TDC Group
2016-2018
Strategy
Capital Market Day
27th January 2016
Disclaimer
This presentation of TDC Strategy for 2016 – 2018 may include statements about TDC‟s expectations,
beliefs, plans, objectives, assumptions or future events or performance that are not historical facts and
may be forward-looking for the period 2016-2018 and beyond. These statements involve known and
unknown risks, estimates, assumptions and uncertainties that could cause actual results, performance or
achievements or industry results to differ materially from those expressed or implied by such forwardlooking statements.
Any forward-looking statements are qualified in their entirety by reference to the factors discussed
throughout this presentation. The key factors include, but not limited to: developments in competition
within the domestic and international communications industry; information technology and operational
risks including TDC‟s responses to change and new technologies; introduction of and demand for new
services and products; developments in the demand, product mix and prices in the markets; research
regarding the impact of mobile phones on health; changes in applicable legislation; decisions by
authorities; status of important intellectual property rights; exchange-rate fluctuations; global and local
economic conditions; investments in and divestments of domestic and foreign companies; and supplier
relationships.
Who is present
Present today
CEO
Pernille Erenbjerg
Household
brands
Michael Moyell
Juul (acting)
Group Finance
Stig Pastwa
(June 1st, 2016)
Group Strategy &
Portfolio Mgmt.
Louise Knauer
CCO & Stakeholder
relations
Jens Aaløse
Operations
Peter Trier Schleidt
Online
brands
Michael Moyell
Juul
Business
Marina Lønning
(April 1st, 2016)
Norway
Gunnar
Evensen
Sweden
Erik Heilborn
3
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
4
TDC Group snapshot
Consumer
Network assets
& Operations
Business
 Market leader in
 Unparalleled infrastructure
 B2B leader in Denmark
communication and home
entertainment, with
focused
 Full household brands
 Agile online brands
base with unique mix of all
technologies
Mobile
Coax
Fiber
DSL
with footprints in Norway
and Sweden
 High quality customer
base from small, over midsize to large enterprises
 Agile online SMB player
5
We maintain our strong positions in Denmark and Norway –
value of Danish market down by 20% and Norway up by 16%
XX
Denmark, Total market3 (‘000 subscribers)
Mobile1
#1
6,128
45%
#1
6,448
2,219
41%
61%
Broadband
#1
2,411
#2
56%
1,723
14%
Utilities
Others
Others
2012
Landline Voice2
#1
#1
2,354
1,757
70%
2015
Pay-TV
#1
1,874
17%
2012
2015
Pay-TV
#1
2,646
2,575
53%
54%
#2
#2
2,191
18%
2,226
2012
2015
19%
64%
Others
Others
Others
2012
#2
Others
2012
2015
Market share
Norway, B2C mkt.4 (‘000 subs.)
Broadband
#1
Market position
2015
2012
Source: DBA, TDC, NKOM
1) Mobile voice, contract based
2) Landline voice market size and market share calculated in number of lines
3) DK total market shares (both B2C and B2B market)
4) Norwegian market shares for 2015 based on 1H 2015
2015
6
We remain one of the most efficient cash converters
EBITDAMargin 16E (%)
2016E industry average
Cash Conversion1: 15.2%
40%
2016
35%
2016E
industry
average
EBITDAmargin:
33.2%
30%
25%
5%
10%
Source: Company information, FactSet as of January 15, 2016
1) Calculated as ((EBITDA minus CAPEX) / Sales)
15%
20%
Cash
Conversion1
25%16E (%)
7
TDC DK has been affected by a number of market
developments
XX
% share of total Group GP decline1
2013-16 TDC Denmark GP decline contribution, DKKm
2013 – 2016 have and will be tough…
SMB
Business
Enterprise
Business
Consumer
landline
Consumer
mobile
Regulation
31%
~-750
25%
~-600
27%
~-650
19%
 Recalibrated product portfolio
with high priced products
 Lower revenue from renego-
tiation of profitable contracts
 Termination of high-margin
landline subscriptions
 Lowest price point in EU
…the future looks better
 Reduced churn rates in SMB
and flattening decline in GP
 Public contract prices fully
implemented
 Churn impact reduced given
smaller subscriber base
8
 Prices stabilizing in late
2015, potentially sustainable
~-450
17%
~-400
 High regulatory pressure e.g.
 Roaming impact taking off
roam-like-home1
and
unbundling of cable network
1) Share of GP decline effects add to more than 100 % due to positive contributions from other areas
2) Also effecting 2017
7
…resulting in unhealthy market dynamics
The overall Danish profit pool is eroding1…
… impacting all operators in Denmark2
Total Danish profit pool,
EBITDA (DKKb)
DKKbn
Other operators
TDC Group in Denmark
37.7
4.7
5%
-6.8% p.a.
12.7
11.8
11.5
49%
10.9
95%
9.6
3
51%
Revenue
market share
EBIT
market share
 Overall market profit has been declining
significantly over past 5 years
2011
2012
2013
2014
2015E
 All Danish telco operators, incl. utilities
have experienced very limited profitability in
Denmark, excl. TDC
1) Total profit pool based on TDC, Telia, Telenor and 3 for full DK operations; company factsheet figures
2) Full market in 2014 including utilities and other operators
3) Danish business, excluding Norway and Sweden
9
While 2016 will be a transition year, EBITDA is expected to be
on an improving trend towards growth in 2018
Get pre TDC
TDC Group Gross Profit 2013-2016E, (DKKbn)
18.91
1.5
18.51
1.4
17.4
17.1
2013
2014
17.5
2015
10.71
0.9
10.0
9.8
2013
2014
2016E
 Strong growth expected
in Norway combined
with return to growth in
Sweden
 Investments in new
strategy start to pay
off, incl. reduced OPEX
from simplifying the
business model
9.8
2015
Transitioning to growth
through;
 GP decline seen in
Denmark expected to
ease off during 2016
and 2017
TDC Group EBITDA 2013-2016E, (DKKbn)
10.91
0.9
TDC group
2016E
1) Include Get’s EBITDA for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
10
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
11
Our purpose is simple
People have always had the
need to communicate
– that will continue to grow
We connect people with
technology, unite friends and
families, and create
coherence for businesses
12
We are changing
Mindset
From…
…To
What it requires
Incumbent
mindset, thinking
inside-out
Customer driven
development, successfully done at Get
Cultural mindset change to become
customer-centric
Integrated
businesses and best
technology at the
address
Minimize differences from legacy
systems, to enable Group
perspective
Product and RGU
focus
Integrated
Household and SMB
solutions
Integrate systems to drive
integrated solutions
Proprietary TDC
developed solutions
White-labeled
solutions and
partnerships
Moving from complex to simplified
systems enables 3rd party solutions
Negative market
perception from all
stakeholders
Intuitive positive
reaction from all
stakeholders
Break the vicious image spiral for
customers and stakeholders
Systems
Silo business lines
thinking
Offering
Development
Image
13
Our 2018 strategy delivers customer satisfaction and cash flow
Always
Simpler
and Better
Our
guiding
Principle
Our
promise
Our goal
-For our customers
- For TDC
Better
connectivity,
by
continuing to deliver the
best speed, quality and
coverage by uniting our
unique asset
Better offerings
and entertainment by
delivering relevant products
both today and tomorrow
Best Customer
Satisfaction
Better customer
experience driven by
best customer insights and
digitalisation
Best Cash Flow
Generation
14
To succeed we have launched a number of new initiatives
Always Simpler and Better
– New organization incl. change in executive mgmt.
Our
guiding
Principle
– One household Brand in Denmark – youSee
– B2B simplification program launched
– Trim-to-invest program launched
– Strategic review of TDC Sweden
Better
connectivity
Our
promise
Our goal
– Giga speed (covering 50%
of Danish households and
all Get households)
– Best technology, with no
overlap in investments
Better offerings
– get Mobile MVNO launch
– Fully enabled Online Brands
– SMB relaunch – new
offerings, service model,
and platforms
Best Customer
Satisfaction
Better customer
experience
– Customer experience based
on customer insights
– Differentiated customer
service including 24/7
support
Best Cash Flow
Generation
15
youSee - one unified, premium household brand in Denmark
…provide consumers a simplified,
best-in-class integrated suite of
mobile, BB, TV and landline
services
youSee as our
unified
household
brand will…
… leverage youSee as
Denmark’s #1
entertainment platform for
all group household
customers
... deliver an unmatched,
ubiquitous fixed and mobile
broadband network
experience
… simplify our operating model,
optimizing investment and
marketing spend
Full household
penetration1
Households (‘000)
+81%
450
249
2015
2018
1) Full youSee households (TV+BB+MV).
16
Fully integrating youSee will be an immediate focus
3P
… offer all HHs an integrated
3P portfolio through a
unified product roadmap
… combine IT platforms,
backhaul, internal processes
As part of
integration
we will…
... rationalize future network
CAPEX spend
Resulting in new
OPEX and CAPEX
levels for youSee
youSee OPEX/CAPEX
spend, DKK
~-200m
… integrate channels, branding
and go-to-market strategy
with aligned price point in
mobile portfolio
… aggregate and streamline
customer service functions
2015
2018
17
The TDC and youSee merger and the B2B program enable a
simpler long term operating model
Business simplifications…
TDC and
youSee
merger
Business
program
One integrated
IT platform
across all
household
products
…drive operational simplification
Consolidation of
IT systems
25 % reduction in
number of IT systems
-25%
2015
Simple product
portfolios and
few product
platform for all
Business
customers
No
overlap in
technologies
Simpler
operating
model
2018
Reduced investments
due to limited need for
overlapping access
technologies
E2E process optimization
reduced late delivery1
-65%
2014
2015
1) First wave improvements on E2E fiber – reduced late delivery on fiber orders
18
And in addition we launch a “trim-to-invest” program already
in 2016
TDC Denmark
OPEX net re-investments
Re-investments
~-250m
6.2bn
150m
2015
DKKm
~250
in gross
savings from
program in 2016
DKKm
~150
re-invested in
our 2018
strategy
DKKm
~100
in net savings
in 2016
2016E
19
We deliver better connectivity to all our customers…
We build on our world-class
mobile network…
…while drastically improving
our cable network…
“TDC has fastest 4g
network in the world”
– Open Signal, June 2015
“TDC’s network rated as
best in Denmark“
– Teknologisk Institut,
March 2015
GIGA speed in 2017. DOCSIS 3.1
upgrade of our cable network to
enable
1000 Mbps
household coverage in
Denmark by 20171
~50%
~100%
1000 Mbps
in get footprint
…to cover Denmark with the best connectivity
~100%
≥10 Mbps
household
coverage2
~70%
≥100 Mbps
household
coverage2
~50%
1000 Mbps
household
coverage1
1) (%) in DK. Based on 2.759 million households in DK (excluding summerhouses and industry and trading addresses);
2) Measured by the EU definition (“up to” speeds).
20
…and are able to provide the best technologies across all
addresses
B2C
B2B
Best available
access at any
address
Coax
Fiber
DSL
Mobile
No overlapping investments nor investing in areas with limited
commercial opportunities
21
We deliver better offerings and entertainment across all
platforms
Better content
and integration
of OTT offerings
in one interface
Better
entertainment and
OTT for HHs
Through full IP
enabled base1, %
93%
26%
2015
Get gone
mobile
Integrated
solutions in
SMB
90%3 100%
2018
13%
+
One-stopshop
No-frills
solution
Penetration of Get
households2 in 2018
Integrated solutions in
SMB taking +15%
market share in a market
that increases 10%
1) IP enabled based on TV base - In Get driven by conversion of last analogue networks to digital and STB roll-out, in YS driven
by STB roll-out
2) Get penetration is measured as mobile uptake in Get connected households
3) 45 p.p. from STB
22
We deliver a simpler and better customer experience
day by day…
TOMORROW
TODAY
I am forced to contact the
call center at specific times,
and have no personalized
contact
I receive the service I need
on my preferred platform
whenever I want
The connection I am offered
depends on which of TDC’s
brands I called
TDC always offers the best
possible connection at my
address
The movie I want to
watch is not available in
my holiday house
I can view my TV programs
and streaming services are
available on all my devices
My bill is complicated and
often contains errors
I receive the correct bill
every time and it is easy
to understand
My perception of TDC is
mediocre
I see TDC as a
responsible company
that delivers as promised
23
…based on customer insights, digitalization and journeys
Best Customer
Experience
Customer Insights
Digitalization
Customer Journeys
Proactive service based
on insights
Simple differentiated,
service approach
Journeys optimized
around the customer
 Customer segmentation,
incl. next product to buy
algorithms
 Convenient multi touch
point customer interaction,
e.g. VIP service & Digital
self-service app
 Zero based journey
approach, from touch
point optimized to multi
channel
 Strong service concept,
incl.
 First Journey “I Move”
generated
 Customer Experience
Index to predict potential
poor customer experience
reduction
30% Churn
accomplished by
“The Save Team”1
24h/7d
call centers
10pp
Increase in
CSAT accomplished in pilot
1) Save Team reduced churn with 30% compared to a control group
24
We steer and incentivize on our two main goals…
Best cash flow generation
Best customer experience
Recommend Score,
TDC Group
+13pp
Equity Free Cash Flow generation2,3 (DKKbn)
77
3.8
65
64
3.2
~2.5
71
66
3.7
~ 1.9
65
2013 2014 2015 2016 2017 2018
13 p.p.
improvement in TDC Group
recommend score1 will make us
‘best in class’ in our local
market
2013 2014 2015 2016E 2017E 2018E
Ambition for 2018
DKK 2.5bn
In equity free cash flow
1) Recommend score for entire TDC group incl. Nordics
2) 2013 and 2014 include Get EBITDA-CAPEX before TDC’s acquisition, for 12 and 10 months respectively
3) Includes NWC, provision, pension contributions and license payments
25
…supported by central commercial and financial steering
Commercial steering
Financial delivery
Resulting in e.g.
Legacy for strong
financial discipline with
focus on EFCF
Continue to optimize
with a Group
financial focus
Increased focus on
CAPEX optimization
with CFO management
Increased focus on
retention over new sales
Central
steering on
Group
performance
Strong management of
intake ARPU to avoid
value disruption
Aligned incentives to
focus on profitability
26
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
27
EBITDA pressure in 2015 due to challenged Danish market
partly offset by one offs in Consumer on non-service GP
TDC Group EBITDA 2013-2015, (DKKbn)
~-0,9bn
10.91
0.9
10.71
0.9
Get pre TDC
TDC Group
9.8
Group EBITDA bridge 2014-2015,
(DKKbn)
Regulatory
B2B Enterprise2
B2B SMB
B2C landline voice
B2C mobile voice
10.0
B2C non-service3
9.8
Get, EBITDA
OPEX DK net savings
Other4
2013
1)
2)
3)
4)
2014
2015
Total
Includes Get’s EBITDA for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
Includes Public
Paper communication fees and reassessment of provisions
Other includes forex (negative), Sweden (flat), Norway ex Get (positive), TV & BB (positive) and WHS (negative)
~-0.9bn
28
EBITDA pressure expected to continue in 2016 in spite of
improved trends in Consumer mobile and Business
TDC Group EBITDA 2013-2016E, (DKKbn)
Get pre TDC
10.91
0.9
10.71
0.9
~-1bn
9.8
8.8
TDC Group
Group EBITDA bridge
2015-2016, (DKKbn)
Regulatory
B2B Enterprise2
B2B SMB
B2C landline voice
B2C mobile voice
10.0
B2C non-service3
9.8
Get, EBITDA
OPEX DK gross savings
OPEX DK investments
Other4
2013
1)
2)
3)
4)
2014
2015
2016E
Total
Includes Get’s EBITDA for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
Includes Public
Paper communication fees and reassessment of provisions
Other includes forex (negative), Sweden (positive), Norway ex Get (flat), TV & BB (flat) and WHS (negative)
~-1bn
29
Improving trend towards growth in 2018 as Consumer mobile and
Business trends improve + new OPEX levers from simplification
TDC Group EBITDA 2013-2018E, (DKKbn)
Get pre TDC
10.91
0.9
10.71
0.9
TDC Group
Group EBITDA bridge
2016-2018, (DKKbn)
Regulatory
B2B Enterprise2
9.8
8.8
B2B SMB
B2C landline voice
B2C mobile voice
10.0
B2C non-service3
9.8
Get, EBITDA
OPEX DK net savings
Other4
2013
1)
2)
3)
4)
2014
2015
2016E 2017E 2018E
Total
Includes Get’s EBITDA for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
Includes Public
Paper communication fees and reassessment of provisions
Other includes forex (flat), Sweden (positive), Norway ex Get (positive), TV & BB (positive) and WHS (flat)
30
A different OPEX profile in 2018 driven by simplification
OPEX net re-investments
Re-investments1
TDC Denmark OPEX 2013-2018E, (DKKbn)
6.5
2013
-300m
6.3
2014
6.2
2015
-600-700m
150
m
2016E
75m
2017E
75m
2018E
1) OPEX reinvestments in strategic initiatives, e.g. digitalization, improved service concepts (e.g. 24/7), rebranding, migrations
31
We will continue to invest – but with slight decrease in cash
outflow from investment from 2017
CAPEX spend 2013-2016E, (DKKbn)
CAPEX DK
4.3
CAPEX Sweden & Norway Incl. Get (Pre-TDC)
4.5
4.0
3.3
3.5
3.5
0.5
0.71
0.91
1.0
2013
2014
2015
Ring-fenced for
initiatives
linked directly
to the strategy
eg.:
▪ IT
consolidation
▪ Digitalization
programs
 Increasing investment
level in Get to support
growth, incl. further
footprint expansion
 Non ring-fenced
investments in
Denmark supports
capacity expansion of
network, platform
upgrades and
maintenance and
volume driven
investments
 Cash outflow to Giga
speed almost evenly
distributed from 2017
to 2021
2016E
1) Includes Get’s Capex for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
32
EFCF under pressure in 2016 driven by EBITDA decrease,
however improvement expected after 2017
Equity Free Cash Flow1,2, (DKKbn)
3.8
 2016 negatively
affected by EBITDA
higher net interest
and expected new
license payment
(1800 MHz
frequency auction)
3.7
3.2
~2.5
~1.9
2013
2014
2015
2016E
2017E
 2018 improvement
driven by EBITDA
increase, lower
cash CAPEX levels
and lower special
items cash outflow
2018E
1) Includes Get’s EBITDA-Capex for 12 months in 2013 and 10 months in 2014 before TDC’s acquisition (based on 2015 average forex)
2) Includes Net interest, tax, Special items, NWC, provision, pension contributions and license payments
33
Update of TDC’s financial policies
Ambition to pay an attractive return to shareholders subject to financial
performance, investment needs and investment grade rating commitment
and to be paid as either dividends or through share buy backs
2015  Remainder of the 2015 DPS of DKK 1.50 is cancelled
Shareholder
Remuneration
2016  DPS guidance of DKK 1.00 paid in 2017
Financial
leverage
Maintain investment grade rating
 Ambition to grow DPS dependent on financial performance,
investment needs, and our ability to honor our commitment
2017
to an investment grade rating

 Annual dividends paid out following AGM approval of
proposal on the distribution of profits. No interim dividends
34
Summary of financial outlook
2016 Guidance
2015 Result
2016 guidance
9.8bn
~8.8bn
EFCF
DKK 3.2bn
~DKK 1.9bn
DPS
DKK 1.00
DKK 1.00
EBITDA
Note: Assuming NOK/DKK and SEK/DKK of ~0,80
35
Our 2018 strategy delivers customer satisfaction and cash flow
Always
Simpler
and better
Our
guiding
Principle
Our
promise
Our goal
- For our customers
- For TDC
Better
connectivity,
by
continuing to deliver the
best speed, quality and
coverage by uniting our
unique asset
Better offerings
and entertainment by
delivering relevant products
both today and tomorrow
Best Customer
Satisfaction
Better customer
experience driven by
best customer insights and
digitalization
Best Cash Flow
Generation
36
Q&A
37
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
38
Continued pressure expected in Consumer in 2016 but
assumed improvement hereafter
Danish Consumer Revenue 2013-2016E, (DKKbn)
11.9
11.5
11.2
2013
2014
2015
2016E
Danish Consumer Gross Profit 2013-2016E, (DKKbn)
9.0
8.8
8.4
2013
2014
2015
2016E
2013
7.9
2014
 Mobile: ARPU pressure
from roaming regulation,
ARPU overhang and new
potential entrant, partly
compensated by repricing
 TV: Continued cable
shaving and pressure from
OTT streaming services
 BB: Significant competition
both in low speed DSL and
high speed coax/fiber
broadband
7.4
 Fixed line: Continued drop
in fixed line telephony
customers
2015
 Decreasing revenues from
paper communication fees,
etc.
Danish Consumer EBITDA 2013-2016E, (DKKbn)
8.0
Key drivers for 2016
2016E
39
We now cover the market with three brands
Established/
families
Young/
single
Price
conscious
Value
focused
40
The TDC/youSee merger will drive clear customer benefits …
Better
Connectivity
+150k
TDC households with DSL broadband will
get Giga speed
Better Entertainment
+800k
TDC households
will get access to better entertainment
Better
Solution
+250k
TDC households with youSee products
will be rewarded for full product holding
Better
Customer
Experience
+250k
TDC households with youSee products
will get 1 invoice and 1 support number
41
…as well as Group impact through simplification
… platform consolidation
driving less development
spend
The brand
merger will
lead to
simplification
and less
CAPEX/OPEX
through…
… one brand, one portfolio
driving a simplified goto-market model
Household OPEX
(DKK)
~-75m1
… one national brand
driving more efficient
marketing spend
…one brand, one portfolio
with no internal
cannibalization
1) Incl. re-branding in 2016
2) TV and/or BB excluding Fullrate
Brand merger
impact
Internal
access
churn2
2015
2018
2.1%
0.0%
42
The TDC and youSee merger will be full encompassing
1Q 2016
People &
Organization
3Q 2016
4Q 2016
One org
Retail rebranding One call center
TDC.dk redirect
Channels &
Support
TDC tactical
Branding &
marketing
Only YS
MV & BB
Product
portfolio
IT
platform
2Q 2016
Apps
Billing
TV rights
TV
TV platform1
Campaign
27th of January
30th of June
1 Including GET
43
New youSee Mobile Voice Portfolio
8h + 4gb
44
youSee will take a regional go-to-market approach pushing
highest possible speed on available infrastructure
1.8m
Regional
approach to
commercialize
on our infrastructure
… households on coax: Focus on upselling Giga speed broadband to
lift ARPU and lower churn
0.2m
0.3m
0.5m
Average speed
Mbps download
… households on FttH (own & 3
party): Focus on (up)-selling
high speed broadband and TV
… households on utility fiber (off
coax): Focus on churn prevention and leverage Fullrate low
price DSL broadband
… remaining households with DSL
only: Focus on leveraging e.g.
DSL/MBB hybrid to up-sell
x3
~150
~50
2015
2018
45
Building on a strong combined household penetration, youSee
will continue to push sale of full household solutions
… data based personalized
cross- & up-sell in
households
Full household
penetration1
Households (‘000)
+81%
Increasing
ARPU and
retention
through…
… activation of value
added services to drive
usage and reduce churn
450
249
… extending integrated
solution, e.g. through
smart home services
External
access
churn2
2015
2018
14%
11%
1) Full youSee households (TV+BB+MV). For 2018, the merger will automatically provide an additional 45k households
2) TV and/or BB
46
youSee will revitalize the entertainment experience through
great content anywhere and anytime
… at the right price, and
with necessary rights…
Combined
force of Get &
youSee to
deliver all
relevant
content…
youSee IP
enabled
TV solutions
Customer base
penetration
… to enable a revitalized
packaging structure…
~80%
625
… of great entertainment
available anytime
anywhere…
… through a user-friendly
interface, also on TV
350
STB
penetration
2015
2018
26%
45%
47
youSee will deliver a premium customer centric experience
… a new strong service
concept, including
24/7 call center
Better
customer
experience
through…
Share of
ambassadors
… a strong digital focus
with mobile first including self-service app
% of customer base
… seamless customer
service across
multiple channels
… focusing efforts on
E2E customer
centric journeys
~2X
51%
27%
Digital
service
share
2015
2018
50%
69%
47
Online Brands Strategy
A digital first approach
in marketing, sales and
(self) service
Simple and easy to use
B2C/B2B connectivity services at affordable prices
Online brands
revenue
+20%
Digital entertainment
and B2B services sold
on top (and stand alone)
Fast time to market and
cost/CAPEX focus through
full value chain ownership
Digital
service
revenue
share1
2015
2018
11%
30%
1) Digital service revenue share includes Telmore Play (ex MV sub), Blockbuster, Bet25, Fullrate TV
49
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
50
Get enjoys continued revenue and profit growth, and the
acquisition is on track to deliver planned synergies
Innovation driven growth
Realization of synergies on track in 2015
Get Financial performance – Revenue & EBITDA
(NOKm)
2,786 CAGR:
2,649
11–15
2,437
 Nordic 2017 run-rate synergies (NOKm)1
2,131
10%
1,922
NOK 185m
 Whereof cross border synergies
− Leveraging Group competencies, e.g.
procurement and content
− Leverage from mobile launch
− Best practice sharing in seamless
EBITDA
-margin
entertainment experience and other offerings
43%
2011
45%
2012
46%
47%
50% 14%
Leading brand perception2
2013
2014
2015
# 1 Top of mind
# 1 Future proof
# 1 Freedom of choice
# 1 Making my everyday easier
1) Corresponding to DKK ~160m at acquisition announcement
2) Trend report from Penetrace 2015 – In Get footprint
51
Get strategy towards 2018
THE FIBER-BASED BROADBAND HOME COMPANY
NO
BEST
DOWN- SERVICE
TIME
GIGASPEEDS
WIFI
UNLIMITED
VIDEO &
CLOUD
STREAMING
STORAGE
SERVICES
TRANSFORM TO
GIGABIT
INFRASTRUCTURE
AND MOBILITY
SMART MOBILITY
HOMES
DRIVE NEW
CONTENT
DELIVERY
EVOLVE BRAND AND
CUSTOMER INTERACTION
“THE CABLE COMPANY”
51
Transform to gigabit infrastructure and mobility
Gigabit Infrastructure
Expand range for Fixed and Mobile
Gbps
52
New content delivery platform
What you want
All channels & choose your own
All premium content
All relevant OTT services
When you want
Simultaneous
recording
Startover
Catchup
On all your devices
Where you want
Within the home
Outside the home
Offline
Just for you
Personal
RecomGlobal Channel
profiles mendations search selection
All your content in the cloud
And take the lead on OTT & Streaming
Gbps
53
Digitize entire customer lifecycle to deliver seamless customer
experiences
…and transform the operation and organization
 One seamless Get UX across all
platforms
 One UI customer service
 Deep network insight –
proactive & automated fault
handling
 Customer network management
 Home Network insight e-service & e-support
 24/7 e-customer service
 100% e- interaction
all channels
2018
2017
2016
2015
Digitize the customer lifecycle….
 Search &
Recommend all levels
Degree of digitalization
100% satisfied
customers
Significantly lower
operational cost
55
Careful ARPU and RGU management are levers of
continued growth
2013
345
318
2014
2015
Broadband development

Broadband revenue showed growth of 9% YoY

Main drivers are increased broadband penetration and
ARPU growth driven by a tiering strategy and upselling

Broadband share of revenues grown from 32% in 2013
to 35% in 2015
+1%
243
248
245
ARPU
Broadband
293
RGU
+9%
2013
2014
2015
2013
427
421
2014
2015
+2%
269
273
279
2013
2014
2015
ARPU
Video
415
RGU
+2%
Video development

Video revenue grew 4% YoY

Main drivers is continued management of box
penetration, analogue to digital conversion, VoD and
price evolution combined with Homes Connected
growth
56
Fuel growth through launch of Get Mobile and Smart Home
Large growth potential in Get mobile
Secure a strong position in BB homes
Leverage on existing Group capabilities
and new MVNO agreement to launch in
strategic business area
Smart Home - New business area
with healthy margins, enhancing the
overall value proposition and increase
stickiness in core MDU
1.3m
subs on Gets infrastructure
Series
+6 million
mobile
Subscriptions
in Norway
Get Safe
Get Smart
~800k
interested
in Get mobile
SMART FIRE ALARM
& BURGLAR ALARM
1.3
SMART SOLUTIONS
FOR YOUR HOME
59%
Get Care
41%
SMART SERVICES IN YOUR
EVERYDAY LIFE
4.7
56
Q&A
58
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
59
Fierce competition in Business market has impacted profitability
Danish Business Revenue 2013-2016E, (DKKbn)
6.8
6.4
5.9
2013
2014
2015
 Intense competition in
all segments
2016
Danish Business Gross Profit 2013-2016E, (DKKbn)
5.7
2013
5.3
2014
4.6
2015
2016
Danish Business EBITDA 2013-2016E, (DKKbn)
4.8
2013
4.4
2014
3.7
2015
Challenging years for TDC
Business division
2016
 Public contract tenders
impacting Public
solutions
 Large contracts being
renegotiated
 Mobile Voice ARPU
levels challenged across
segments
 Commercial and
regulatory pressure on
roaming prices
 Trends to some extend
expected to continue in
2016
60
SMB challenged in 2016, however with some positive outlook
SMB1 base ARPU levels for Q4, indexed
X%
Business CAGR
Comments
Consumer
Business
Mobile Voice (MV)
 Intense competition and
challenged ARPU levels on MV and
BB expected to continue in 2016
150
-13%
100
 However, positive outlook driven by
-11%
 TDCs preferable functionality and
service driving price premium
and churn reduction
77,500 50
SMB
customers
contributing
Broadband (BB)
60%
of GP2
 Signs of stabilizing Consumer
mobile prices
0
-6%
 BB ARPU with flattening trends
from 2013-2015 – however still
uncertainty
-1%
100
 Early indications of migrating4
customers to converged solutions
paying off…
50
0
2011
1)
2)
3)
4)
2012
2013
2014
2015
Entrepreneur, Business and Corporate segments
Excl. Hosting
Including impact from roaming regulation
Business: From ~30% in 2015 to ~60% in 2016, Corporate: From ~30% in 2015 to ~55% in 2016
 …also for customers migrating
from Scale to TDC One
61
Public ARPU stabilized – Enterprise revenue still expected to
X%
decline into 2016-2017
Public base ARPU levels for Q4, indexed
Comments
Mobile Voice (MV)
Broadband (BB)
460
150
Public
customers
contributing 100
19%
of
150
-8%
-10%
-26%
-5%
100
50
50
0
0
Enterprise base ARPU levels for Q4, indexed
79
Enterprise
100
customers
contributing
21%
of GP1
-17%
-7%
2)
3)
4)
-8%
0
 Challenged MV2,3 and BB
ARPU levels to continue in
2016 and 2017
62
 Still missing 2/3 of
contracts to be renegotiated
in new price regime
 However competitors
struggling on profitability
50
0
2011
1)
-9%
100
50
 MV ARPU significantly
reduced in latest SKI
renegotiation - natural
absolute floor
approaching
Comments
Broadband (BB)
150
 ‘Stable’ prices until 2017
 Less fierce vendor
process for BB as
wholesale price sets
natural floor
GP1
Mobile Voice (MV)
CAGR
12
13
14
2015
2011
12
13
Excl. Hosting
MV ARPU spill over impact from SKI renegotiations. Enterprise prices still considerably higher on average
Including impact from roaming regulation
Across Business and Consumer
14 2015
61
We will be simpler and better
Always
Simpler
and Better
- For our
customers
- For TDC
Simpler


Simplified operating model through
significant reduction of
complexity in Business portfolio
Simplified and standardized products,
also for large accounts
Better

Relaunch SMB with strong convergent
solution offering

Refocus Enterprise to profitability

Leverage Fullrate Erhverv as strong
supplement to cover the SMB market

Build new revenue streams
63
We have launched a massive simplification program…
Significant reduction of
complexity in B2B portfolio…
…to drive, transparency and quality of
B2B solutions
From
complexity…
Standardized solutions
enabling automation & online
26
…to simplicity
3
Product platform
Transparency in products,
services & invoicing
1 Invoice
Improved overview for faster
& better support
~3000
2
Discount schemes
Higher stability driving a better
customer experience
2
1
Billing platform
Faster time to market
Simplification of systems and processes slims the operational setup and creates a platform
allowing for differentiated service offerings
64
…which will drive OPEX and CAPEX savings
Simplification driving cost savings
Expected Business OPEX and
CAPEX savings
FTE reduction driving OPEX
savings
Automation as services moves
from manual to online self service
Leaner and more efficient
approach to servicing customers
More standardized solutions
DKK ~130m1
OPEX savings by 2018
10-15%
CAPEX savings in 2018
CAPEX savings from fewer and
more coordinated systems
Savings on development of new
product functionality
1) OPEX base is including Hosting and NetDesign
65
We have relaunched our go-to-market models
Value focused
Tailored solutions
Off-the-shelf solutions
Price conscious
SMB
Enterprise
66
Refocusing on SMB to capture full market profit potential…
Radical change in go-to-market
and execution
Other
Increase in market
share of converged
offering1
Estimated
% of total
market
market
CAGR

New go-to-market model:
more effective solution selling and
retention by radical consolidation
of partner setup

Clear customer proposition
− One customer anchor point
− Always best solution
− In person demonstration
57
51
Improved market coverage:
launch of digital customer communication
43
49
2015
2018


Stronger solution proposition: launch
of enhanced unified communication
offering
TDC
~10%
1) Does not cover Fullrate Erhverv
67
…building on components for a converged solution
Components of a converged solution for an SMB customer
Adjustable and
scalable via
online selfservice
Wall
Board
Selfservice
Presence
across devices,
call forwarding
etc.
Call
assistant
app
Web-based real-time
overview of incoming
phone lines
PC
switchboard
Switchboard
with presence
and customer
calling history
Communicator
Softphone as
integrated part
of UC solution
68
Focus on gross profit in Enterprise segments…
Enterprise gross profit focus
Off-the-shelf solutions
Tailored solutions
 Focus on simple and standardized
products provided off-the-shelf
 Truly complex and customized
solutions allowing for premium
pricing
 No incentive to pursue add-on sale
of tailored products depleting
overall margin
 No incentive to pursue add-on
sale low margin solutions
complicating overall offering
From January 2016, incentive structure is based on gross profit rather
than sales - we will not compromise profitability
69
… and building on with new revenue streams
IT Security
Location Based Commerce
 TDC delivers an E2E security solution
 Strong potential in leveraging existing
dominant B2B customer base
 Danish market expected to grow 7%
p.a. towards a size of ~1,500 DKKm
(Gross Profit) in 2018
0
through selling customer insights
 Precise area catchment analysis
using TDC’s world class 4G network
 Indoor footfall analytics leveraging
strong B2B integrator position
1
Security analysis,
architecture, and
implementation
Event
analysis
 TDC to utilize its massive data platform,
Prevent
attacks &
intrusion
2
Discover
End-to-end attacks
&
Security
intrusion
OUTDOOR
5
Reestablish
operation
Fight
attacks
3
INDOOR
4
70
All of this enabled by the best connectivity in Denmark
99%
TDC Business
secures broad
coverage of
high speed
broadband
with…
10
Gbps
15K
4G
back
-up
1)
… of B2B customers with broadband access via
DSL
… to all B2B customers via Fiber BTO1 – 60% get
free installation
… B2B customers on coax broadband access
ultimo 2016
…for all B2B customers with 3G/4G back-up to their
access connection – and 4G DSL load sharing
available from 2017
BTO: Fiber Built To Order: Dedicated fiber to the customer. All business customers in DK can get Fiber BTO
71
And generate the best customer experience
I enquire
“Before I struggled to
understand the complex
product portfolio and pricing”
I receive
timing of delivery
? “Before
was unpredictable and
uncertain”
“Today simple and
transparent product offerings
and pricing makes my choice
easy”
I pay
“Today I have confidence in
TDC’s ability to deliver in a
timely manner”
I use
“Before I had ten different
colleagues reviewing our TDC
bills”
“Before I mainly received
basic operator services”
“Today no review is needed
– the bill is correct every
time and easy to understand”
“Today TDC’s integrated
solutions always address my
evolving business needs”
72
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
73
TDC Sweden: Combined sales & standardization of offerings
Develop ‘one-stop shop’
within Networking through
e.g. digitalization, new
Networking-as-a-service concept
and enhanced IP-VPN Go-toMarket
Increase recurring UC
revenue through leverage of
one-AM model to up-sell total UC
solutions and improved delivery
model driving increase quality in
complex UC deliveries
50%
Growth in revenue1
for Networking
Solutions towards
2018
50%
Growth in CaaS2
Customers
towards 2018
Continued standardization
via more conceptualized offerings
and one digital customer channel
to increase simplicity & boost
quality in sales, delivery and
support
74
TDC Norway: Drive profitability and growth
New Customer Value proposition
 Focused Go To market model
 Standardized product line-up – Standardized value
chains
 Introduce Multiservice networks with Voice AaS
and TV AaS.
 Proactive renegotiation and better systems to
reduce churn
GET and TDC on one integrated
infrastructure
 Increase On Net degree, utilize HFC
 Leverage on new GET MVNO agreement and lift
mobile profitability
Restructuring TDC Operations
 Leverage SE OSS/BSS systems setup and drive
better digital customer journey.
 Slimmer and refocused organization
 Extract synergies from joint Get/TDC Operations
75
Q&A
76
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
77
Better connectivity in uniting TDC’s unique asset to deliver
speed, quality and coverage
Maintain strong number one position
on mobile capabilities
Wide broadband coverage for all Danes
through unique infrastructure mix
Boosting Giga speed to 50% of
Danish households intelligently
Effectiveness - Investing right
with no overlaps
Offering the best possible access at
any address
78
We have built a world class mobile network
We have the best mobile
network in Denmark…
…and will continue to make
it better
Fastest network…
Mobile download, Mbps1
Fastest network…
First in Europe to fully deploy
the use of 3 carriers to provide
data speed above 400 Mbps
31
22
18
11
TDC has fastest
4g network in
the world
3
…with widest coverage
4G coverage, % of Denmark2
99
85
1)
2)
3)
90
82
TDC’s network
rated as best in
Denmark
Based on KQI measurements in Region Sjælland/København from 24/11-2015
TDC Group and external benchmarks
June 2015
Increase voice coverage…
Launching VoLTE and WiFi
calling to achieve 99% indoor
coverage and Pico solutions
for small business
Prepare for the future…
Virtualization to prepare for
5G and testing NB-LTE (IoT)
1800 MHz frequency
auction in 2016
79
Our investments enable us to provide best access to all Danes
10pp
~100%
90%
100%
≥10 Mbps
household
coverage1,2
2015
2018
~70%
≥100 Mbps
household
coverage1
5pp
70%
65%
Delivering on customer needs
2015
~50%
1000 Mbps
household
coverage
Lifeline for the whole of
Denmark
2018
50pp
50%
0%
2015
Delighting customers creating brand ambassadors
2018
1) Measured by the EU definition (“up to” speeds).
2) Minimum 98%
80
Landmark agreement with Huawei to provide Giga speeds to
>50% of Danish HHs before end of 2017
Superior network offering and customer experience
 Upgrade to provide +1Gbps using DOCSIS 3.1
 Improved network quality through new KQI/KPI targets
Transformation covers 50% of Denmark in 2017
 Full YouSee coax footprint upgrade by end of 2017
Future proof network infrastructure
 Full Coax infrastructure upgraded
 Potential to extend agreement to Norway (Get)
Partner with global leader and local hero
 Huawei worldwide leader in telecom equipment with
proven experience
 TDC retains operational control of network
January 26 TDC and Huawei signed a landmark agreement for complete network transformation of full Coax (HFC)
network infrastructure in Denmark to support DOCSIS 3.1
81
We will do the build out without overlap in investments
1
Illustrative
Coax
Illustrative
FttH
First mover of DOCSIS 3.1 technology with full roll-out completed end of
2017
3rd party
1
DSL
3
4
Own & existing 3rd party deals
Constantly improving fiber reach
and promote existing fiber infrastructure
(where coax is not available)
3
Maintain and cover DSL and MBB
1
2
3
2
2
1
DSL boost by new copper technologies
and through MBB incl. hybrids
4
3
Coax2
(~64% of HHs)
FttH
(~ 6% of HHs)
DSL only
3rd party
Moving to Giga speed
Upgrade to 1 Gbps high speed for 50%
of Danish households1
(~30% of HHs)
Mobile capabilities will maintain number
1 position in Denmark
4
Potential 3rd party fiber deals
Improving fiber reach through entering
3rd party deals with utilities
No overlap in build-out (if we cannot
strike a deal will not offer the service)
1) ~1.2m HHs on coax and ~0.2m on fiber
2) ~400k Households on Stofa coax
82
Enabling us to provide our customers with continuously better
connectivity
B2C
B2B
Best available
access at any
address
Coax
Fiber
DSL
Mobile
No overlapping investments and investing in areas where others have
superior access
83
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
84
We will fix the root causes of operational complexity
Today
Unnecessary business complexity
inside B2B and B2C
Brand–aligned call centers not
communicating with each other
Insufficient digital/mobile service
Future
1 Simplified and standardized
internal and customer facing
processes
2 Think digital & mobile first
Separate and nonintegrated
services per channel
No single overview of customers
3 Consolidated IT systems
Multiple billing systems
Multiple IT systems
4 Agile product development
Unacceptable customer experiences
85
1 Simplified and standardized processes
Customers prefer
Simple and
transparent product
offering
Fast and precise
delivery of products
and services
Quality delivery and
service processes
How we rethink our
operational approach
95 %
First-time right
50%
Integration of call
centers, one entry
for customers
Reduction in unacceptable customer
experiences 2
Value stream
boards used to
govern end-to-end
processes
New simplified
process launched
resulting in drastic
reduction of late
delivery of fiber orders
New way-ofworking based on
quality, delivery
and cost (QDC)
-65%
2014
2015
Simple
products
Short
waiting
time
High
quality
Low
cost
Simple
customer
process
Fast
delivery
1) Churn effect not included here, as total churn effect is included in levers for customer satisfaction and journeys
86
2 Think digital and mobile first
How we rethink our
operational approach
Customers prefer
Ordering on all
platforms with
instant access
and use
Simple
installment with
limited physical
service
We will match the
digital mindset of our
customers with our
operational setup
Funds for significant
digitalization agenda
in place
Service call volumes
will decrease as
consequence
Develop offerings
using a mobile first
& customer-centric
focus
-46%
5.2m1
Easy, ubiquitous
and personal
online selfservice
2.8m
2015
2018
Advanced customer
analytics supports
digital ambitions
1) Number of offered support & billing calls
87
3 Consolidated IT systems
How we rethink our
operational approach
Customers prefer
Easy and seamless
interaction across
all sales channels
Real time portfolio
overview and
consolidated, one
simple billing
~25%
Reduction in IT systems
in HH brand and B2B
50%
Personal support
and advice based
on holistic
customer overview
Lower perceived IT
downtime
Fully integrated HH
product portfolio,
roadmap and
system landscape
Front-end employees
will work in only one
system across all
channels
Migrate from two
B2B product
platforms to one
Consolidate B2B
product portfolios and
discount schemes
88
4 Agile product development in a simpler context
How we rethink our
operational approach
Customers prefer
Services that meet
needs, both known
and unknown
Development time
From idea to delivery
-60%
15 months
Rapid deployment
of new products
and functionality
Integration of
existing TDC
products and
devices with new
services and
technologies
6 months
2014
2018
~10%
Development
spend savings in
2018
Integrated backend systems to
deliver best
available access
technologies
Best-practice
development
based on agile
methods
Removal of overlap
in product
development
Central and agile
governance and
development setup
89
Summary of planned OPEX savings until 2018
Impact of key initiatives by 2018
Simplified and
standardized
processes
~50% reduction in unacceptable customer experiences and ~65%
reduction of late delivery of fiber orders
Think digital &
mobile first
~50% decline in support call volumes and decline in sales related calls
Consolidated
IT systems
~25% reduction in IT systems in HH brand and B2B and ~50% lower
perceived IT downtime
Agile product
development
~60% reduction in time to market and ~10% development spend
savings
Brand
simplification
consumer
DKK ~75m savings in households, from merging YouSee and TDC
Simplification of
B2B portfolio
Ongoing spend
initiatives
Total DK OPEX
savings by 2018
~250 FTE reduction from significant reduction of complexity in B2B
Ongoing savings initiatives related to for example procurement and
administration
DKK ~600 – 700m
Furthermore, the strategy
plan entails significant
savings on capex spend
90
Q&A
91
Agenda
09.00 – 10.30 Roadmap for relaunch of TDC
 Setting the scene
 Strategy
 Financial plan
 Q&A
10.30 – 11.10 Consumer
 Denmark
 Norway
 Q&A
11.10 – 11.30 Business
 Denmark
 Sweden and Norway
 Q&A
11.30 – 12.00 Network assets & Operations
 Connectivity
 Operations
 Q&A
Wrap Up
92
Our 2018 strategy delivers customer satisfaction and cash flow
Always
Simpler
and better
Our
guiding
Principle
Our
promise
Our goal
- For our customers
- For TDC
Better
connectivity,
by
continuing to deliver the
best speed, quality and
coverage by uniting our
unique asset
Better offerings
and entertainment by
delivering relevant products
both today and tomorrow
Best Customer
Satisfaction
Better customer
experience driven by
best customer insights and
digitalization
Best Cash Flow
Generation
93