Financial and operational highlights

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Glossary

Improved revenue trend and strong earnings and cash-flow performance were achieved despite a difficult macroeconomic environment

In 2009, Group revenue increased by DKK 330m to DKK 35,939m compared with 2008. Adjusted for acquisitions and divestments, outsourcing and currency effects, revenue in the TDC Group was unchanged from 2008 to 2009.

In 2009, revenue in Nordic Business1 declined by DKK 839m or 3.1% compared with 2008, which was primarily a result of divestments, outsourcing, the negative foreign exchange impact, price regulation and adverse macroeconomic environment. Furthermore, revenue was negatively affected by lower domestic landline telephony in both the residential and business segments, as well as lower revenue from the integrator business in TDC Sweden which was closely related to the economic downturn. This was partly offset by the positive net effect of the acquisitions of Fullrate and A+, and significant growth in the TV business: The growth related to both ARPU and an increased customer base, as well as increased traffic in the no-frills mobile voice segment and more domestic mobile voice and mobile broadband customers. Adjusted for the impacts from divestments, acquisitions, outsourcing and currency, revenue in Nordic Business declined by approximately DKK 331m or 1%.

During 2009, the quarter-over-quarter revenue decline in Nordic Business improved in each quarter, and revenue development in 4Q 2009 was stable compared with 4Q 2008. The stabilization of revenue in Nordic Business marks an important milestone for TDC.

In 2009, revenue in Sunrise increased by DKK 1,161m or 13.3% compared with 2008, which benefited from increased revenue from the landline wholesale segment and more prepaid and postpaid mobile voice customers. Revenue was also positively affected by the acquisition of Tele2 in November 2008 and a favorable currency impact, which was in turn counteracted by the divestment of SBC in July 2008. Adjusted for the impacts from divestments, acquisitions and currency, revenue in Sunrise rose by approximately DKK 292m or 3%.

In 2009, Group gross profit increased by 2.4% compared with 2008. Nordic Business' gross profit declined by only 0.2% despite the revenue decline, whereas gross profit in Sunrise increased by 12.0%

Despite the challenging macroeconomic environment, income before depreciation, amortization and special items (EBITDA) rose by 6.9% to DKK 13,046m, compared with 2008, leading to an improvement in the EBITDA margin in the TDC Group of 2 percentage points to 36.3% in 2009. Adjusted for acquisitions and divestments, currency effects and the non-recurring compensation from Swisscom in 2008, EBITDA in the TDC Group increased by 6%.

In Nordic Business, EBITDA grew by 5.0% to DKK 10,535m in 2009, leading to a strong EBITDA margin of 40.4%. The growth in Nordic Business’ EBITDA resulted from cost reductions across all business lines including Headquarters.

The 16.9% growth in Sunrise’s EBITDA during 2009 was driven by organic growth in the residential mobile business, the acquisition of Tele2 and a favorable currency impact. This was partly offset by a one-time compensation from Swisscom in 2008 regarding excessive landline termination charges.

Net income from continuing operations, excluding special items, decreased by DKK 171m or 4.6% to DKK 3,566m as a result of higher income taxes in 2009, lower income from joint ventures and associates related to the divestment of Polkomtel and a negative impact from exchange-rate translation adjustments. This was compensated for by higher EBITDA.

Net income increased by DKK 1,826m to DKK 2,383m in 2009, reflecting lower expenses related to special items and higher EBITDA, which was partly offset by increased income taxes in 2009, a negative impact from exchange-rate translation adjustments and lower income from joint ventures and associates.

Cash flow from operating activities rose by 48.2% or DKK 3,456m, while operating free cash flow increased by 23.3% or DKK 1,665m.

Net interest-bearing debt totaled DKK 33.5bn at year-end 2009, down DKK 1.4bn compared with DKK 34.9bn at year-end 2008. The divestment of Invitel had a positive impact of approximately DKK 5bn. However, the payment of dividends more than offset the positive net cash flow from operating and investing activities in 2009.

Key operational achievements

  • Successful enhancement of core product suite: The very successful introduction of the HomeDuo and HomeTrio multi-play offers in January 2009 has reduced TDC's copper line loss. In total, these products had 197,000 customers at the end of 2009, corresponding to 8% of all Danish households. As a result, TDC has captured the position as market leader on both the VoIP market and the triple-play market in 2009.
  • Improved position in mobile and strong momentum in cable: TDC has improved its market leader position in the competitive domestic mobile voice market during 2009. It also exhibited strong subscriber and revenue growth in its cable business (YouSee) across all product lines while containing operating expenses. The digital add-on subscriber base (YouSee Plus) increased by 39% compared with year-end 2008.
  1. Group operations in Denmark, Sweden, Finland and Norway – thus Switzerland is excluded.