TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011

Letter from the CEO
Significant strategic progress
In 2008, TDC defined its ambition to become the best-
performing incumbent telco in Europe by 2012 measured
on value creation, customer satisfaction and employee
pride, while remaining the backbone of the Danish worldclass
communications infrastructure. It is therefore time to
consider our progress.
Measured on profitability and total shareholder return TDC
has transformed from being a lowest quartile performer
into one of the most profitable and value creating telcos in
Europe. Our EBITDA margin has increased from 29% in
2006 to 42% in 2011, and our average annual shareholder
return totalled 11.2% against a TSR of 3.8% in the
European telco benchmark and 6.3% in the Danish C20
index 1 . Productivity in the TDC Group excluding YouSee and
Nordic has improved by an average of approximately 10% a
year since 2008.
We have also significantly improved customer satisfaction
since launching our TAK improvement programme in 2009.
Our score in the customer satisfaction index for the TDC
Group excluding Nordic has improved from 67 in 2009 to
72 in 2011 with 33% fewer unacceptable customer
experiences. Our new multi-brand strategy has added new
brands with high customer satisfaction scores to our
portfolio, including Fullrate, M1, and Onfone, while
Telmore’s customer satisfaction remains the highest of all
Danish telco brands.
TDC operates in a very demanding, competitive
environment and adjusting to major technology shifts
requires continuous change and cost reductions. In spite of
this challenging context, TDC's employee satisfaction has
steadily increased in recent years from 73 in 2008 to 80 in
2011. At the same time, the number of managers with a low
employee satisfaction score (index < 60) has dropped from
13% in 2008 to 2% in 2011. This testifies to the ongoing
efforts to fuel employee development and motivation and
upgrade TDC's management processes and leadership
quality.
In recent years, TDC has invested an average of 14% of
revenue in infrastructure, IT and innovation. This has
allowed a parallel build-out of highly competitive cable,
xDSL, and mobile infrastructures. Since 2007, the average
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1 An index consisting of the 20 most traded shares at the Copenhagen stock exchange.
TDC Group Annual Report 2011
maximum broadband speed TDC offers Danish households
has increased from 17 Mbps to 60 Mbps. Today, the
average maximum speed offered is a factor 4.8 higher than
the average speed purchased, illustrating the significant
unexploited potential in our infrastructure. In 2011, TDC
announced its plans to invest DKK 25bn in Danish
infrastructure towards 2020 with a main focus on the
continued roll-out of cable and FttX fibre infrastructure and
high-speed mobile technologies. TDC remains the backbone
of a Danish world-class communications society and we are
committed to maintaining this position.
We have come a very long way towards delivering on our
ambition for 2012. This achievement is the result of 10,000
competent and highly committed members of the TDC team
working hard every day to succeed. They deserve
tremendous credit for the transformation in TDC's
performance.
Naturally, TDC can and must continue to improve its
customer experience and productivity. We have much more
work ahead of us when it comes to building world-class
customer-facing processes and benefiting from the
productivity improvement potential throughout the
Company. Furthermore, we must maintain a high level of
investment in innovation, technology and infrastructure to
further develop our strong market positions in the Nordic
region.
With the progress made towards achieving our ambition for
2012, it is now time for TDC to set a new ambition reaching
further into the future. TDC's Board of Directors and the
Corporate Management Team have therefore launched a
strategy process for setting a new ambition to be achieved
before the end of 2015 as well as the strategic priorities
that will lead the way. We expect to announce the outcome
of this process in June this year.
Strong 2011 results
In 2011, TDC delivered another set of very solid results in a
highly challenging, competitive market and macroeconomic
climate. With revenue and EBITDA growth of 0.5% and
1.6%, respectively, and a strong cash-flow performance
with EFCF up by 1.7%, the Company demonstrated its
resilience and ability to produce results under significant
pressure. The results form a solid foundation for TDC's
2011 dividend commitment of DKK 4.35 per share.
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