Slide 1: Second Quarter 2009
SECOND QUARTER 2009 22 July 2009
Slide 2: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 2 2009-07-22 Second quarter 2009
Slide 3: Highlights Q2
HIGHLIGHTS Q2 • Record result with all regions performing • Nordic – Good EBITDA contribution • Russia – Strong operational momentum – Tomsk launched with good initial market traction • Central Europe – Focus on maintaining our customer base and profitability • Western Europe – All countries deliver
Slide 4: Mobile Highlights Q2
MOBILE HIGHLIGHTS Q2 • Sweden – Good customer intake driven by mobile internet service • Russia – Strong EBITDA margin – Strong net intake • The Baltic Region – Create a platform for future growth 4 2009-07-22 Second quarter 2009
Slide 5: Market Trends
MARKET TRENDS • Develop distribution strategies • Stimulate customer activity • Introduce diversified pre-paid services 5 2009-07-22 Second quarter 2009
Slide 6: Corporate Segment
CORPORATE SEGMENT • Sweden – New contract wins in price sensitive market • The Netherlands – Gold standard for the group • Austria – New strategy is paying off 6 2009-07-22 Second quarter 2009
Slide 7: How Do We Create the Best Deal
HOW DO WE CREATE THE BEST DEAL • Price leadership through best in class cost control BEST DEAL • Rewarded quality network • Standardized product portfolio 7 2009-07-22 Second quarter 2009
Slide 8: Economic Development
ECONOMIC DEVELOPMENT • The effects of the global recession can still be observed in some parts of Tele2’s operations • The Company has acted and can see positive effects on OpEx and CapEx – The contingency plan will continue 8 2009-07-22 Second quarter 2009
Slide 9: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 9 2009-07-22 Second quarter 2009
Slide 10: Q2 2009 Group Results
Q2 2009 GROUP RESULTS SEK million Q2 09 Q2 08 Change % Continuing operations, Net Sales 10,130 9,832 3% EBITDA 2,450 2,101 17% - EBITDA margin (%) 24,2% 21,4% Depreciation and joint venture -944 -934 - Depreciation of net sales (%) 9,2% 8,7% One-off items -59 -737 EBIT 1,447 430 Normalized EBIT 1,50
Slide 11: H1 2009 Group Results
H1 2009 GROUP RESULTS SEK million H1 09 H1 08 Change % Continuing operations, Net Sales 20,250 19,359 5% EBITDA 4,677 3,761 24% - EBITDA margin (%) 23,1% 19,4% Depreciation and joint venture -1,838 -1,864 - Depreciation of net sales (%) 8,9% 8,9% One-off items -63 -654 EBIT 2,776 1,243 Normalized EB
Slide 12: Financial Items Q2
FINANCIAL ITEMS Q2 SEK million Q2 09 Q2 08 Change External Net interest expenses -99 -94 -5 Exchange rate differences, external 92 14 78 Other financial items -11 -47 36 -18 -127 109 Exchange rate differences, intragroup 35 25 10 Financial items 17 -102 129 12 2009-07-22 Second quarter 2009
Slide 13: Financial Items H1
FINANCIAL ITEMS H1 SEK million H1 09 H1 08 Change External Net interest expenses -238 -182 -56 Exchange rate differences, external -74 116 -190 Other financial items -31 -55 24 -343 -121 -222 Exchange rate differences, intragroup -232 -9 -223 Financial items -575 -130 -445 13 2009-07-22 Second quart
Slide 14: "Our" Currencies
“OUR” CURRENCIES YTD Average Fixing rate Currency 09 vs. 08 June 09 vs Dec 08 EUR + 16 % - RUB -4% -5% ”BALTICS” + 15 % - USD + 33 % +1% 14 2009-07-22 Second quarter 2009
Slide 15: Net Assets in Foreign Currencies
NET ASSETS IN FOREIGN CURRENCIES 30 2,1 2,3 20 6,2 6,7 Other Baltics 5,4 5,6 Russia 10 EUR 11,8 11,5 0 Year-end 2008 Q2 2009 Total 25.5 bSEK Total 26.1 bSEK 15 2009-07-22 Second quarter 2009
Slide 16: Cash Flow for Q2 2009
CASH FLOW FOR Q2 2009 SEK million Q2 09 Q2 08 OPERATING ACTIVITIES Taxes paid -124 153 Cash flow from operations, other 2,060 2,086 Changes in working capital 63 -381 CASH FLOW FROM OPERATING ACTIVITIES 1,999 1,858 INVESTING ACTIVITIES CAPEX -1,078 -1,446 Cash Flow after CAPEX 921 412 Acquisition an
Slide 17: Cash Flow for H1 2009
CASH FLOW FOR H1 2009 SEK million H1 09 H1 08 OPERATING ACTIVITIES Taxes paid -580 -167 Cash flow from operations, other 3,952 3,831 Changes in working capital 458 -299 CASH FLOW FROM OPERATING ACTIVITIES 3,830 3,365 INVESTING ACTIVITIES CAPEX -2,227 -2,445 Cash Flow after CAPEX 1,603 920 Acquisitio
Slide 18: New Definition of a Pre-paid Customer
NEW DEFINITION OF A PRE-PAID CUSTOMER OUR GOAL Definition alignment; apply the same definition to all our countries NEW DEFINITION ”An active pre-paid customer is a customer that has a refillable active account; and has either refilled or done an active transaction during the last 90 days” 18 2009-0
Slide 19: Customer Definition – New Rule
CUSTOMER DEFINITION – NEW RULE Relative Absolute impact impact Country Old definition (%) (in thousands) Sweden 6 months from last refill or usage -5,8 -200 Norway 6 months from last refill or usage -0,4 -2 Russia 3 months from last refill 11,3 1,261 Estonia 7 months from last refill -6,6 -32 Lithua
Slide 20: Group Financial Profile
GROUP FINANCIAL PROFILE 25 000 3,5 Net debt incl. JV 3 20 000 2,5 Net debt 15 000 2 10 000 1,5 Net debt/ EBITDA 1 incl. JV 2008 5 000 Net debt/ EBITDA 0,5 2008 0 0 07 07 08 08 09 2 4 2 4 2 Q Q Q Q Q • Net debt amounted to SEK 5,441 million in Q2 2009 – 0.6 times FY 2008 EBITDA – 0.9 times FY 2008 EB
Slide 21: Net Intake per Segment
NET INTAKE PER SEGMENT 1000 800 600 400 Fixed telephony 200 Fixed broadband 0 Mobile -200 Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 -400 -600 • Russia is the growth driver in net intake adding 478,000 new customers • Mobile customer base increasing by 524,000 new users 21 2009-07-22 Second quarter 2009
Slide 22: Group Q2 2009 Mobile
GROUP Q2 2009 MOBILE 25 000 20 000 15 000 Mobile Internet 0.2 million Pre paid voice 16.7 million 10 000 Post paid voice 3.8 million 5 000 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 • Total number of mobile customers 20.7 million Q2 2009 – New pre-paid definition adding 553 000 customers in the reporting 22 20
Slide 23: MoU and ARPU Development
MoU AND ARPU DEVELOPMENT SWEDEN RUSSIA 225 240 70 220 220 235 215 60 215 230 210 210 50 205 225 205 40 200 220 200 195 215 30 195 190 190 210 185 20 185 205 180 180 200 10 175 175 195 0 170 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 ARPU MoU ARPU MoU • Relatively strong
Slide 24: Group Q2 2009 Net Sales
GROUP Q2 2009 NET SALES 12 000 10 000 8 000 Other Fixed telephony 6 000 Fixed broadband 4 000 Mobile 2 000 0 Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 • Mobile net sales SEK 6,457 million, up 5 percent 24 2009-07-22 Second quarter 2009
Slide 25: Group Q2 2009 EBITDA
GROUP Q2 2009 EBITDA 3 000 30,00% Other 2 500 25,00% 2 000 Fixed telephony 20,00% 1 500 Fixed broadband 15,00% 1 000 10,00% Mobile 500 0 5,00% Group EBITDA Q1 Q2 Q3 Q4 Q1 Q2 margin -500 0,00% 08 08 08 08 09 09 • Group EBITDA margin 24 percent – Lithuania delivering new record EBITDA margin of 39 per
Slide 26: Mobile Q2 2009 EBITDA
MOBILE Q2 2009 EBITDA 2 000 30,00% 1 800 1 600 25,00% 1 400 20,00% Mobile 1 200 1 000 15,00% 800 Mobile EBITDA 600 10,00% margin 400 5,00% 200 0 0,00% Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 • Mobile EBITDA margin 27 percent – Russia EBITDA margin 40 percent in mature regions and 35 percent in all regio
Slide 27: Fixed Broadband Q2 2009 EBITDA
FIXED BROADBAND Q2 2009 EBITDA 300 20,00% 15,00% 200 10,00% 100 Fixed broadband 5,00% 0,00% Fixed broadband 0 EBITDA margin Q1 Q2 Q3 Q4 Q1 Q2 -5,00% -100 08 08 08 08 09 09 -10,00% -200 -15,00% • Fixed broadband EBITDA margin 14 percent – Excellent performance in Tele2 Netherlands driven by continued
Slide 28: Fixed Telephony Q2 2009 EBITDA
FIXED TELEPHONY Q2 2009 EBITDA 500 30,00% 400 25,00% 20,00% Fixed Telephony 300 15,00% 200 Fixed telephony 10,00% EBITDA margin 100 5,00% 0 0,00% Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 • Fixed telephony EBITDA margin 27 percent – Focus on maintaining relative performance 28 2009-07-22 Second quarter 20
Slide 29: Group Q2 2009 EBIT
GROUP Q2 2009 EBIT 2 000 16,00% Other 14,00% 1 500 12,00% Fixed telephony 1 000 10,00% Fixed broadband 500 8,00% 6,00% Mobile 0 Q1 Q2 Q3 Q4 Q1 Q2 4,00% -500 08 08 08 08 09 09 Group EBIT 2,00% margin -1 000 0,00% • Group EBIT margin 15 percent excluding one-off items • Improved operational performanc
Slide 30: Group Q2 2009 Capex
GROUP Q2 2009 CAPEX 1600 16,00% 1400 14,00% 1200 12,00% Other 1000 10,00% Fixed telephony 800 8,00% Fixed broadband 600 6,00% Mobile 400 4,00% Capex/sales 200 2,00% 0 0,00% Q1 Q2 Q3 Q4 Q1 Q2 08 08 08 08 09 09 • Group Capex SEK 1,085 million or 11 percent of net sales – FY 2009 expectation in the ran
Slide 31: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 31 2009-07-22 Second quarter 2009
Slide 32: Concluding Remarks
CONCLUDING REMARKS • Record result with strong performance in all markets • Top priorities 2H 2009 – Tele2 will continue to focus on cost discipline in all parts of the organization – Roll-out of new regions in Russia • Launch of up to six new regions during Q3 2009 – Develop our mobile operations •
Slide 33: Q&A
Q&A 33 2009-07-22 Second quarter 2009
Slide 34: Appendix
Appendix 34 2009-07-22 Second quarter 2009
Slide 35: General Market Trends in Mobile
GENERAL MARKET TRENDS IN MOBILE • Strong customer intake • MoU growth is offsetting price competition • Pricing environment for basic voice fairly stable • Good interest in Mobile Internet services 35 2009-07-22 Second quarter 2009
Slide 36: Tele2 Sweden Mobile
TELE2 SWEDEN MOBILE 3 400 140 3 350 120 • Flat revenue development 3 300 • Good customer intake 100 3 250 – Driven by Mobile Internet and 3 200 80 Mobile subscriber post-paid voice 3 150 60 Net intake • 33,000 new Mobile Internet 3 100 users 40 3 050 – Total base 218,000 20 3 000 • MoU continue to g
Slide 37: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) 4 000 3 500 3 000 2 500 Mobile Internet 0.2 million 2 000 Pre paid voice 1.7 million 1 500 Post paid voice 1.3 million 1 000 500 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 • Total number of mobile customers 3.2 million Q2 2009 – New pre-paid definition affecting the reported number
Slide 38: Tele2 Norway Mobile
TELE2 NORWAY MOBILE 465 25 460 20 • Tele2 staying the price leader 455 15 despite tough market 450 10 conditions Mobile subscriber 445 Net intake 440 5 • Customer intake 2,000 in Q2 435 0 2009 430 -5 • Improvement EBITDA 425 -10 development: Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 660 12,00% – Efforts t
Slide 39: Tele2 Russia Mobile
TELE2 RUSSIA MOBILE 14 000 700 12 000 600 • Revenue growth 14 percent in 10 000 500 SEK 8 000 400 • More than 12 million customers Mobile subscriber 6 000 300 Net intake – Net intake in the quarter 478,000 4 000 200 2 000 100 • Stable ARPU development despite economic weakness 0 0 Q1 08 Q2 08 Q3 08
Slide 40: Tele2 Baltic Mobile
TELE2 BALTIC MOBILE 3 600 60 3 550 40 • Challenging economic 3 500 3 450 environment 20 3 400 – Lithuania and Estonia relatively 3 350 0 Mobile subscriber stable development 3 300 Net intake 3 250 – Fierce price competition in -20 3 200 Latvia 3 150 -40 3 100 • Robust EBITDA development 3 050 -60 de
Slide 41: Tele2 Croatia Mobile
TELE2 CROATIA MOBILE 900 80 800 70 • The Croatian operations 700 60 developing according to plan 600 50 500 40 Mobile subscriber • Good EBITDA improvement in Net intake 400 30 the quarter 300 20 200 10 • Opex affected by higher 100 marketing spending and 0 0 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 acqui
Slide 42: Second quarter 2009
42 2009-07-22 Second quarter 2009