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

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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 ______________________________________________________________________ 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. 4
While our business is less impacted by the macroeconomic environment than most other industries, we nonetheless felt the impact of a subdued Danish economy in our 2011 figures. Consumer behaviour has become even more cautious, and business and public accounts are being extraordinarily circumspect in their investment and procurement decisions. 2011 was characterised by intense price competition in all segments of the mobile market. This inevitably led to a reduced residential mobile ARPU compared with 2010. However, our strong portfolio of brands, including newly acquired Onfone, has performed well and our domestic mobile subscription base increased by 287,000 during 2011. This included a positive development in the business market with TDC gaining market share during 2011 and maintaining a stable ARPU with price pressure offset by growth in mobile data. YouSee and TDC in combination delivered pay-TV revenue growth of 11% in 2011 driven mainly by higher ARPU in YouSee and 19% subscriber growth in TDC TV. Several innovative products and services were added to our pay-TV portfolio, including new TV apps in TDC HomeTrio, increased freedom of choice with YouSee through the new ’Extra Channels’ product and most recently the launch of TV apps for iPhone and iPad. The number of VoD sessions grew by >300% in 2011 and TDC is on track to become the number one movie rental company in Denmark within the next year. Nordic delivered organic revenue and EBITDA growth of 5% and 8%, respectively, driven by strong performances by TDC Hosting and TDC Sweden in particular. The macroeconomic bounce-back in Sweden supported strong growth in both our integrator and operator businesses in TDC Sweden. TDC Finland also delivered on expectations while TDC Norway faced a challenging second half of 2011. TDC's landline business generally met expectations in 2011 despite significant competitive pressure from the utilities in particular as well as increased landline-to-mobile substitution in the wake of the mobile price war. However, new product launches within both telephony and broadband across our brands and extensive retention efforts have contained the total loss of landline profit. In Q4, we had the highest quarterly retail broadband net adds TDC Group Annual Report 2011 in more than three years and lowest PSTN/ISDN churn in Consumer in more than five years. These positive trends contribute to our expectation of a slowdown in the decline in gross profit from landline in 2012. TDC is in good shape and well prepared for 2012. We are ready to continue offering still more value and better experiences to our customers while improving our productivity throughout the Group and launching new and innovative products and services. Henrik Poulsen CEO & President --- 5
Page 1 and 2: 2011 Group Annual Report
Page 3: TDC Group Annual Report 2011 Accomp
Page 7 and 8: Revenue The TDC Group’s revenue i
Page 9 and 10: Profit for the year Profit for the
Page 11: Guidance 2011 TDC published financi
Page 14 and 15: TDC during 130 years TDC turns 130
Page 16 and 17: Internet The four regional telephon
Page 18 and 19: TDC Group Annual Report 2011 “The
Page 20 and 21: TDC today Profile TDC is the leadin
Page 22 and 23: Product lines In a rapidly changing
Page 24 and 25: Innovations in TDC in 2011 TDC is a
Page 26 and 27: TDC’s mission, vision and values
Page 28 and 29: Strategy 2012 Customer satisfaction
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Page 32 and 33: TDC’s homedisk stores 320,000 GB
Page 34 and 35: Consumer 2011 at a glance • Consu
Page 36 and 37: To an increasing extent, customers
Page 38 and 39: Performance in 2011 Revenue The bus
Page 40 and 41: Business partners & colleagues Cope
Page 42 and 43: Nordic 2011 at a glance • Solid r
Page 44 and 45: Gross profit The gross profit growt
Page 46 and 47: Performance in 2011 Revenue Wholesa
Page 48 and 49: YouSee 2011 at a glance • Strong
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Page 52 and 53: Performance in 2011 In 2011, Operat
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In 2011, TDC showed its ability to
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Shareholder information Policy TDC
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Share price In a challenging market
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TDC has 2,550 3G sites in Denmark,
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Regulation Overview The summary bel
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Risk factors TDC is faced with both
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Risk Description and impact Mitigat
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Corporate Social Responsibility 201
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Corporate Social Responsibility The
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of life of the individual patients
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At TDC, we continued to increase th
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Red Cross for vulnerable population
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YouSee and TDC in combination deliv
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Corporate Governance Recommendation
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Management Corporate Management Tea
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Board of Directors Vagn Sørensen C
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Jan Bardino Age 59. Elected by the
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Coax refers to a technology based o
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data, which may vary in accuracy. A
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Financial Statements 2011
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Financial Statements Financial Stat
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Management Statement TDC Group Annu
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TDC Group Annual Report 2011 Consol
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TDC Group Annual Report 2011 Assets
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TDC Group Annual Report 2011 Consol
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Notes to Consolidated Financial Sta
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interests is recognised in equity.
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Special items Special items include
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account exceeding the amount capita
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Assets or disposal groups classifie
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Note 3 New accounting standards At
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Note 4 Segment reporting For a desc
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TDC Group Annual Report 2011 Geogra
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TDC Group Annual Report 2011 Remune
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TDC Group Annual Report 2011 Deferr
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TDC Group Annual Report 2011 Note 8
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TDC Group Annual Report 2011 Net fi
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Reconciliation of effective tax rat
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TDC Group Annual Report 2011 is bas
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Land and buildings Telecommun icati
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TDC Group Annual Report 2011 Treasu
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TDC Group Annual Report 2011 Net in
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Maturity profiles 1 Financial asset
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exceed 25% in year two, 30% in year
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Financial transactions are only ent
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Other risks of capital contribution
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TDC Group Annual Report 2011 Sensit
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C: Pensions for former Danish civil
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TDC Group Annual Report 2011 Assets
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Note 35 Overview of Group companies
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Note 39 Research and development co
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Five year overview TDC Group Annual
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Cover photo: NW Copenhagen Translat
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TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011

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