TDC Nordic

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Glossary

In 2009, TDC Nordic’s revenue and EBITDA totaled DKK 3,515m and DKK 497m, respectively, compared with DKK 3,854m and DKK 458m in 2008. The EBITDA margin was 14.1% in 2009 compared with 11.9% in 2008.

At year-end 2009, TDC Nordic had 1,437 full-time employee equivalents compared with 1,619 in 2008 and 0.2m customers at year-end 2009, up 9.7% compared with year-end 2008.

From 2008 to 2009, TDC Nordic increased its market share and now holds a strong position in the high-margin IP-VPN market and in capacity services. This has been accomplished through improved product offerings and value added services.

Revenue

TDC Nordic’s revenue decreased by DKK 339m or 8.8% to DKK 3,515m in 2009. The decrease was driven largely by unfavorable exchange-rate developments in Sweden and Norway. Adjusted for the exchange-rate development, revenue decreased by approximately 2%. The adjusted revenue decrease was driven by TDC Sweden due primarily to a decline in the integrator business. This decline was due mainly to lower project sales that have been highly impacted by the economic downturn. The reduced revenue in TDC Sweden was partly offset by an increase in the operator business (related mainly to revenue from IP-VPN). Adjusted for the unfavorable exchange-rate development, TDC Norway achieved positive revenue growth from 2008 to 2009 due to IP-VPN and data. TDC Finland showed an increase in revenue in 2009, due mostly to growth in the data and IP-VPN businesses. This was partly offset by a slight fall in voice revenue. The increased revenue in TDC Hosting was driven by revenue growth in Denmark, Sweden and Finland.

In 2008, TDC Nordic’s revenue decreased by DKK 9m or 0.2% to DKK 3,854m. The decrease was driven largely by unfavorable exchange-rate developments in Sweden and Norway, and the sale of the residential customer base, which was partly offset by the acquisition of UNI2 in September 2007. Adjusted for the exchange-rate development and acquisitions and divestments, revenue increased by approximately 0.4%. The adjusted revenue increase was driven primarily by an increase in the data business, which was partly offset by a decline in voice revenue in TDC Sweden. Despite an unfavorable exchange-rate development, the revenue in TDC Norway in 2008 was in line with 2007. In TDC Finland, revenue increased by DKK 14m, stemming from data revenue due to an increasing customer base related to IP-VPN. The growth in IP-VPN revenue was partly offset by a slight decrease in landline voice revenue. Including the acquisition of UNI2, revenue in TDC Hosting increased by DKK 139m, which also related to the establishment of Hosting AB and Hosting OY in January 2008 and general organic growth.

Gross profit

In 2009, TDC Nordic’s gross profit decreased by DKK 117m or 6.8% to DKK 1,609m. The decrease in revenue was partly offset by a DKK 222m or 10.4% decrease in transmission costs and cost of goods sold, as a result of the lower activity related to the integrator business in TDC Sweden.

In 2008, TDC Nordic’s gross profit increased by DKK 59m or 3.5% to DKK 1,726m. The increase was driven by a DKK 68m decrease in transmission costs and cost of goods sold due mainly to decreasing activities in Sweden primarily within the voice business, but also due to the sale of the residential customer base.

Income before depreciation, amortization and special items (EBITDA)

TDC Nordic’s EBITDA increased by DKK 39m or 8.5% to DKK 497m in 2009. This related mainly to lower other external expenses and wages, salaries and pension costs, both of which were affected by the exchange-rate development. Other external expenses fell by DKK 65m or 18.0% to DKK 296m in 2009, and related to a strict focus on cost control and a reduction in personnel-related costs as a consequence of fewer FTEs. Wages, salaries and pension costs decreased by DKK 86m or 9.2% to DKK 851m due largely to the decrease in full-time employee equivalents.

In 2008, TDC Nordic’s EBITDA rose by DKK 33m or 7.8% to DKK 458m. The increase was positively affected by a decrease of DKK 56m to DKK 361m in other external expenses in 2008, as a consequence of the strict focus on cost control and minimization of personnel-related costs that was partly offset by increases in other external expenses in TDC Hosting due to the expansion of the business. The development in EBITDA from 2007 to 2008 was negatively affected by a DKK 43m or 4.8% increase in wages, salaries and pension costs, up to DKK 937m. This increase was due primarily to more FTEs in TDC Hosting.

Selected financial and operational data Excluding special items
TDC Nordic    2009  2008  2007   Growth in %  Growth in %
                2009 vs. 2008  2008 vs. 2007
                    
    DKKm               
Revenue    3,515  3,854  3,863  (8.8) (0.2)
   TDC Sweden    1,726  2,064  2,236  (16.4) (7.7)
   TDC Norway    879  905  906  (2.9) (0.1)
   TDC Finland    686  673  659  1.9  2.1 
   TDC Hosting    330  308  169  7.1  82.2 
   Other, incl. eliminations    (106) (96) (107) (10.4) 10.3 
   Landline telephony    852  937  1,038  (9.1) (9.7)
   Mobility services    106  62  69  71  (10.1)
   Internet and network    1,385  1,424  1,395  (2.7) 2.1 
   Terminal equipment, etc.    912  1,153  1,163  (20.9) (0.9)
   Other    260  278  198  (6.5) 40.4 
Transmission costs and cost of goods sold    (1,906) (2,128) (2,196) 10.4  3.1 
Gross profit    1,609  1,726  1,667  (6.8) 3.5 
Other external expenses    (296) (361) (417) 18.0  13.4 
Wages, salaries and pension costs    (851) (937) (894) 9.2  (4.8)
Operating expenses before depreciation, etc.    (3,053) (3,426) (3,507) 10.9  2.3 
Other income and expenses    35  30  69  16.7  (56.5)
EBITDA    497  458  425  8.5  7.8 
                    
Key financial ratios                  
EBITDA margin  % 14.1  11.9  11.0       
                    
Customer base (end-of-year) '000               
Landline customers    55  47  16  17.0  193.8 
Mobile customers    44  24  14  83.3  71.4 
Internet customers    82  94  98  (12.8) (4.1)
Customer base, total    181  165  128  9.7  28.9 
                    
Number of employees    1,437  1,619  1,596  (11.2) 1.4