TDC Nordic

TDC Nordic

Operating review

The exchange-rate development in 2010 had a favourable influence on TDC Nordic's revenue and EBITDA in DKK (related to TDC Sweden and TDC Norway). Revenue in TDC Norway and TDC Sweden was also positively affected by a general increase in mobile RGU throughout 2010, as well as more landline voice and IP-VPN RGUs. Despite significant market competition, TDC Sweden experienced growth in the Integrator Business in 2010 compared with 2009. The acquisition of AinaCom's fibre network led to a positive development in data and voice revenue in TDC Finland. TDC Hosting experienced growth in 2010 by winning a number of new contracts with major customers, and simultaneously reducing churn significantly.

KPI development 2009-2010

TDC Nordic had 233,000 RGUs at the end of 2010, up 28.7% compared with the end of 2009.

  • The number of landline telephony RGUs increased by 45.5%, due primarily to an increase in TDC Sweden's wholesale segment.
  • The number of TDC Nordic mobile RGUs increased by 52.3%, due to relatively successful sales in TDC Norway and TDC Sweden.
  • Broadband RGUs increased by 4.9%, due primarily to a large customer case in TDC Norway.

Financial review

Revenue

2009-2010

Revenue in TDC Nordic rose by DKK 572m, or 16.3%, to DKK 4,087m with increasing growth in each quarter of 2010.

  • Revenue in TDC Sweden increased by DKK 360m, or 20.9% and was positively affected by the currency development. In local currency, TDC Sweden's revenue rose by 8.4%, and related primarily to a number of new customer contracts and the recovery from the recent economic downturn in the integrator business.
  • TDC Norway's revenue increased by DKK 165m, or 18.8% and was positively affected by the currency development. In local currency, the rise was 8.9%, which was due mainly to a revenue increase in mobile voice, and a number of new IP-VPN customer contracts that were partly offset by a decrease in revenue from traditional landline telephony due mainly to migration to mobile telephony and lower prices resulting from price competition.
  • TDC Finland's revenue increased by DKK 41m, or 6.0%, due mainly to the acquisition of AinaCom's fibre network, which affected revenue from both landline voice and IP-VPN.
  • TDC Hosting's revenue increased by DKK 25m, or 7.6%, which reflected primarily increased revenue in Sweden and Finland, due mainly to an increased focus on the value-added business area of managed hosting.

2008-2009

In 2009, TDC Nordic's revenue decreased by DKK 339m, or 8.8%, to DKK 3,515m.

  • Revenue in TDC Sweden decreased by DKK 338m, or 16.4%, which resulted primarily from the unfavourable exchange-rate developments. In local currency, revenue in TDC Sweden declined by 7.2%, due mainly to lower project sales in the integration business, which was only partly offset by an increase in revenue from IP-VPN.
  • Revenue in TDC Norway decreased by DKK 26m, or 2.9%, which resulted primarily from unfavourable exchange-rate developments. In local currency, revenue in TDC Norway increased by 3.5%, which was due primarily to higher sales of IP-VPN services to public-sector and international customers and more mobile voice RGUs.
  • Revenue in TDC Finland increased by DKK 13m, or 1.9%, due mainly to the number of new RGUs in the IP-VPN and data business resulting from increased demand, which was partly offset by a decrease in TDC Finland's traditional landline telephony revenue.
  • Revenue in TDC Hosting increased by DKK 22m, or 7.1%, driven primarily by increased sales in Denmark (incl. the hosting of TDC's own servers), and revenue growth in Sweden and Finland as a result of a dedicated sales focus and expanded product range.

Gross profit

2009-2010

Gross profit in TDC Nordic rose by DKK 85m, or 5.3%, to DKK 1,694m.

  • This was due to the higher activity and the acquisition of AinaCom's fibre network in TDC Finland, but was partly offset by an unfavourable impact on transmission costs and cost of goods sold from divestment of the field force in TDC Sweden, as this led to a shift in costs from wages to transmission costs.
  • The gross profit margin decreased from 45.8% in 2009 to 41.4% in 2010, due mainly to the higher share of revenue generated by low-margin products and the impact from the divestment of the field force operation in TDC Sweden.

2008-2009

In 2009, TDC Nordic's gross profit was DKK 1,609m, a decrease of DKK 117m, or 6.8%.

  • This related mainly to lower project sales in the integrator business.
  • TDC Nordic's gross profit margin increased from 44.8% in 2008 to 45.8% in 2009, reflecting primarily reduced activities in the low-margin integration business in TDC Sweden.

EBITDA

2009-2010

EBITDA in TDC Nordic rose by DKK 67m, or 13.5%, to DKK 564m, while the EBITDA margin declined slightly, from 14.1% in 2009 to 13.8% in 2010, following the decrease in the gross profit margin.

  • EBITDA was positively affected by the gross profit increase, the implementation of a cost reduction programme and lower employee-related costs due to fewer full-time employee equivalents, which was partly offset by an accounting gain recorded in 2009 resulting from the divestment of the field force operation in TDC Sweden.

2008-2009

In 2009, TDC Nordic's EBITDA was DKK 497m, an increase of DKK 39m, or 8.5%. The EBITDA margin increased from 11.9% in 2008 to 14.1% in 2009.

  • The EBITDA increase was related to a reduction in wages, salaries and pension costs, reflecting fewer full-time employee equivalents, as well as cost reduction programmes (incl. fewer consultants and facility costs). EBITDA growth was also positively impacted by an accounting gain related to the divestment of the field force operation in 2009. The positive development was partly offset by the negative gross profit development.

Selected financial and operational data Excluding special items
TDC Nordic 2010 2009 2008 Change in % 2010 vs. 2009 Change in % 2009 vs. 2008
DKKm
Revenue 4,087 3,515 3,854 16.3 (8.8)
   TDC Sweden 2,086 1,726 2,064 20.9 (16.4)
   TDC Norway 1,044 879 905 18.8 (2.9)
   TDC Finland 727 686 673 6.0 1.9
   TDC Hosting 355 330 308 7.6 7.1
   Other, incl. eliminations (125) (106) (96) (17.9) (10.4)
   Landline telephony 984 852 937 15.5 (9.1)
   Mobility services 190 106 62 79.2 71.0
   Internet and network 1,523 1,385 1,424 10.0 (2.7)
   Terminal equipment, etc. 1,086 912 1,153 19.1 (20.9)
   Other¹ 304 260 278 16.9 (6.5)
Transmission costs and cost of goods sold (2,393) (1,906) (2,128) (25.6) 10.4
Gross profit 1,694 1,609 1,726 5.3 (6.8)
Other external expenses (282) (296) (361) 4.7 18.0
Wages, salaries and pension costs (852) (851) (937) (0.1) 9.2
Other income and expenses 4 35 30 (88.6) 16.7
EBITDA 564 497 458 13.5 8.5
Gross profit margin % 41.4 45.8 44.8 - -
EBITDA margin % 13.8 14.1 11.9 - -
Adjusted revenue² DKKm 4,087 3,838 3,928 6.5 (2.3)
Adjusted EBITDA³ DKKm 564 525 459 7.4 14.4
RGU base ('000)
Landline 80 55 47 45.5 17.0
Mobile 67 44 24 52.3 83.3
Internet 86 82 94 4.9 (12.8)
RGU base, total 233 181 165 28.7 9.7
ARPU (year-average) DKK / month
Mobile voice 279 275 258 1.5 6.6
FTEs
Number of FTEs (EoY) 1,388 1,437 1,619 (3.4) (11.2)
Average number of FTEs (YTD) 1,412 1,556 1,616 (9.3) (3.7)
  1. Includes operator services, etc.
  2. Revenue for 2009-2010 has been adjusted for exchange-rate effects the acquisition of AinaCom's fibre network; and regulation of international roaming charges. Revenue for 2008-2009 was adjusted for exchange-rate effects and regulation of international roaming charges.
  3. EBITDA for 2009-2010 has been adjusted for exchange-rate effects the acquisition of AinaCom's fibre network and the gain resulting from the divestment of the field force operation in TDC Sweden as well as the sale of property, plant and equipment. EBITDA for 2008-2009 was adjusted for exchange-rate effects, the divestment of Upsala Stadsnät, gain related to the divestment of the field force operations in TDC Sweden and the sale of property, plant and equipment.

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