Slide 1: Fourth Quarter 2015
FOURTH QUARTER 2015 January 28th, 2016 Tele2 AB
Slide 2: Highlights from the quarter
Highlights from the quarter Mobile-end user service revenue continues to grow Value Solid quarter for Swedish consumer postpaid Champion Data monetization particularly strong in the Baltic region Focused Commercial launch of our Dutch 4G-only network Technology 4G coverage now at 90% in al
Slide 3: Monetization of data is our key priority
Monetization of data is our key priority Year-on-year growth, Tele2 Group Mobile end-user service Average data usage Mobile EBITDA revenue per mobile customer** +2% -4% +94% (+5%*) (-4%*) *FX adjusted 3 **Average data usage excludes traffic on MVNO networks.
Slide 4: Continued growth in mobile end-user service revenue
Continued growth in mobile end-user service revenue Year-on-year growth for mobile end-user service revenue, Tele2 Group Average +6.8% 9.6% 8.7% 8.1% 7.4% 6.5% 6.7% 6.7% 6.6% 5.2% 2.4% Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 4
Slide 5: Continued growth in mobile end-user service revenue FX adjusted
Continued growth in mobile end-user service revenue FX adjusted Year-on-year growth for mobile end-user service revenue, Tele2 Group Average +5.9% 7.7% 6.8% 5.9% 6.0% 5.4% 5.6% 5.2% 4.8% 3.6% 3.3% Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 5
Slide 6: Market year-on-year development
Market year-on-year development Mobile end-user service revenue* Data usage growth (Excluding MVNO networks) Sweden: +121% +0.3% Estonia: +10% Germany: Kazakhstan: -12% -10% (25% ex FX) Latvia: +1% Netherlands: +4% Lithuania: +8% Austria: -7% Croatia: Q4 14 Q4 15 +1% Sweden Netherlands Kazakhstan CE
Slide 7: Tele2 Sweden
Tele2 Sweden Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q4 (SEK million) YTD (SEK million) -2% +8% +6% 3 373 3 299 1,000 946 4,500 60% 60% 880 3 844 900 4,000 50% 3 612 50% 800 3,500 700 3,000 40% 40% 600 2,500 500 29% 30% 29% 30% 30% 400 26% 2,000 1,500 20% 20% 300 1,
Slide 8: Tele2 Sweden
Tele2 Sweden Churn Tele2 brand Mobile net intake Most satisfied customers award (thousands) -20% 27 30 20 10 0 -10 Q4 14 Q4 15 -20 -30 -40 -50 Q4 14 Q4 15 -60 -58 Q4 Highlights Tele2.0 provides more flexibility, transparency and simplicity which has led to increased loyalty and lower churn Custo
Slide 9: Tele2 Baltics
Tele2 Baltics Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q4 (SEK million) YTD (SEK million) +9% -3% +2% 745 815 300 265 257 1200 60% 60% 250 1000 50% 973 989 50% 200 800 40% 40% 36% 33% 150 32% 600 30% 32% 30% 100 400 20% 20% 50 200 10% 10% 0 0%0 0% Q4 14 Q4 15 Q4 14 Q
Slide 10: Tele2 Netherlands
Tele2 Netherlands Net sales EBITDA and EBITDA margin EBITDA and EBITDA margin (SEK million) Q4 (SEK million) YTD (SEK million) +6% -80% -51% 1 512 200 173 1000 25% 903 60% 1 432 180 900 50% 160 800 20% 140 700 40% 120 600 15% 100 12% 500 445 30% 80 400 10% 20% 60 35 300 17% 40 200 5% 10% 20 2% 100 8
Slide 11: Tele2 Netherlands
Tele2 Netherlands Outdoor population coverage Spontaneous Brand Awareness Share of switchers, postpaid now at 95% (Memo2) handset segment (GFK) 28.0% 24.6% 44% 43% 16.7% 39% 36% 34% 34% 45 Nov 1547 46 48 49 Dec50 15 51 Jan-Oct 15 Nov 15 Dec 15 Q4 Highlights 4G Network came out on top in 3 out of 6
Slide 12: Tele2 Kazakhstan
Tele2 Kazakhstan Net sales Q4 EBITDA and EBITDA margin Q4 EBITDA and EBITDA margin (KZT million) (KZT million) YTD (KZT million) +35% -97% +21% 12 687 500 1600 20% 20% 450 433 1400 1 372 18% 9 432 400 15% 1200 1 133 16% 350 14% 10% 1000 300 12% 250 5% 800 5% 10% 200 600 8% 150 0% 0% 400 6% 100 4% 50
Slide 13: Financial Overview
Financial Overview TELE2
Slide 14: Financial highlights
Financial highlights Q4 2014 Q4 2015 % Change Net sales (SEK billion) 6.9 6.9 +1% Mobile end-user service revenue 3.2 3.3 +2% (SEK billion) EBITDA (SEK billion) 1.4 1.3 -5% CAPEX (SEK billion) 1.0 1.2 +19% 14
Slide 15: Financial highlights
Financial highlights FY 2014 FY 2015 % Change Net sales (SEK billion) 26.0 26.9 +3% Mobile end-user service revenue 12.5 13.2 +6% (SEK billion) EBITDA (SEK billion) 5.9 5.8 -3% CAPEX (SEK billion) 3.5 4.2 +23% Ordinary dividend 2.2 2.4 +10% (SEK billion) 15
Slide 16: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +2% 102 3,205 3 422 3 282 -27 3 205 3 184 3 324 29 -12 3 282 3 205 -15 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Sweden Baltics Netherlands Kazahkstan RoW Q4 15 16
Slide 17: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) -5% 1800 90.00% 80.00% 1600 1 599 70.00% 1 412 1 428 1 393 66 1400 1 337 60.00% -8 27 50.00% 1 412 1,412 1200 -138 -22 1 337 40.00% 1000 30.00% 20.5% 21.9% 21.1% 23.5% 19.3% 20.00% 800 10.00% 600 0.00% Q4 14 Q1 15 Q2 15 Q3 15 Q4 1
Slide 18: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) +19% 43 90.00% 76 1,300 1 223 80.00% 1 223 1 134 70.00% 46 1,100 1 030 20 60.00% 8 938 932 50.00% 900 1 030 40.00% 700 30.00% 20.00% 500 15.0% 17.2% 17.6% 14.4% 13.7% 10.00% 300 0.00% Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q4 14 Sweden Balt
Slide 19: Free cash flow
Free cash flow Total operations Tele2 Group Development (SEK million) (SEK million) 600 -222% 500 238 400 -75 31 300 238 -77 34 200 169 -136 100 -29 0 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 -100 -96 -291 -200 -277 -300 -268 Q4 14 EBITDA Interest etc Taxes Working capital CAPEX Discontinued One-off items Q4 1
Slide 20: Debt position and financial leverage
Debt position and financial leverage Pro forma net debt / EBITDA 12 m rolling Financial SEK billion leverage 15.0 2.0 12.5 1.5 2.4 10.0 10.1 9.6 9.7 7.5 1.0 7.9 5.0 0.5 2.5 3.3 0.0 0.0 Dec 2014 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Pro forma net debt Dividend, announced Pro forma net debt to EBITDA 20
Slide 21: Challenger Program Update
Challenger Program Update TELE2
Slide 22: Challenger Program progressing
Challenger Program progressing 2014 2015 2018 Simplify 30% 30% 60% % of products harmonized on shared platforms Discipline 40% 67% 80% % of spend strategically sourced & procured Consolidate 0% 4% 20% % reduction in IT OpEx as share of revenue Transform 12% 15% 25% % of staff in shared operations 22
Slide 23: Initiatives commenced in 2015
Initiatives commenced in 2015 Product Harmonization Simplify Application Rationalization ICB & Roaming Discipline Return on Marketing Investment Field Force outsourcing Consolidate Transmission optimization Customer Service offshoring Transform Finance back office nearshoring Germa
Slide 24: Challenger Program roadmap
Challenger Program roadmap 2014 2015 2016 2017 2018 Investment phase Benefits phase Q4 24
Slide 25: Financial Guidance
Financial Guidance TELE2
Slide 26: Financial guidance 2016
Financial guidance 2016 Mobile end-user EBITDA service revenue (SEK billion) Mid-single digit % growth 4.6 – 5.0 Net sales CAPEX (SEK billion) (SEK billion) 26 – 27 3.7 – 4.1 26
Slide 27: Summary
Summary TELE2
Slide 28: Key priorities moving forward
Key priorities moving forward Maximize our dual brand strategy strength in Sweden Accelerate next phase of Netherlands commercial launch JV integration in Kazakhstan Commercialize and monetize 4G investments in Baltics, Croatia Continuing execution on the Challenger Program New Leadershi
Slide 29: 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 M2M & IoT Technology People
Slide 30: The End
THE END