Q3 2010 Earnings Call Transcript
October 25, 2010 10:30 am ET
Andreas Ekstrom – VP, IR
Lars Nyberg – President and CEO
Per-Arne Blomquist – EVP and CFO
Stefan Gauffin – Nordea
Sven Skold – Swedbank
Andreas Joelsson – Enskilda
Lena Osterberg – Carnegie
Andrew Lee – Goldman Sachs
James Britton – Nomura
Pieter-Kurt Nielsen – Cheuvreux
Jan Dworsky – Handelsbanken
Barry Zeitoune – Berenberg
Laurie Fitzjohn – Citigroup
Maurice Patrick – Barclays Capital
Andy Parnis – UBS
Dominik Klarmann – HSBC
Jakob Bluestone – Merrill Lynch
David Wright – Deutsche Bank
Okay. Good morning. And my name is Andreas Ekstrom, Head of Investor Relations. A very warm welcome to this sunny, but cold Stockholm morning. We will start with Lars presenting the Q3 numbers, and then as usual, Per-Arne Blomquist, our CFO, will go through the financials more in detail with you. After that, there will be a Q&A session, both here from the floor and from you listening in over the Web.
And with that, I think I leave over the floor to Lars, our Chief Executive Officer.
Thank you very much. Good morning, everyone. Welcome, happy to see so many of you here. Well in summary, I think we had a good quarter, growth of 4.3% local currency – local stock, local currency in the quarter; record high earnings in the history of the company, maybe that's not nothing to boast about should we have any (inaudible) record high earnings on – for the sake of my friends. But we have 36.5%, and EPS along 33%.
I think, personally, the growth is the most encouraging thing. You might recall when we started the year or maybe you might recall the last year when we had basically zero growth, which did put us as one of the best operators that year on the marketplace. But when we started this year, we thought we would get some growth, but not much, maybe 1% or so. And already in the – after the second quarter, we had to revise that outlook and say, "No, it's not – it's going to be like 2.9% growth for the full year." And now, we had 4.3% in the quarter and we have to revise it again. And we continue with the same approach. So we say, "Whatever we have in the nine months that will be the outlook for the year."
Where is this growth coming from? Well, our growth end in Eurasia is doing very well again. The economy in that part of the world has improved after the financial crisis. And we reached nearly 18% growth in Eurasia. And I'll come back a little bit more and talk about it because it's quite interesting, obviously the data growth and the mobile – Nordic mobile markets, and I'll give you an example of that, too. And very encouraging is the growth in Yoigo, Spain. If we're going to make the breakeven result this quarter, we need that kind of growth. We needed that kind of growth in the third quarter. I'm not sure we want to have that kind of growth in the fourth quarter because of the sack. But we grew 82% in Spain in Q3.
If you look at the Eurasia, the encouraging is that, basically, all markets are growing, except Yoigo. They're still suffering from the assaults of the war. But our biggest market here is Kazakhstan. And Kazakhstan grows with 20%. That makes a big impact on the result. But also, Nepal and Uzbekistan are growing, and growing quite spectacular. You can see the growth rate from Q1, Q2, and Q3, the rate is improving.
I'd like to spend a couple of minutes on the two investments we did three years and two years ago. We don't talk too often about them in any detail. These are big investments, big decisions to enter a market like Nepal or, in this case, Uzbekistan. The top left picture shows the coverage we had in that market when we acquired this operator, very spotty, not a very good coverage. And below, you see the network coverage of today. That's where we spent all the CapEx on, to increase coverage and increase capacity.
So we had geographical coverage of 21%, and now it's 34%. More importantly, the population coverage was – it was 54%, and it's now 84%. And we're a clear number two in Uzbekistan. And our market share is 31% increase from 12%. And this is basically a little bit more than three years.
And look at these – both the right hand, we have 6 million subscribers in Uzbekistan. We started with 500,000 two years ago. Only Kazakhstan is bigger, we have 7 million subscribers in Kazakhstan. ARPU is lower there, so obviously, Kazakhstan is worth more to us. But there's still a lot of growth in this market.
Market wise, even more possible growth is Nepal. This acquisition we did exactly two years ago. And again fairly spotty coverage on the time of the acquisition; we have a much better coverage today. I think you all asked me about why we invested so much money in Nepal a couple of quarters ago. That's the reason again.
We have grown the subscriber base from 1.7 million to 3.4 million. In this country lives 28 million people. So the penetration is still low. And we have gone from 12% to 30% geographical coverage. Seventy-three percent of the people in Nepal can now have a mobile phone. And we re-branded. This outfit was called Spice Nepal originally, but we changed it to the same model as we have in the rest of this region and for Nepal Ncell. And we have market share around 40%. There are two operators in this place.
Another reason for growth is the mobile data, and particularly Smart phones. It's really amazing. Seventy percent, 7 out of every 10 mobile phones that we sell are now Smart phones. It's totally dominating our deliveries. And I had said many times, I believe the telecom industry. We will look at the industry and say the time before the Smart phone and the industry after the Smart phone. It changed everything, offered those up, traffic explodes in our networks. It's really fascinating.
And the interesting thing now, as you can see on the lower picture is not only iPhone anymore. And it's also Symbian and Android. I believe they will come up with more models and probably take a bigger share of the cake. Finland is somewhat behind. But the other three Nordic countries are fairly similar in the volume of Smart phones.