Slide 1: Q3 2006 Financial Report
Q3 2006 Financial Report Lars-Johan Jarnheimer President and CEO
Slide 2: Transitioning our business
Transitioning our business Disposals/withdrawals (resale based) Two years ago Finland fixed Today Baltic fixed 24 Countries UK & Ireland fixed 22 Countries Czech fixed Mobile/MVNO in France fixed and Mobile/MVNO in 13 countries broadband 14 countries Broadband in 10 Broadband
Slide 3: As a result it is changing rapidly
As a result it is changing rapidly Change in customers over the last year Change in revenues over the last year 18 20 -10% +42% -23% 18 16 +31% 16 14 14 R e ve n u e s (S E K b illio n s) 12 C us tom ers (m illions ) 12 10 10 8 8 +149% 6 +109% 6 4 4 2 2 0 0 Mobile Broadband Fixed Telephony Mobile Br
Slide 4: We may further concentrate focus and scope
We may further concentrate focus and scope... Mobile Broadband Fixed Good position in We have gone through Structurally Mobile a learning curve – declining We will seek to different models, LLUB Difficult to forecast further strengthen provisioning, scalability, competitive dynamics Down
Slide 5: Q3 2006 - Key points
Q3 2006 - Key points Overall: Q3 Revenue growth of 11% to SEK 13.7 billion EBITDA SEK 1.8 billion – up sharply on recent quarters SEK 4.3 billion total one time effect of goodwill write down and capital loss related to the SEC acquisition in 2000 (as previously announced) Disposal of Frenc
Slide 6: Nordic
Nordic Tele2 acquired 75.1% of E.ON Bredband in Southern Sweden Continued good performance from Nordic operations with Swedish mobile at 43% EBITDA margin MA NORDIC Denmark, Norway & Sweden Tele2’s corporate MSEK Q3 2006 Q3 2005 business in Sweden Operating revenue* 3,961 3,872 +2% won a numbe
Slide 7: Baltic & Russia
Baltic & Russia Strong net intake of 872,000 customers in the quarter Russia reaching EBITDA margin of 25%, up from -8% one year ago Four GSM MA BALTIC & RUSSIA Estonia, Latvia, Lithuania, Russia & Croatia operators MSEK Q3 2006 Q3 2005 acquired in Operating revenue 1,884 1,129 +67% 482 286 +6
Slide 8: Central Europe
Central Europe “Plusnet” was created with QSC to provide broadband access in Germany Fixed resale in Germany had positive net intake of customers and healthy profitability Strong broadband intake in Austria MA CENTRAL EUROPE Austria, Germany, Hungary & Poland MSEK Q3 2006 Q3 2005 Operating rev
Slide 9: Southern Europe (continuing operations)
Southern Europe (continuing operations) French fixed and broadband business sold to SFR Retained French mobile business MA SOUTHERN EUROPE Italy, Spain, France, Portugal & Switzerland has more than MSEK Q3 2006 Q3 2005 350,000 customers Operating revenue 2,537 2,039 +24% Spanish broadband EBIT
Slide 10: UK & Benelux
UK & Benelux Tele2 is successfully migrating customers in Belgium and the Netherlands from CPS to dual and triple play products Digital Television agreement signed with KPN Netherlands MVNO is EBITDA positive MA UK & BENELUX Belgium, The Netherlands, Luxembourg, Liechtenstein, Alpha Telecom an
Slide 11: Q3 2006 Financial Report - Håkan Zadler, CFO
Q3 2006 Financial Report Håkan Zadler CFO
Slide 12: Financial overview for Q3 2006 – Total Operations
Financial overview for Q3 2006 – Total Operations Q3 2006 Difference to Q3 2005 Revenues (MSEK) 13,749 1,368 11% EBITDA (MSEK) 1,784 -89 CAPEX (MSEK) 1,200 483 Customer Net Additions (thousands) 435 -275 12
Slide 13: Financial overview for Q3 2006 – Discontinued Operations
Financial overview for Q3 2006 – Discontinued Operations Q3 2006 Difference to Q3 2005 Revenues (MSEK) 1,024 -289 -22% EBITDA (MSEK) 105 -104 CAPEX (MSEK) 32 13 Customer Net Additions (thousands) -139 -11 13
Slide 14: Financial overview for Q3 2006 – Continuing Operations
Financial overview for Q3 2006 – Continuing Operations Q3 2006 Difference to Q3 2005 Revenues (MSEK) 12,725 1,657 15% EBITDA (MSEK) 1,679 15 CAPEX (MSEK) 1,168 464 Customer Net Additions (thousands) 574 -264 14
Slide 15: Operating Revenue per Segment
Operating Revenue per Segment Sales - Fixed telephony resale Sales - Broadband resale -17% year-on-year +78% year-on-year (MSEK) (MSEK) 10 000 600 500 8 000 400 6 000 300 4 000 200 2 000 100 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 Sales - Direct access & LLUB Sales - Mobile +206%
Slide 16: Customer net intake ('000)
Customer net intake (‘000) Customer net intake Customer net intake 1400 Mobile 120 Broadband resale 1200 100 1000 80 800 60 600 400 40 200 20 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 Customer net intake Customer net intake 400 Fixed telephony reasale 120 Direct access & LLUB
Slide 17: ARPU per Segment
ARPU per Segment (SEK) Q3 2005 Q3 2006 Mobile 131 120 Fixed telephony 141 137 Broadband resale 270 230 Direct access & LLUB 450 627 17
Slide 18: ARPU - Group
ARPU - Group Q3 2005 Q2 2006 Q3 2006 (SEK) 145 144 143 ARPU slightly down at 143 (145) Dilution from high growth in low ARPU regions, particularly Russia, offset by increased intake of broadband customers 18
Slide 19: Sales development
Sales development (MSEK) Sales development per segment 800 600 400 200 0 -200 -400 -600 -800 ∆ Q1-06 ∆ Q2-06 ∆ Q3-06 Mobile Direct access & LLUB Fixed telephony resale Broadband resale 19
Slide 20: EBITDA development
EBITDA development EBITDA development per segment (MSEK) 500 400 300 200 100 0 -100 -200 -300 ∆ Q1-06 ∆ Q2-06 ∆ Q3-06 Mobile Direct access & LLUB Fixed telephony resale Broadband resale 20
Slide 21: P&L impact from Broadband growth
P&L impact from Broadband growth (inclusive discontinued operations) Q2 2006 Q3 2006 P&L impact from Broadband growth (MSEK) 300 250 Net intake Broadband resale (’000) 72 39 Direct access and LLUB (’000) 57 113 Acquisition cost Broadband resale (SEK) 1,500 2,050 Direct access and LLUB (SEK) 3,600 1,
Slide 22: EBITDA and Net Intake per Segment
EBITDA and Net Intake per Segment FIXED TELEPHONY RESALE BROADBAND RESALE Group EBITDA and Net Intake Group EBITDA and Net Intake (MSEK) ('000) (MSEK) ('000) 800 600 0 100 700 400 -50 200 600 80 -100 0 500 60 -200 -150 400 -400 40 300 -200 -600 200 -800 -250 20 100 -1 000 -300 0 0 -1 200 Q2 Q3 Q4 Q1
Slide 23: EBITDA – CAPEX
EBITDA – CAPEX EBITDA - CAPEX EBITDA - CAPEX Fixed telephony resale Broadband resale 600 0 500 -50 400 -100 (MSEK) (MSEK) -150 300 -200 200 -250 100 -300 0 -350 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA - CAPEX EBITDA - CAPEX Direct access & LLUB Mobile telephony 0 700 -50
Slide 24: Mobile sales +32%
Mobile sales +32% Mobile Mobile Group Sales Group EBITDA and Net Intake (MSEK) ('000) (MSEK) 1 600 6 000 1 200 1 400 1 000 1 200 4 500 800 1 000 3 000 800 600 600 400 1 500 400 200 200 0 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA Net intake EBITDA impact from France & Croatia
Slide 25: Russia sales +182%
Russia sales +182% Net intake of 711,000 customers to a total of 5,520,000 customers ARPU of 52 SEK in Q3 2006 compared to 43 SEK in Q3 2005 EBITDA margin 25% (-8%) Russia Russia (MSEK) Sales EBITDA and Net Intake (MSEK) ('000) 900 250 800 800 700 200 700 600 150 600 500 500 100 400 400 50 300
Slide 26: Baltic & Croatia Mobile sales +31%
Baltic & Croatia Mobile sales +31% Mobile roll-out in Croatia – 104 MSEK Baltic & Croatia Baltic & Croatia Sales - mobile (MSEK) EBITDA and Net Intake - mobile ('000) (MSEK) 1 200 400 350 350 300 1 000 300 250 250 800 200 200 150 600 150 100 100 400 50 50 0 0 200 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3
Slide 27: Sweden Mobile sales +1%
Sweden Mobile sales +1% Sweden Sweden Sales - mobile (MSEK) EBITDA and Net Intake - Mobile ('000) (MSEK) 1 000 80 2 000 60 800 40 1 500 600 20 0 1 000 400 -20 500 200 -40 0 -60 0 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA Net intake EBITDA-margin stable at 43% Payment to Sven
Slide 28: Nordic excl. Sweden Mobile sales +28%
Nordic excl. Sweden Mobile sales +28% Nordic excl. Sweden Nordic excl. Sweden Sales - mobile EBITDA and Net Intake - mobile (MSEK) (MSEK) ('000) 800 50 100 40 80 30 600 60 20 40 10 400 0 20 -10 0 -20 200 -20 -30 -40 -40 0 -50 -60 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA Net int
Slide 29: Southern Europe Mobile sales
Southern Europe Mobile sales Southern Europe Southern Europe Sales - mobile (MSEK) EBITDA and Net Intake - mobile (MSEK) ('000) 350 0 120 300 100 -50 250 80 -100 200 60 150 -150 40 100 -200 50 20 0 -250 0 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA Net intake More than 350,000 M
Slide 30: UK & Benelux Mobile sales +9%
UK & Benelux Mobile sales +9% UK & Benelux UK & Benelux (MSEK) Sales - mobile (MSEK) EBITDA and Net Intake - mobile ('000) 600 120 70 60 500 100 50 40 400 80 30 300 60 20 10 200 40 0 -10 100 20 -20 0 0 -30 Q2 Q3 Q4 Q1 Q2 Q3 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 2005 2006 EBITDA Net intake 30
Slide 31: Net debt
Net debt Net debt (MSEK) 18 000 2,8 15 000 2,4 2,0 12 000 1,6 9 000 1,2 6 000 0,8 3 000 0,4 0 0,0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2005 2006 Net Debt Net Debt to EBITDA (Q3-06 excludes proceeds from divested operations in France, which will have a Net Debt effect of 3,3 billion SEK) 31
Slide 32: Financial impact of disposal of French fixed and broadband
Financial impact of disposal of French fixed and broadband The main part of the group's goodwill is associated with the acquisition of SEC in 2000. Payment was made in Tele2 shares at a time where both Tele2 and SEC, in common with most TMT companies at that time, had historically high valuations.
Slide 33: Financial comments on the coming quarters
Financial comments on the coming quarters Previous guidance for the full year 2006, including France was: – Revenue growth of between 11–14% – EBITDA in the range SEK 5,5–6,0 billion – Capex in the range SEK 5,5–6,0 billion If the assumption is made that the fixed telephony and broadband operati
Slide 34: Don't forget
Don’t forget VISIT WWW.TELE2.COM Conference call today at 16.00 CET WEBCAST AT WWW.TELE2.COM Q4 2006: February 2007 CONTACTS Lars-Johan Jarnheimer, Telephone: + 46 (0)8 562 640 00 President and CEO, Tele2 AB Håkan Zadler, Telephone: + 46 (0)8 562 640 00 CFO, Tele2 AB Dwayne Taylor, Telephone: +