Consumer

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Glossary

In 2009, Consumer's revenue and EBITDA were DKK 9,711m and DKK 3,965m, respectively, compared with DKK 9,901m and DKK 3,873m in 2008. The EBITDA margin was 40.8% in 2009 compared with 39.1% in 2008.

At year-end 2009, Consumer had 2,160 full-time employee equivalents compared with 2,212 in 2008, and 4.2m customers at year-end 2009, up 7.9% compared with year-end 2008, due to the acquisition of Fullrate, more mobile voice and broadband customers and an increased TV-customer base.

Revenue

Consumer’s revenue decreased by DKK 190m or 1.9% to DKK 9,711m in 2009. The decrease was due mainly to a reduction of DKK 419m in landline telephony, related to a 18% decrease in the average number of PSTN/ISDN customers, causing a reduction in revenue from both subscriptions and traffic. This was partly counterbalanced by the increase in the VoIP customer base, including the impact from the acquisition of Fullrate, which had 63,000 active VoIP customers at the time of acquisition, and the commercial success of HomeDuo/Trio that helped stem line loss. Revenue from mobility services rose by DKK 211m or 5.0% and related mainly to Telmore as a result of a larger customer base. Revenue in mobility services was also positively affected by mobile broadband due to an increase in the number of customers, from 33,000 at year-end 2008 to 99,000 at year-end 2009. Furthermore, revenue increased in the SoHo segment due to the larger customer base. This was partly counterbalanced by lower ARPU from postpaid residential voice customers due to lower mobile termination charges1 and lower international mobile roaming charges caused by national and EU price regulation, respectively. Revenue in internet and network rose by DKK 113m and related mainly to the acquisition of Fullrate and Telmore's larger customer base, which was partly counterbalanced by fewer ADSL customers and lower ARPU in Consumer (parent). Revenue from terminal equipment, etc. decreased by DKK 112m due to lower sales in TDC Shops, and operator services fell by DKK 71m due to fewer calls to directory services. Finally, other revenue increased by DKK 88m in 2009, due mainly to an increase in revenue from TVoIP of DKK 112m. Revenue from the TDC TV product soared in 2009 with an increase in customers from 27,000 at year-end 2008 to 96,000 customers at year-end 20092 due to the TDC HomeTrio success and the analog switch-off in November.

In 2008, Consumer's revenue decreased by DKK 214m or 2.1% to DKK 9,901m. This related primarily to a DKK 320m decline in landline telephony due to the reduced customer base and lower MoU. Reduced sales of data CPE by TDC Shop also contributed to the negative development, and in total, terminal equipment, etc. decreased by DKK 73m. This was partly offset by increased revenue of DKK 125m from mobility services due mainly to the larger customer base in Telmore, postpaid voice and the SoHo segment, as well as revenue from mobile broadband, which was introduced in 2008. This was offset by lower revenue on prepaid voice due to the smaller customer base. Revenue was also positively affected by internet and network, which increased by DKK 32m due to an increase in the number of broadband customers. Furthermore, other revenue was positively affected by the increase in the number of TV customers.

Gross profit

Gross profit decreased by 0.4% or DKK 24m to DKK 6,691m in 2009. This was a result of the decrease in revenue and increased transmission costs related to more VoIP and TVoIP customers. This was partly offset by reduced transmission costs related to lower mobile termination and lower international roaming, and lower costs related to fewer traditional landline and broadband customers. Overall, transmission costs decreased by DKK 115m or 4.1%. Cost of goods sold decreased by DKK 51m due to reduced sales in TDC Shop.

In 2008, gross profit decreased by 1.8% or DKK 124m to DKK 6,715m as a consequence of the decrease in revenue. This was partly offset by a DKK 78m or 2.7% decrease in transmission costs caused primarily by lower landline telephony activity. Transmission costs were also affected by lower mobile termination and lower international roaming costs, which were partly offset by increased outgoing traffic in Telmore, and more mobile broadband and TV customers. Cost of goods sold also fell due to lower sales of CPE by TDC Shop.

Income before depreciation, amortization and special items (EBITDA)

In 2009, Consumer's EBITDA rose by DKK 92m or 2.4% to DKK 3,965m reflecting savings in other external expenses and wages, salary and pension costs. Other external expenses decreased by DKK 44m or 2.3% to DKK 1,899m in 2009 and stemmed primarily from lower staff-related costs due to fewer employees, reduced rental and IT costs, and lower marketing costs. This was offset mainly by higher costs related to temporary employees and increased costs in Telmore associated with subscriber acquisition and retention costs. Wages, salaries and pension costs fell by DKK 64m or 7.1% to DKK 837m as a result of a reduction in average full-time employee equivalents. Adjusted for the acquisition of Fullrate, Consumer's EBITDA fell by DKK 33m.

In 2008, Consumer's EBITDA rose by DKK 156m or 4.2% to DKK 3,873m reflecting savings in other external expenses and wages, salaries and pension costs. Other external expenses decreased by DKK 126m or 6.1% reflecting lower IT and billing costs, lower employee-related costs as well as lower costs for consultancy, marketing and temporary employees, which were offset by an increase in acquisitions and license costs. The latter was related to the introduction of TDC Play in 2008. Wages, salaries and pension costs decreased by DKK 169m or 15.8% due to a reduction in average full-time employee equivalents.

Selected financial and operational data Excluding special items
Consumer    2009  2008  2007   Growth in %  Growth in %
                2009 vs. 2008  2008 vs. 2007
                    
   DKKm               
Revenue    9,711  9,901  10,115  (1.9) (2.1)
   Landline telephony    2,675  3,094  3,414  (13.5) (9.4)
   Mobility services    4,418  4,207  4,082  5.0  3.1 
   Internet and network    1,734  1,621  1,589  7.0  2.0 
   Terminal equipment, etc.    381  493  566  (22.7) (12.9)
   Operator services    228  299  311  (23.7) (3.9)
   Other    275  187  153  47.1  22.2 
Transmission costs and cost of goods sold    (3,020) (3,186) (3,276) 5.2  2.7 
Gross profit    6,691  6,715  6,839  (0.4) (1.8)
Other external expenses    (1,899) (1,943) (2,069) 2.3  6.1 
Wages, salaries and pension costs    (837) (901) (1,070) 7.1  15.8 
Operating expenses before depreciation etc.    (5,756) (6,030) (6,415) 4.5  6.0
Other income and expenses    10  17    (88.2)
EBITDA    3,965  3,873  3,717  2.4  4.2 
                    
Key financial ratios                  
EBITDA margin % 40.8  39.1  36.7     
Customer base (end-of-year) '000               
Landline customers    1,238  1,287  1,463  (3.8) (12.0)
Mobile customers    2,079  1,938  1,864  7.3  4.0 
Mobile broadband- and data customers    99  33       
Internet customers    705  624  645  13.0  (3.3)
TDC TV customers    96  27  13    107.7 
Customer base, total    4,217  3,909  3,985  7.9  (1.9)
   Dual-play bundles    213         
   Triple-play bundles    86         
    DKK /               
ARPU (year-average) month               
PSTN/ISDN    186  188  n.a. (1.1)  
Mobile voice, blended    183  189  n.a. (3.2)  
Mobile voice, prepaid    148  145  n.a. 2.1   
Mobile voice, postpaid    219  235  n.a. (6.8)  
Broadband    221  227  n.a. (2.6)  
                    
Number of employees    2,160  2,212  2,681  (2.4) (17.5)
  1. The negative impact on EBITDA from price reductions on mobile termination was relatively low due to the spill-over effect on TDC’s costs.
  2. Including TDC Business' supply of residential customers.