Slide 1: Third Quarter 2015
THIRD QUARTER 2015 October 21st, 2015 Tele2 AB
Slide 2: Highlights from the quarter
Highlights from the quarter • Strong net intake across the Group, especially Sweden and Kazakhstan Value • Solid mobile end-user service revenue growth of 5% Champion • Continuing mid-single digit ASPU development in Tele2 Sweden Focused • 4G network in Netherlands & Baltics now at 90 percent popula
Slide 3: Monetization of data is our key priority
Monetization of data is our key priority Year-on-year growth, Tele2 Group Mobile end-user service Average data usage Mobile EBITDA revenue per mobile subscriber* +5% +0.4% ~70% 3 *Average data usage excludes traffic on MVNO networks.
Slide 4: Mid-single digit growth in mobile end-user service revenue continues
Mid-single digit growth in mobile end-user service revenue continues Year-on-year growth for mobile end-user service revenue, Tele2 Group Average +7.2% 9.6% 8.7% 8.1% 7.4% 6.5% 6.5% 6.7% 6.7% 6.6% 5.2% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 4
Slide 5: Market year-on-year development
Market year-on-year development Mobile end-user service revenue Data usage growth (Excluding MVNO networks) Sweden: ~85% +1% Estonia: +8% Germany: Kazakhstan: -6% +35% Latvia: +5% Netherlands: +13% Lithuania: +6%* Austria: -2%** Croatia: Q3 14 Q3 15 +2% Sweden CEE Kazakhstan *Excluding non-recurring
Slide 6: Tele2 Sweden
Tele2 Sweden Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q3 (SEK million) YTD (SEK million) -1% -1% +6% 3 124 3 100 1,200 3,500 60% 60% 1 025 1 014 2 898 1,000 3,000 50% 2 732 50% 2,500 800 40% 40% 2,000 600 33% 33% 30% 30% 31% 30% 1,500 400 20% 20% 1,000 200 10% 500 10
Slide 7: Tele2 Sweden
Tele2 Sweden Fundamentals for continued growth are strong Net intake ASPU growth Tele2 consumer Comviq: Continuing shift from (SEK) prepaid to postpaid +200% +5% 84 000 250 229 219 200 80% 70% 150 28 000 100 50 20% 30% 0 Q3 14 Q3 15 Q3 14 Q3 15 Q3 14 Q3 15 postpaid prepaid Q3 Highlights – Average da
Slide 8: Tele2 Baltics
Tele2 Baltics Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q3 (SEK million) YTD (SEK million) +7% -1% +3% 775 832 267 263 732 300 800 60% 708 60% 700 250 50% 50% 600 200 40% 40% 500 150 34% 32% 400 30% 33% 32% 30% 300 100 20% 20% 200 50 10% 10% 100 0 0 0% 0% Q3 14 Q3 15
Slide 9: Tele2 Netherlands
Tele2 Netherlands Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q3 (SEK million) YTD (SEK million) +5% -41% -44% 1 440 250 800 60% 730 60% 1 369 206 700 50% 50% 200 600 40% 40% 150 122 500 410 400 30% 30% 100 300 20% 20% 15% 200 18% 50 8% 10% 100 10% 10% 0 0 0% 0% Q3 14 Q
Slide 10: Tele2 Netherlands: We are ready to launch Q4 2015
Tele2 Netherlands We are ready to launch Q4 2015 Network ready: ~90% outdoor Handset ready Customer ready: Attracting population coverage >50% 4G phones in our base higher ASPU customers 60% Average Monthly Recurring Charge 50% 40% 30% 20% 10% 0% Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Jan Feb M
Slide 11: Tele2 Kazakhstan
Tele2 Kazakhstan Net sales EBITDA and EBITDA margin Increased incoming traffic (SEK million) Q3 (SEK million) driving Revenue and EBITDA +42% Incoming % of outgoing +127% 497 120% 60 20% 50 18% 100% 50 349 16% 80% 40 14% 12% 60% 30 22 10% 10% 20 8% 40% 10 6% 6% 20% 4% 0 2% 0% Q3 14 Q3 15 Q3 14 Q3 15
Slide 12: Financial Overview
Financial Overview TELE2
Slide 13: Financial highlights
Financial highlights Q3 2014 Q3 2015 % Change Net sales (SEK billion) 6.58 6.79 +3% Mobile end-user service revenue 3.25 3.42 +5% (SEK billion) EBITDA (SEK billion) 1.68 1.60 -5% CAPEX (SEK billion) 0.86 0.93 +8% 13
Slide 14: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +5.2% 91 3,205 -2 3 422 3 422 43 3 252 3 205 3 184 3 324 14 24 3 252 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Sweden Baltics Netherlands Kazahkstan RoW Q3 15 14
Slide 15: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) -5% 1800 90.00% 1 682 1 599 1600 80.00% 1 412 1 428 1400 1 393 70.00% 1 682 -11 -4 28 1200 60.00% -12 1 599 1000 50.00% -84 1,412 800 40.00% 600 30.00% 25.5% 21.9% 21.1% 23.6% 400 20.5% 20.00% 200 10.00% 0 0.00% Q3 14 Q4 14 Q1 15
Slide 16: EBITDA YTD
EBITDA YTD Tele2 Group Development per market (SEK million) (SEK million) -2% 90.00% 4800 80.00% 4600 4 514 4 420 70.00% 24 4400 166 60.00% 4200 50.00% 4000 1,412 40.00% 4 514 33 3 3800 4 420 3600 30.00% -320 23.7% 3400 22.2% 20.00% 3200 10.00% 3000 0.00% YTD Sep 14 YTD Sep 15 YTD Sep 14 Sweden Balt
Slide 17: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) +8% 90.00% 1,300 80.00% 1 134 70.00% 64 1,100 1 030 932 60.00% 938 932 25 -4 33 900 861 50.00% 40.00% 861 -47 700 30.00% 20.00% 500 13.1% 14.4% 17.2% 15.0% 13.7% 10.00% 300 0.00% Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q3 14 Sweden Baltics N
Slide 18: Free cash flow
Free cash flow Total operations Tele2 Group Development (SEK million) (SEK million) 600 500 475 475 400 300 -83 238 200 169 -50 -5 100 0 145 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 -100 169 -96 -200 -229 -84 -300 -268 Q3 14 EBITDA Interest etc Taxes Working CAPEX Discontinued Q3 15 -400 capital Operations 18
Slide 19: Debt position and ratio
Debt position and ratio Pro forma net debt / EBITDA 12 m rolling SEK billion / Ratio 15.0 2.00 1.75 12.5 1.50 10.0 10.1 1.25 6.6 9.6 7.5 1.00 7.9 7.9 0.75 5.0 0.50 2.5 3.3 0.25 0.0 0.00 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Pro forma net debt Dividend, announced Pro forma net debt to EBITDA (
Slide 20: Challenger Program Update
Challenger Program Update TELE2
Slide 21: How we will deliver SEK 1 Bn in productivity improvements
How we will deliver SEK 1 Bn Simplify Discipline Consolidate Transform in productivity improvements Simplify 60% of products harmonized on shared platforms Discipline 80% of spend strategically sourced & procured Consolidate 20% reduction in IT OpEx as share of revenue Transform 25% of staff in shar
Slide 22: Progress in Q3 – Important steps taken to enable execution
Progress in Q3 – Important Simplify Discipline Consolidate Transform steps taken to enable execution Simplify Product Harmonization: Harmonization of product process planning completed SMS A2P: New contracts grew revenues by 28%, margins grew 110% Discipline Procurement: Savings realized from suppli
Slide 23: A multi-year investment program that will realize significant benefits
A multi-year investment program Simplify Discipline Consolidate Transform that will realize significant benefits Ramp-up of costs and benefits over 4 years Productivity improvement: Benefits One-off program costs SEK 1Bn 2015 2016 2017 2018 23 Baseline: Actuals 2014
Slide 24: Momentum is building
Momentum is building Simplify Discipline Consolidate Transform More than 50 initiatives have kicked off since December. We will report quarterly on progress. 2014 2015 2016 2017 2018 Investment phase Benefits phase Q3 24
Slide 25: Financial Guidance
Financial Guidance TELE2
Slide 26: Updated financial guidance 2015
Updated financial guidance 2015 Mobile end-user EBITDA service revenue (SEK billion) Mid-single digit 5.6 – 5.8 % growth (5.8-6.0) Net sales CAPEX (SEK billion) (SEK billion) 25.5 – 26.5 3.8 – 4.0 26
Slide 27: Q3 2015 Summary
Q3 2015 Summary TELE2
Slide 28: Q3 2015 in short and key priorities moving forward
Q3 2015 in short and key priorities moving forward - Continued focus on data monetization - Executing on the Challenger Program - Netherlands 4G launch - Reiterate our commitment to our progressive dividend policy Focused Value Step-Change Winning People Technology Champion Productivity & Culture Ch
Slide 29: Tele2's Way2Win
Tele2’s Way2Win Vision We will be champions of customer value in everything we do Mission We are challengers, fast-movers and will always offer our customers what they need for less Where we play How we win Focused Winning Mobile Our current Residential Value Step-Change M2M & IoT Technology People
Slide 30: The End
THE END