Slide 1: Third Quarter
THIRD QUARTER October 17, 2019
Slide 2: Group highlights
Group highlights SEK billion (YoY growth) Q3 2019 Jan-Sep 2019 Guidance End-user service revenue 5.1 (0%) 15.2 (0%) ~0% Underlying EBITDA ex. IFRS 16 2.5 (5%) 7.0 (4%) Mid-single digit Capex ex. spectrum and 0.5 1.7 2.3-2.6 leases Changed 2 Organic is constant currencies and including Com Hem profor
Slide 3: Tele2 is becoming a true integrated challenger
Tele2 is becoming a true integrated challenger — Increasing penetration of FMC bundle benefits, now reaching 141k FMC-customers Win Swedish household — Mobile pricing as a new growth driver – first step taken with frontbook adjustment through FMC — Executing more-for-more strategy with Tele2 rebrand
Slide 4: Growth and cost initiatives drive cash flow
Growth and cost initiatives drive cash flow FY2018 Starting Point – proforma* 1 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 mid-term End-user service revenue: SEK 20.3bn d
Slide 5: Sweden
SWEDEN TELE?
Slide 6: Sweden Consumer – Operational highlights
Sweden Consumer – Operational highlights RGUs & net intake – core and legacy services ASPU year-on-year growth (thousands, proforma) (%, proforma) +24 +28 +20 +34 +35 5% 658 661 663 664 655 +1 +3 +3 +2 +1 3% 814 827 839 852 863 1% -25 -81 1.0% +13 +13 +12 -49 +13 -12 +11 -11 351 325 313 298 286 -1%
Slide 7: Sweden Consumer – Financials
Sweden Consumer – Financials End-User service revenue Underlying EBITDA ex. IFRS 16 and margin (SEK million, proforma, year-on-year growth %) (SEK million, proforma) +4% +5% +3% +2% +3% +4% 1,601 474 464 454 1,538 475 466 -4% 1,428 1,470 1,447 +0% +0% -1% -3% 601 613 618 627 632 +11% +10% +8% +5% +5
Slide 8: Pricing as a new growth driver
Pricing as a new growth driver – A gradual process underpinned by increased customer value Tele2 pricing strategy Illustration of Tele2’s pricing cycle Award-winning network and products Q1 Q2 Q4 Premium positioned leading brands Q3 Q3 Year 1 Year 2 Proactively adding customer value through more-for
Slide 9: Fixed products & pricing
Fixed products & pricing – Network and product enhancements together with more-for-more benefits create increased customer value Product and service improvements Broadband frontbook pricing changes during Q3 2019 Network improvements Tier Old price New price Change – Rollout of DOCSIS 3.1 - 67% comp
Slide 10: Mobile products & pricing
Mobile products & pricing – Updated Tele2 Residentials mobile portfolio creates customer value and backbook pricing potential Product and service improvements Tele2 Mobile frontbook pricing changes Q3 2019 Premium offerings Old price New price Change – Awarded best mobile network in Sweden in the P3
Slide 11: Sweden Business – Operational highlights
Sweden Business – Operational highlights Mobile RGUs Mobile ASPU End-user service revenue (thousands, proforma) (SEK, proforma) (SEK million, proforma, year-on-year growth %) +4% -8% -2% -1% -2% -4% -4% 881 889 896 913 916 180 183 177 246 280 264 168 166 276 257 -3% +4% +1% +5% +4% 307 296 295 276 2
Slide 12: Sweden Business – Financials
Sweden Business – Financials Revenue Underlying EBITDA ex. IFRS 16 and margin (SEK million, proforma) (SEK million, proforma) -2% +4% 450 408 424 35% 137 168 400 378 152 170 179 346 335 30% 504 446 350 352 375 337 300 26% 25% 25% 250 200 20% 20% 150 19% 18% 1,026 1,062 1,033 1,008 984 100 15% 50 0 1
Slide 13: Sweden overview
Sweden overview End-User service revenue Underlying EBITDA ex. IFRS 16 and margin Underlying EBITDAaL - Capex* and cash (SEK million, proforma, year-on-year growth %) (SEK million, proforma) conversion, rolling 12m (SEK million, proforma) +4% 5,417 5,348 5,319 5,287 5,295 -1% -1% -1% -2% -1% 1,947 2
Slide 14: Network audit in Sweden concluded
Network audit in Sweden concluded Conclusions following the audit Change program already started — Excellent Radio Access Network, as shown by — Reorganization of the Technology unit conducted recent P3 benchmarks this summer — The consolidation of the Swedish NOC to our HQ — Recommended core networ
Slide 15: Baltics
BALTICS
Slide 16: Baltics – Operational highlights
Baltics – Operational highlights RGUs & net intake – mobile services ASPU year-on-year growth (thousands) (%) +49 -35 -14 +41 +28 11.3% 9.4% 8% 8.2% 1,869 1,861 1,857 1,875 1,902 3% -2% 964 951 946 961 963 -7% 450 437 431 439 440 -12% Q3 ’18 Q4 ’18 Q1 ’19 Q2 ’19 Q3 ’19 Q3 ’18 Q4 ’18 Q1 ’19 Q2 ’19 Q3
Slide 17: Baltics – Financials
Baltics – Financials End-User service revenue Underlying EBITDA ex. IFRS 16 and margin Underlying EBITDAaL - Capex* and cash (SEK million, year-on-year growth %) (SEK million) conversion, rolling 12m (SEK million) +10% +6% 1,400 100% +6% 1,255 +3% +7% +7% 1,165 1,205 1,200 1,080 1,115 90% 500 80% 43
Slide 18: Financial overview
FINANCIAL OVERVIEW
Slide 19: Group results Q3 2019
Group results Q3 2019 SEK million Q3 2019 Q3 2018 Comments Revenue 6,852 5,062 1 Record high underlying EBITDA margin of 41% (36% excluding Underlying EBITDA 2,783 1,617 IFRS16) Margin (%) 1 41% 32% 2 Items affecting comparability mainly include cost related to Items affecting comparability 2 -75 -1
Slide 20: Group cash flow Q3 2019
Group cash flow Q3 2019 SEK million Q3 2019 Q3 2018 Comments Underlying EBITDA, continuing operations 2,783 1,617 1 Capex paid lower year-on-year as Q3 2018 included capex related to assets in Kazakhstan and the Netherlands which are Items affecting comp., continuing operations -75 -189 now divested
Slide 21: Synergy update
Synergy update Benefit in quarter Run-rate Target (Annualized at end of quarter) (Run-rate at end of year 3) Opex synergies (SEK million) 150 650 900 Revenue Almost 50% of overlapping customer base on FMC benefits synergies Initiated more-for-more strategy in the Tele2 brand with price as a new grow
Slide 22: Financial guidance
Financial guidance End-user service revenue Underlying EBITDAaL CAPEX2 unchanged unchanged 2019, changed Mid-term Low-single digit Mid-single digit 2.8-3.3 ambition growth growth Mid-single digit 2019 Around 2018 level 2.3-2.6 growth1 – FMC cross-sell and monetization – Growth in the mid-term driven
Slide 23: Leverage at 2.6x
Leverage at 2.6x Economic net debt to underlying EBITDAaL Comments (SEK billion) 27.8 2.8 2.8 – Economic net debt to underlying EBITDAaL 2.6x at end of 2.8 September, up from 2.4x at end of July due to distribution 27.8 of extraordinary dividend of SEK 6.00 per share (SEK 4.1 2.8 billion) 2.6 2.6 –
Slide 24: To conclude...
TO CONCLUDE...
Slide 25: Key priorities moving forward
Key priorities moving forward Reignite end-user service revenue growth in Sweden — B2C: Win the Swedish household through FMC — FMC benefits to be extended to all brands, addressing the remaining overlap — Establish Tele2 as a household brand through the family offer — Monetize increased customer sa
Slide 26: Thank you!
THANK YOU! TELE?
Slide 27: Tele2
TELE