Tele2 Ab Class A · OMXSTO:TEL2_A
Tele2 Ab Class A — Q4 2018 Earnings Presentation
33 slides from Tele2 Ab Class A's earnings presentation, Feb 15, 2019
Slide 1: Fourth Quarter 2018
FOURTH QUARTER 2018 February 13, 2019 Tele2 AB Tele2
Slide 2: Group highlights - Q4 2018
Group highlights - Q4 2018 SEK billion Revenue End-user service revenue Adjusted EBITDA Operating cash flow, rolling 12m Q4 2018 Pro Forma 7.8 5.4 2.2 5.6 %change organic 3% 1% 11%* Comments Organic growth of end-user service revenue of 1%, including - Mobile EUSR+3% -Fixed EUSR-2% Organic adjusted
Slide 3: Tele2 is becoming a true integrated challenger
Tele2 is becoming a true integrated challenger Drive FMC in Sweden B2C FMC through more-for-more, and increase customer satisfaction to drive superior growth versus the overall market FMC benefits in existing base - drive customer satisfaction, monetized through churn reduction and pricing power Sel
Slide 4: Growth and cost initiatives drive cash flow
Growth and cost initiatives drive cash flow FY2018 Staring Point - pro forma Low-single digit end-user service revenue growth - SEK 450m of revenue synergies Expected to be flat in 2019, which is a transition year, and low-single digit growth in the midterm driven by strategy initiatives End-user se
Slide 5: Sweden
Sweden Tele2
Slide 6: Sweden Consumer - Strategy
Sweden Consumer - Strategy Focused on FMC Legacy Services Mobile prepaid Convert to mobile postpaid Fixed tele & DSL Convert DSL to cable & fiber broadband. Opportunistically adjust price on fixed telephony DTT Convert churning DTT base into IPTV and upsell fiber broadband Mobile Postpaid Current po
Slide 7: Sweden Consumer - Operational highlights
Sweden Consumer - Operational highlights RGUs & net adds - core and legacy services (thousands, pro forma) +38 655 +4 778 +19 1,803 +15 -85 401 443 1,223 +3 653 -2 790 +12 1,796 -7 -74 381 432 1,180 +10 654 +1 801 +11 1,794 -2 -31 369 420 1,173 +24 655 +1 814 +13 1,804 +10 -25 351 411 1,175 +29 658
Slide 8: Sweden Consumer segment - Financials
Sweden Consumer segment - Financials End-user service revenue (SEK million, pro forma, year-on-year growth %) 472 556 1,148 138 394 325 +6% 472 +1.3% 571 +14.2% 1,152 +4.4% 128 300 +6% 479 +0.8% 595 +12.1% 1,168 +4.4% 377 294 +5% 476 +0.6% 600 +10.7% 1,189 +3.1% 117 365 300 +5% 474 +0.4% 614 +10.4%
Slide 9: Sweden Business - Operational highlights
Sweden Business - Operational highlights Mobile RGUs (thousands, pro forma) +8% 821 855 868 881 889 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 MobileASPU (SEK, pro forma) -4% 191 188 184 180 183 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 End-user service revenue (SEK million, pro forma, year-on-year growth %) 269 335 468 -7%
Slide 10: Sweden Business segment - Financials
Sweden Business segment - Financials Revenue (SEK million, pro forma) +1% 151 476 1,072 145 467 1,058 140 421 1,048 152 352 1,025 136 504 1,063 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 End-user Equipment Wholesale Operator Adjusted EBITDA and margin (SEK million, pro forma) -12% 383 289 18% 363 303 19% 293 286
Slide 11: Sweden overview
Sweden overview Total end-user service revenue (SEK million, pro forma) -1% 4,297 4,249 4,269 4,249 4,273 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Adjusted EBITDA and margin (SEK million, pro forma) +0% 1,718 1,743 1,730 1,927 1,718 30% 31% 31% 35% 29% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 OCF and cash conversion, rol
Slide 12: International
International Tele2
Slide 13: Baltics - Operational highlights
Baltics - Operational highlights ASPU development +5% Q4'17 Q4'18 Mobile RGUs +1% Q4'17 Q4'18 Brand campaigns Tele2 Laisvas Internetas TIK NUO 490 EUR/MIN 25 GB/MEN Tele2 it/laisvas TELE2 Q4 highlights - ASPU growth driven by continued migration to postpaid and successful pricing, including backbook
Slide 14: Baltics - Financials
Baltics - Financials Mobile end-user service revenue (SEK million) +6% 586 585 639 650 654 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Adjusted EBITDA and margin (SEK million) +10% 323 30% 315 31% 365 32% 403 35% 374 31% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 OCF and cash conversion, rolling 12m (SEK million) 973 78% 1,00
Slide 15: Kazakhstan (discontinued) - Financials
Kazakhstan (discontinued) - Financials Mobile end-user service revenue (SEK million) +20% 552 534 613 628 650 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Adjusted EBITDA and margin (SEK million) +65% 197 202 264 274 317 28% 29% 34% 34% 39% Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 OCF and cash conversion, rolling 12m (SEK mi
Slide 16: Financial Overview
Financial Overview Tele2
Slide 17: Group results Q4 2018
Group results Q4 2018 SEK million Revenue Adjusted EBITDA Adjusted EBITDA margin (%) Items affecting comparability D&A JVs and associated companies Operating profit Interest income/expenses Other financial items Taxes Net profit, continuing operations Discontinued operations Non-controlling interest
Slide 18: Group cash flow Q4 2018
Group cast flow Q4 2018 SEK million Adjusted EBITDA, continuing operations Adjusted EBITDA, discontinued operations Financial items paid/received Taxes paid Changes in working capital Capex paid Other cash items Equity free cash flow, total operations Of which equity free cash flow, discontinued ope
Slide 19: Full year 2018 vs. Guidance
Full year 2018 vs. Guidance Tele2 SEK billion, including Kazakhstan Mobile EuS Adjusted EBITDA Capex ex. Spectrum Guidance Mid-single digit growth 7.0-7.2 1.9-2.2 Actual 5% 7.2 2.1 Com Hem SEK billion, previous accounting principles Underlying EBITDA Capex Guidance Mid-single digit growth 1.0-1.1 Ac
Slide 20: Synergy update
Synergy update Old target Updated target Change Total SEK 900m SEK 1,350m +50% Revenue SEK 450m SEK 450m Same Cost SEK 450m SEK 900m +100% - Total synergies upgraded by 50% with cost synergies up 100% - Timing of cost synergies upgraded from 5 to 3 years with 50% run-rate by end of 2019 - Restructur
Slide 21: Financial guidance
Financial guidance Not including effects from IFRS16 Mid-term ambition 2019 End-user service revenue Low-single digit growth Around 2018 level Adjusted EBITDA Mid-single digit growth Mid-single digit growth CAPEX (SEK bn excl. spectrum) 3.0-3.5 2.9-3.2 Ramp up of initiatives in 2019 in a low-growth
Slide 22: Leading capex efficiency
Leading capex efficiency Tele2 capex/revenue in Sweden - phasing (Pro forma, excluding spectrum) 14% 12% 10% 8% 6% 4% 2% 0% 4G roll-out 2011 2012 2013 2014 2015 2016 2017 2018 Capex / revenue - vs. European peers (Group, excluding spectrum LTM) 30% 25% 20% 15% 10% 5% 0% TALK TELE2 ELISA BT TEF DE DN
Slide 23: Shareholder remuneration and leverage
Shareholder remuneration and leverage Economic net debt to adjusted EBITDA, total operations (SEK billion) 9.8 1,5x -1.8 2.0 17.8 27.9 2,8x Dec 2017 EFCF Shareholder remuneration M&A and other Dec 2018 Economic net debt Economic net debt to adjusted EBITDA Dividend to be paid 2019 SEK 4.4 / share, t
Slide 24: To conclude...
To conclude... Tele2
Slide 25: Key priorities moving forward
Key priorities moving forward Reignite EuS Revenue growth in Sweden B2C: Com Hem Mobile, launch FMC on the customer base B2B: High margin OnNet growth Structural cost savings Cost synergies of 900m within 3 years Investigate further intiatives Build on the momentum in the Baltics Close the sale of K
Slide 26: Thank you!
THANK YOU! Tele2
Slide 27: Q4 2018 Highlights
Q4 2018 Highlights ● Revenue of SEK 7.1 billion representing organic growth of 3 percent including 1 percent organic growth in end-user service revenue ● Organic growth of adjusted EBITDA of 11 percent, or 4 percent adjusting for non-underlying items in Sweden and Croatia ● Tele2 and Com Hem deliver
Slide 28: Analysis of profit and loss
Analysis of profit and loss “With the combined talent of two great companies and a roadmap of exciting initiatives, I see a bright future for Tele2 in 2019 and beyond” Q4 2018 and full year summary Group organic end-user service revenue (EUSR) grew by 1 percent for the quarter with the Baltics growi
Slide 29: Revenue | End-user service revenue
[Revenue | End-user service revenue 10,000
Slide 30: Analysis of cash flows
Tele2 – Full Year and Fourth Quarter Report 2018 4 (36) Analysis of cash flows SEK million, total operations 2018 Q4 2017 Q4 2018 Full year 2017 Full year Adjusted EBITDA, continuing operations 1,956 1,315 6,655 5,798 Adjusted EBITDA, discontinued operations 1,462 1,115 Capex paid –1,129 –844 –3,403
Slide 31: Revenue by segment and country
m Sweden Consumer 59% Croatia 5% i Sweden Business 20% i Germany 2% Lithuania
Slide 32: Financial guidance
Net intake Customer stock Q4 2018 PRESENTATION CONTACTS APPENDICES Tele2 – Full Year and Fourth Quarter Report 2018 5 (36) Financial guidance Financial guidance Tele2 AB gives the following guidance for continuing operations in constant currencies, based on the IAS 17 accounting standard for leases
Slide 33: Changes since previous report
CHANGES SINCE PREVIOUS REPORT 1) Cash flow: Free cash flow renamed to Equity free cash flow 2) Sweden: row 29: renamed "Operator revenue" to be "Operator revenue, excluding Wholesale" 4) Cash flow: retroactive adjustment of Q1-Q3 2018 between working capital, investment activities and financing acti