Slide 1: Fourth Quarter 2017
FOURTH QUARTER 2017 February 2nd, 2018 Tele2 AB
Slide 2: Group highlights – Q4 2017
Group highlights – Q4 2017 Including the Netherlands % Change % Change % Change SEK billion Q4 2017 Q4 2017 Reported LFL LFL Mobile end-user service revenue 3.4 5% 5% 4.0 8% Net sales 6.6 5% 0% 8.1 -1% EBITDA 1.5 5% 3%* 1.7 19% LFL is constant currencies and pro forma for TDC Sweden Note: All figure
Slide 3: Tele2's Way2Win
Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Baltic Sea Investment IoT Cash Positively Connecting Digital First Winning Challenger Markets Generators Fearless Things our Customer Cost Brands Customers Experience Structure Love Respo
Slide 4: Delivering on our long term strategy
Delivering on our long term strategy • Sweden mobile end-user service revenue down 1%, EBITDA up 3% LFL Baltic Sea • Baltics mobile end-user service revenue up 9%, EBITDA up 21% Challenger • Rolling 12 months operating cash flow up 26% to SEK 4.6 billion • Kazakhstan mobile end-user service revenue
Slide 5: Baltic Sea Challenger
Baltic Sea Challenger TELE2
Slide 6: Sweden – Financials
Sweden – Financials Net sales, LFL Mobile end-user service EBITDA and EBITDA margin, (SEK million) revenue, LFL (SEK million) LFL (SEK million) -3% -1% +3% 4,332 4,210 3,932 3,921 1,959 1,922 1,930 1,939 1,941 1,091 1,121 TDC 3,833 1,045 1,040 1,077 4,029 1,928 1,028 28% 27% 29% 26% 26% Q4 16 Q1 17
Slide 7: Sweden Consumer – Growth despite RLAH
Sweden Consumer – Growth despite RLAH Consumer mobile end-user Share of postpaid sales with Customer satisfaction service revenue bundle >3GB (Tele2 Media & Insight) +2% 70% 58% 85% 87% 85% 82% Q4 16 Q4 17 Q4 16 Q4 17 Q4 16 Q4 17 Tele2 Comviq Q4 Highlights – Mobile end-user service revenue grew by 3
Slide 8: Sweden B2B – Lower costs offset lower sales
Sweden B2B – Lower costs offset lower sales B2B net sales, LFL B2B Large net sales, LFL FY 2017 integration synergies (SEK million) (SEK million) -8% -10% SEK 209 million 0 Q4 16 Q4 17 Q4 16 Q4 17 Q4 Highlights – Decrease in net sales against a tough comp, due to churn in prior quarters, price compe
Slide 9: Baltics – Financials
Baltics – Financials Net sales Mobile end-user service EBITDA (SEK million) revenue (SEK million) (SEK million) +11% +9% +21% 1,042 339 935 949 983 314 320 859 564 582 580 286 533 522 264 33% 33% 34% 30% 28% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4
Slide 10: Baltics – Strong growth despite RLAH
Baltics – Strong growth despite RLAH ASPU development Share of 4G capable MBB end-user service revenue smartphones in base +8% +12% 49% 37% Q4 16 Q4 17 Q4 16 Q4 17 Q4 16 Q4 17 Q4 Highlights – Higher ASPU driven by continued successful data monetization strategy – Smartphone penetration continues to
Slide 11: Investment Markets
Investment Markets TELE2
Slide 12: Kazakhstan – Financials
Kazakhstan – Financials Net sales Mobile end-user service EBITDA and EBITDA margin (SEK million) revenue (SEK million) (SEK million) +1% +18% +115% 702 713 712 547 554 198 649 653 495 506 470 160 169 122 92 26% 28% 19% 22% 13% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q
Slide 13: Kazakhstan – Momentum continues
Kazakhstan – Momentum continues Customer base ASPU development 4G population coverage (thousand) +7% +17% 44% 73% LTE LTE-A 44% 44% LTE-A LTE-A Q4 17 Q4 17 Q4 16 Q4 17 Q4 Highlights – Continued customer growth on the back of successful commercial strategies – Higher ASPU level driven by continued cu
Slide 14: Netherlands
Netherlands Reported as a discontinued operation
Slide 15: Netherlands – Financials
Netherlands – Financials Net sales Mobile end-user service EBITDA (SEK million) revenue (SEK million) (SEK million) -6% +30% +203m 1,583 1,577 570 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 1,489 1,485 509 531 1,390 438 451 180 151 101 18 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 -23 Q4 Highlig
Slide 16: Financial Overview
Financial Overview TELE2
Slide 17: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +5% 3,437 13 3,437 9 84 3,398 3,396 47 13 3,271 3,272 3,271 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Sweden Baltics KZ RoW Oth Q4 17 17
Slide 18: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) +5% 1,773 106 56 1,577 49 1,527 1,530 -90 1,527 1,461 1,461 -55 28.8% 25.4% 25.4% 23.0% 23.0% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Sweden Baltics KZ RoW Oth Q4 17 EBITDA margin 18
Slide 19: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) -13% 763 763 35 662 5 662 -85 -47 -9 513 384 377 12.0% 8.3% 10.0% 6.4% 6.1% Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q4 16 Sweden Baltics KZ RoW Oth Q4 17 CAPEX / Sales 19
Slide 20: Free cash flow
Free cash flow Total operations Tele2 Group Development (SEK million) (SEK million) -16% 1,290 66 394 -17 820 -55 167 231 394 231 79 178 -391 -12 Q4 16 EBITDA Interest Taxes Working CAPEX Discontinued One-off Q4 17 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 etc. capital paid operations items 20 Free cash flow =
Slide 21: Operating cash flow
Operating cash flow EBITDA less CAPEX 12 m rolling, SEK million 62 125 4,085 4,242 4,346 3,839 3,377 3,371 3,361 3,468 3,311 3,381 3,432 3,410 -296 -397 -433 -321 -201 -131 -481 -612 -605 -504 -748 -596 -906 -957 -1,133 -1,217 -1,185 -1,686 -1,389 -1,683 -1,845 -1,838 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q
Slide 22: Debt position and financial leverage
Debt position and financial leverage Total operations, Economic net debt to EBITDA 12 m rolling SEK billion Leverage 2.5 12.5 2.0 2.0 10.0 1,88 1.5 1.5 7.5 12.0 10.4 10.3 10.7 1.0 5.0 9.8 2.5 0.5 0.0 0.0 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Dec 2017 Economic net debt Dividend, announced Economic net
Slide 23: Challenger Program run-rate target reached
Challenger Program run-rate target reached • Run-rate target benefits of SEK >1 billion reached Target fulfillment • Accumulated benefits in 2017 of SEK ~900 million • Total investments of SEK ~700 million • New operating model established – Network, IT and Finance Key takeaways • Customer Service c
Slide 24: Guidance 2018
Guidance 2018 TELE2
Slide 25: Financial guidance 2018
Financial guidance 2018 Mobile end-user EBITDA CAPEX service revenue (SEK billion) (SEK billion excluding spectrum) Mid-single digit % growth* 6.5 – 6.8 2.1 – 2.4 Proposed dividend Financial leverage SEK 4 / share 2.0x – 2.5x 25 * Based on continuing operations in constant currencies
Slide 26: Summary
Summary TELE2
Slide 27: Key priorities moving forward
Key priorities moving forward Fearlessly liberate people to live a more connected life Growth from continued data monetization Return Sweden to growth despite headwinds Further leverage our momentum in Baltics and Kazakhstan Prepare to Close mergers in both Netherlands and Sweden Operati
Slide 28: Tele2's Way2Win
Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Baltic Sea Investment IoT Cash Positively Connecting Digital First Winning Challenger Markets Generators Fearless Things our Customer Cost Brands Customers Experience Structure Love Respo
Slide 29: Merger with Com Hem
Merger with Com Hem Transaction update
Slide 30: Tele2 + Com Hem: strategic rationale
Tele2 + Com Hem: strategic rationale 1 Creating a leading integrated operator in Sweden by combining an award-winning mobile network with the fastest national fixed Combination of two network and the widest range of content in the market highly complementary - Mobile and fixed broadband #2 and mar
Slide 31: FCFE 2017 + targeted synergies
FCFE 2017 + targeted synergies SEK ~5 billion 0.6 Tele2 FCFE 2017 continuing operations Com Hem FCFE 2017, including normalized tax(1) 1.2 Post tax run-rate synergies and added interest(2) 3.1 Source: Company filings, Nasdaq. 31 Notes: (1) Calculated as Com Hem reported FCFE 2017 (SEK 1,528m) less n
Slide 32: The End
THE END