Slide 1: Second Quarter 2016
SECOND QUARTER 2016 July 21, 2016 Tele2 AB
Slide 2: Delivering on our long term strategy
Delivering on our long term strategy • Sweden Consumer Postpaid and B2B Large both up mid single digits Value • Netherlands customer intake up significantly Champion • TDC Sweden acquisition announced Focused • Tele2 Sweden awarded best 4G coverage amongst all Nordic operators Technology • Swedish 4
Slide 3: Group highlights – Q2 2016
Group highlights – Q2 2016 % Change % Change Q2 2016 Reported LFL Mobile end-user service revenue 3.35 +1% +2% (SEK billion) Net sales (SEK billion) 6.67 +1% +1% EBITDA (SEK billion) 1.09 -22% -21% 3 LFL is constant currencies and pro forma for Altel
Slide 4: Sweden – Financials
Sweden – Financials Net sales Mobile end-user service EBITDA and EBITDA margin (SEK million) revenue (SEK million) (SEK million) -3% 0% -7% 3 299 1 829 1 889 1 841 1 797 1 821 3 500 3 101 3 100 3 053 3018 2 000 1 200 1 014 60% 3 000 1 800 908 946 894 1 600 1 000 846 50% 2 500 1 400 800 40% 1 200 2 0
Slide 5: Sweden – Improving trends
Sweden – Improving trends Consumer postpaid end-user Share of sales with bundle Geographic coverage services revenue >0.5GB 2G/4G +5% 87% 84% 81% 71% 73% Q2 15 Q2 16 Q4 15 Q1 16 Q2 16 Q2 15 Q2 16 Q2 Highlights – Consumer postpaid mobile end-user service revenue up 5% mainly driven by Comviq market s
Slide 6: Baltics – Financials
Baltics – Financials Net sales Mobile end-user service EBITDA and EBITDA margin (SEK million) revenue (SEK million) (SEK million) +3% +1% +8% 900 832 815 787 600 300 263 60% 767 770 488 257 246 256 800 470 476 468 477 238 500 250 50% 700 600 400 200 40% 500 300 150 31% 32% 32% 32% 33% 30% 400 300 20
Slide 7: Baltics – Data monetization continues
Baltics – Data monetization continues ASPU development Share of 4G capable 4G population coverage smartphones in base +3% 97% 28% 58% 13% Q2 15 Q2 16 Q2 15 Q2 16 Q2 15 Q2 16 Q2 Highlights – Strong data monetization driven by prepaid to postpaid transition and data centric pricing – Data consumption
Slide 8: Netherlands – Financials
Netherlands – Financials Net sales Mobile end-user service EBITDA (SEK million) revenue (SEK million) (SEK million) +4% +1% -179% 1 440 1 512 1 441 1 452 403 1 600 1 390 450 364 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 1 400 400 332 322 336 350 1 200 180 1 000 300 147 250 122 800 130 200 600 150 80 400 100 35
Slide 9: Netherlands – Continuing momentum
Netherlands – Continuing momentum Spontaneous brand awareness Share of total new postpaid Data usage on own network & brand consideration (Memo2) (GfK) 67% 21% 22% 47% 41% 41% 12% 34% 27% Pre-launch Jun 16 Pre-launch Q1 16 Q2 16 Pre-launch Jun 16 Oct 15 4G Awareness Consideration Q2 Highlights – ”Fu
Slide 10: Kazakhstan – Financials
Kazakhstan – Financials Net sales, LFL Mobile end-user service EBITDA, LFL (SEK million) revenue, LFL (SEK million) (SEK million) +8% +19% 700 651 450 396 574 370 383 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 531 400 332 352 600 493 503 350 45 500 300 35 44 400 250 25 300 200 15 25 150 5 13 200 100 -5 100 50 -1
Slide 11: Kazakhstan – Strong performance
Kazakhstan – Strong performance 4G Competitive advantage Customer base, LFL Main bundle offer development (thousands) (Tele2 brand) +17% 77% 990 1290 6 402 5 477 KZT +30% KZT Q2 15 Q2 16 Existing subscribers New subscribers Q2 Highlights – 4G competitive advantage continues to be a key driver of dat
Slide 12: Challenger program on track
Challenger program on track Baseline 2016 target 2018 target Key progress areas in the quarter Simplify 30% 40% 60% Product simplification initiative progressing with % of products harmonized 700 products closed year-to-date on shared platforms Strategic sourcing progressed in several new Discip
Slide 13: Financial Overview
Financial Overview TELE2
Slide 14: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +1% 23 17 3 324 3 422 3 350 3 350 3 282 3 168 4 -17 7 3 324 -8 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Sweden Baltics NL KZ RoW Oth Q2 16 14
Slide 15: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) 1800 90,00% -22% 80,00% 1 599 1600 70,00% 1400 1 393 60,00% 18 1 337 1 393 -62 1 226 50,00% 1200 35 15 1 087 40,00% -263 -49 1000 30,00% 1 087 21,1% 23,5% 19,3% 19,0% 20,00% 800 16,3% 10,00% 600 0,00% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16
Slide 16: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) -28% 60,00% 1 300 1 223 50,00% 1 134 1 154 1 134 1 100 40,00% 0 932 900 -106 820 30,00% 700 20,00% -103 17,6% 17,9% -30 17,2% 13,7% 12,3% -52 500 10,00% -23 820 300 0,00% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q2 15 Sweden Baltics NL KZ RoW
Slide 17: Free cash flow
Free cash flow Total operations Tele2 Group 600 Development (SEK million) (SEK million) 500 400 +152% 300 Working One-off Q2 15 EBITDA Interest etc Taxes capital CAPEX items Q2 16 200 169 139 100 158 -17 139 0 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 -268 -100 -200 -154 -300 -268 -291 -400 -306 17 -32 587 17 F
Slide 18: Debt position and financial leverage
Debt position and financial leverage Economic net debt to EBITDA 12 m rolling SEK billion Leverage 12,5 2,26 2,25 2,00 10,0 11,7 1,75 10.3 9.9 9.4 9.8 1,50 7,5 1,25 1,00 5,0 0,75 2,5 0,50 0,25 0,0 0,00 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Economic net debt Economic net debt to EBITDA 18 Econ
Slide 19: Where we play – Our portfolio
Where we play – Our portfolio Market Country Focus Cash Flow* Sweden Data monetization Strong Established Baltics Data monetization Strong Funded by JV Kazakhstan Integration partner Investment Netherlands Customer growth Negative 19 * Defined as EBITDA – Capex
Slide 20: Financial guidance 2016
Financial guidance 2016 Mobile end-user Mid-single digit service revenue % growth* Net sales (SEK billion) 26 – 27 EBITDA (SEK billion) 4.6 – 5.0 CAPEX (SEK billion) 3.7 – 4.1 20 * Based on LFL which is constant currencies and pro forma for Altel
Slide 21: Summary
Summary TELE2
Slide 22: Key priorities moving forward
Key priorities moving forward Sustain momentum in Sweden Continue to monetize 4G investments Successfully integrate Altel in Kazakhstan Execute on Challenger Program Prepare for closing of TDC Focused Winning Value Step-Change Technology People & Champion Productivity Choices Culture 22
Slide 23: 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 IoT Technology People & acce
Slide 24: The End
THE END