cash flow clearly positive 19
Morgan Stanley TMT Conference, Barcelona November 2006 20