Slide 1: Fourth Quarter 2009
FOURTH QUARTER 2009 9 February 2010
Slide 2: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 2 2010-02-09 Fourth quarter 2009
Slide 3: Highlights Q4
HIGHLIGHTS Q4 • Solid operational result • Nordic – Nordic mobile is returning to revenue growth • Push in postpaid segment according to plan • Russia – Roll-out better than plan – 1 149 000 new customers • Central Europe – Focus on maintaining market share in the Baltic region and cash flow contrib
Slide 4: Market Area Nordics
MARKET AREA NORDICS Mobile • Positive revenue growth • Solid customer intake in postpaid • Secured No1 market share position in prepaid mobile internet in Sweden Market strategy • Further develop and calibrate our increased focus on mobile postpaid 4 2010-02-09 Fourth quarter 2009
Slide 5: Market Area Russia
MARKET AREA RUSSIA Mobile • Record high EBITDA margin in mature regions • Record high net intake – New regions adding 944 000 customers Market strategy • Making the roll-out an efficient machinery • Continue unique distribution strategy 5 2010-02-09 Fourth quarter 2009
Slide 6: Net Intake Russia
NET INTAKE RUSSIA New regions Old regions (In thousands) 1 400 1 200 205 1 000 359 800 600 944 400 742 379 350 200 449 136 105 84 128 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 6 2010-02-09 Fourth quarter 2009
Slide 7: Clear Business Goals Through Evolution
CLEAR BUSINESS GOALS THROUGH EVOLUTION Perceived price leadership/ Subscriber base Defender 17 REGIONS Challenger Retention ARPU protection Customer acquisition Newcomer ARPU development Retention Customer acquisition 20 REGIONS 1,5 – 2 years 2,5 – 3 years >3 years 7 2010-02-09 Fourth quarter 2009
Slide 8: Market Area Western Europe
MARKET AREA WESTERN EUROPE Corporate segment • Important contract wins Market strategy • Investing for the future • New mobile offering in the Netherlands – Full portfolio of mobile services • Combination package “Internet Home & Away” 8 2010-02-09 Fourth quarter 2009
Slide 9: Market Area Central Europe
MARKET AREA CENTRAL EUROPE Mobile • Defend market share and expand when possible • Mobile internet service launched in Lithuania Market strategy • Economic turmoil creates opportunities for a price leader 9 2010-02-09 Fourth quarter 2009
Slide 10: Tele2 Always Provides the Best Deal
TELE2 ALWAYS PROVIDES THE BEST 10 DEAL 2010-02-09 Fourth quarter 2009
Slide 11: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 11 2010-02-09 Fourth quarter 2009
Slide 12: Q4 2009 Group Results
Q4 2009 GROUP RESULTS SEK million Q4 09 Q4 08 Change % Continuing operations, Net Sales 9,889 9,986 -1% EBITDA 2,188 2,162 1% - EBITDA margin (%) 22.1% 21.7% Depreciation and joint venture -888 -964 - Depreciation of net sales (%) 9.0% 9.7% One-off items -64 -19 EBIT 1,236 1,179 Normalized EBIT 1,30
Slide 13: 2009 Full Year Group Results
2009 FULL YEAR GROUP RESULTS SEK million 2009 2008 Change % Continuing operations, Net Sales 39,265 38,272 3% EBITDA 9,185 8,169 12% - EBITDA margin (%) 23,4% 21,3% Depreciation and joint venture -3,647 -3,679 - Depreciation of net sales (%) 9,3% 9,6% One-off items -11 -1 642 EBIT 5,527 2,848 Normal
Slide 14: Taxes
TAXES Taxes in income statement (MSEK) One-Off Normal Reported Q1 -196 -77 -273 Q2 - -324 -324 Q3 862 -444 418 Q4 20 -267 -247 686 -1,112 -426 Taxes in cash flow statement (MSEK) One-Off Normal Reported Q1 -359 -97 -456 Q2 - -124 -124 Q3 - -98 -98 Q4 -52 -153 -205 -411 -472 -883 In 2010: Tele2 forec
Slide 15: "Our" Currencies
“OUR” CURRENCIES YTD Average Fixing rate Currency 09 vs. 08 Dec 09 vs Dec 08 EUR / EUR pegged 10,6 % - 5,3 % RUB - 8,9 % - 9,4 % USD 16,2 % - 7,0 % 15 2010-02-09 Fourth quarter 2009
Slide 16: Net Assets in Foreign Currencies
NET ASSETS IN FOREIGN CURRENCIES EUR EUR pegged RUB Other 30 1,1 1,0 (SEK billion) 6,2 20 7,2 5,9 6,2 10 12,1 9,6 0 Year-end 2008 Q4 2009 Total 25.3 bSEK Total 24.0 bSEK 16 2010-02-09 Fourth quarter 2009
Slide 17: Cash Flow for Q4 2009
CASH FLOW FOR Q4 2009 SEK million Q4 09 Q4 08 OPERATING ACTIVITIES Cash flow from operations, other 2,485 1,930 Taxes paid -205 -120 Changes in working capital 421 127 CASH FLOW FROM OPERATING ACTIVITIES 2,701 1 937 INVESTING ACTIVITIES CAPEX -1,048 -1,233 Cash Flow after CAPEX 1,653 704 Acquisition
Slide 18: Cash Flow for Full Year 2009
CASH FLOW FOR FULL YEAR 2009 SEK million 2009 2008 OPERATING ACTIVITIES Cash flow from operations, other 8,870 8 166 Taxes paid -883 -377 Changes in working capital 1 131 107 CASH FLOW FROM OPERATING ACTIVITIES 9,118 7,896 INVESTING ACTIVITIES CAPEX -4,340 -4,608 Cash Flow after CAPEX 4,778 3,288 Ac
Slide 19: Cash Flow Development
CASH FLOW DEVELOPMENT Cash flow after CAPEX Cash flow from operating activities 2 800 2 400 2 000 (SEK million) 1 600 1 200 800 400 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 19 2010-02-09 Fourth quarter 2009
Slide 20: Group Financial Profile
GROUP FINANCIAL PROFILE Net debt Net debt incl. JV Net debt/ EBITDA 2009 Net debt incl. JV/ EBITDA 2009 25 000 2,5 20 000 2 (SEK million) 15 000 1,5 10 000 1 5 000 0,5 0 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 20 2010-02-09 Fourth quarter 2009
Slide 21: ROCE
ROCE 19,0% 18,0% 17,0% 16,0% 15,0% 14,0% 13,0% 12,0% 11,0% 10,0% 9,0% 8,0% 7,0% 6,0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2007 2008 2009 21 2010-02-09 Fourth quarter 2009
Slide 22: Net Intake per Segment
NET INTAKE PER SEGMENT Mobile Fixed broadband Fixed telephony 1 400 1 200 1 000 (In thousands) 800 600 400 200 0 -200 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 -400 22 2010-02-09 Fourth quarter 2009
Slide 23: Group Customer Stock
GROUP CUSTOMER STOCK Group Customer Stock Group Mobile Customer Stock Mobile Fixed Broadband Fixed Telephony Prepaid voice Postpaid voice Mobile Internet 30 000 25 000 25 000 20 000 20 000 15 000 15 000 10 000 10 000 5 000 5 000 0 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q
Slide 24: Group Q4 2009 Net Sales
GROUP Q4 2009 NET SALES Mobile Fixed broadband Fixed telephony Other 12 000 10 000 (SEK million) 8 000 6 000 4 000 2 000 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 24 2010-02-09 Fourth quarter 2009
Slide 25: Group Q4 2009 EBITDA
GROUP Q4 2009 EBITDA Mobile Fixed broadband Fixed telephony Other Group EBITDA margin 3 000 25% 2 500 24% 2 000 (SEK million) 23% 1 500 22% 1 000 21% 500 0 20% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 -500 19% 25 2010-02-09 Fourth quarter 2009
Slide 26: Mobile Q4 2009 EBITDA
MOBILE Q4 2009 EBITDA Mobile Mobile EBITDA margin 1 800 30% 1 750 1 700 25% (SEK million) 1 650 20% 1 600 1 550 15% 1 500 1 450 10% 1 400 5% 1 350 1 300 0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 26 2010-02-09 Fourth quarter 2009
Slide 27: Swedish Mobile Margin
SWEDISH MOBILE MARGIN Temporary negatively affected by increased costs for hardware related to post- paid customers 38% 36% 34% 32% 30% 28% Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009 Today, cost upfront If we had matched the cost for hardware with instalments from customers 27 2010-02-09 Fourth
Slide 28: MoU and ARPU Development
MoU AND ARPU DEVELOPMENT Russia Sweden 70 240 240 240 60 220 SEK 220 220 50 SEK 200 200 200 40 180 180 30 180 Q1 08Q2 08Q3 08Q4 08Q1 09Q2 09Q3 09Q4 09 Q1 Q2 Q3 Q4 Q2 Q3 Q4 08 08 08 08 09 09 09 ARPU MoU ARPU MoU • Relatively strong development despite challenging economical times – Swedish ARPU being
Slide 29: Fixed Broadband Q4 2009 EBITDA
FIXED BROADBAND Q4 2009 EBITDA Fixed broadband Fixed broadband EBITDA margin 400 25% 20% 300 (SEK million) 15% 200 10% 100 5% 0 0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 29 2010-02-09 Fourth quarter 2009
Slide 30: Fixed Telephony Q4 2009 EBITDA
FIXED TELEPHONY Q4 2009 EBITDA Fixed Telephony Fixed telephony EBITDA margin 500 30% 29% 400 29% (SEK million) 28% 300 28% 27% 200 27% 26% 100 26% 25% 0 25% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 30 2010-02-09 Fourth quarter 2009
Slide 31: Group Q4 2009 EBIT
GROUP Q4 2009 EBIT Mobile Fixed broadband Fixed telephony Other Group EBIT margin 2 000 16% 14% 1 500 12% (SEK million) 1 000 10% 500 8% 6% 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 4% -500 2% -1 000 0% 31 2010-02-09 Fourth quarter 2009
Slide 32: Group Q4 2009 Capex
GROUP Q4 2009 CAPEX Mobile Fixed broadband Fixed telephony Other Capex/sales 1400 14% 1200 12% (SEK million) 1000 10% 800 8% 600 6% 400 4% 200 2% 0 0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 In 2010: Tele2 forecast a CAPEX level in the range of SEK 4,600 – 4,800 million 32 2010-02-09 Fourth quarter 2009
Slide 33: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 33 2010-02-09 Fourth quarter 2009
Slide 34: Concluding Remarks
CONCLUDING REMARKS Top priorities 2010 • Investment year • Targeting a long term mobile EBITDA margin on own infrastructure at least 35 percent • Best Deal – Expected quality – Perceived price leader 34 2010-02-09 Fourth quarter 2009
Slide 35: Q&A
Q&A 35 2010-02-09 Fourth quarter 2009
Slide 36: Appendix A
Appendix A 36 2010-02-09 Fourth quarter 2009
Slide 37: Tele2 Sweden Mobile
TELE2 SWEDEN MOBILE Mobile subscriber Net intake 3 500 140 3 400 120 3 300 100 (In thousands) 3 200 80 3 100 60 3 000 40 2 900 20 2 800 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 37 2010-02-09 Fourth quarter 2009
Slide 38: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) Mobile net sales EBITDA marg. EBIT marg. 2 000 40% 1 950 35% 1 900 30% (SEK million) 1 850 25% 1 800 20% 1 750 15% 1 700 10% 1 650 5% 1 600 0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 38 2010-02-09 Fourth quarter 2009
Slide 39: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) Postpaid voice Prepaid voice Mobile Internet 4 000 3 500 3 000 (In thousands) 2 500 2 000 1 500 1 000 500 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 39 2010-02-09 Fourth quarter 2009
Slide 40: Tele2 Norway Mobile
TELE2 NORWAY MOBILE Mobile subscriber Net intake 480 25 460 20 15 440 (In thousands) 10 420 5 400 0 380 -5 360 -10 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 40 2010-02-09 Fourth quarter 2009
Slide 41: Tele2 Norway Mobile (contd)
TELE2 NORWAY MOBILE (contd) Mobile net sales EBITDA marg. 700 12% 10% 650 8% (SEK million) 600 6% 550 4% 500 2% 450 0% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 41 2010-02-09 Fourth quarter 2009
Slide 42: Tele2 Russia Mobile
TELE2 RUSSIA MOBILE Mobile subscriber Net intake 16 000 1 400 14 000 1 200 12 000 1 000 (In thousands) 10 000 800 8 000 600 6 000 400 4 000 2 000 200 0 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 42 2010-02-09 Fourth quarter 2009
Slide 43: Tele2 Russia Mobile (contd)
TELE2 RUSSIA MOBILE (contd) Mobile net sales EBITDA marg. 2 500 37% 36% 2 000 35% (SEK million) 34% 1 500 33% 32% 1 000 31% 500 30% 29% 0 28% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 43 2010-02-09 Fourth quarter 2009
Slide 44: Tele2 Baltic Mobile
TELE2 BALTIC MOBILE Mobile subscriber Net intake 3 800 80 3 600 60 3 400 40 3 200 20 (In thousands) 3 000 0 2 800 -20 2 600 -40 2 400 -60 2 200 -80 2 000 -100 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 44 2010-02-09 Fourth quarter 2009
Slide 45: Tele2 Baltic Mobile (contd)
TELE2 BALTIC MOBILE (contd) Estonia net sales Lithuania net sales Latvia net sales EBITDA marg. 1200 40% 1000 800 35% (SEK million) 600 400 30% 200 0 25% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 45 2010-02-09 Fourth quarter 2009
Slide 46: Tele2 Croatia Mobile
TELE2 CROATIA MOBILE Mobile subscriber Net intake 850 100 750 80 60 650 (In thousands) 40 550 20 450 0 350 -20 250 -40 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 46 2010-02-09 Fourth quarter 2009
Slide 47: Tele2 Croatia Mobile (contd)
TELE2 CROATIA MOBILE (contd) Mobile net sales EBITDA marg. 400 0% -5% 350 -10% 300 -15% (SEK million) -20% 250 -25% 200 -30% -35% 150 -40% 100 -45% Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 47 2010-02-09 Fourth quarter 2009
Slide 48: Appendix B
Appendix B 48 2010-02-09 Fourth quarter 2009
Slide 49: Sweden Outlook
SWEDEN OUTLOOK • Tele2 will continue to target higher market share in the postpaid segment, which in the longer term will lead to: – Higher customer intake – Improved ARPU – Lower churn Resulting in – Higher customer lifetime value • In the short term, this strategy will lead to higher total acquisi
Slide 50: Russia Outlook
RUSSIA OUTLOOK • Subscriber base should be able to reach18-19 million by YE 2011 • Maintain ARPU growth at 5% by 2011 • EBITDA 2010-2011 – Old regions’ EBITDA margin should evolve in the range of 40-45 percent – New regions’ EBITDA margin should break even 2 years from launch – EBITDA contribution f
Slide 51: Net Debt and Dividend Targets
NET DEBT AND DIVIDEND TARGETS • Shareholder remuneration – “Tele2’s intention over the medium term is to pay a progressively increasing ordinary dividend” • Long-term financial leverage – “Tele2’s longer-term financial leverage, defined as the net debt /EBITDA ratio, should be in line with the indus
Slide 52: Financial Items Q4
FINANCIAL ITEMS Q4 SEK million Q4 09 Q4 08 Change External Net interest expenses -9 -86 77 Exchange rate differences, external -61 -251 190 Other financial items -24 8 -32 -94 -329 235 Exchange rate differences, intragroup -30 -264 234 Financial items -124 -593 469 52 2010-02-09 Fourth quarter 2009
Slide 53: Financial Items 2009
FINANCIAL ITEMS 2009 SEK million 2009 2008 Change External Net interest expenses -358 -400 42 Exchange rate differences, external 3 -344 347 Other financial items -65 -63 -2 -420 -807 387 Exchange rate differences, intragroup -80 -206 126 Financial items -500 -1,013 513 53 2010-02-09 Fourth quarter
Slide 54: The Best Deal
THE BEST DEAL 54 2010-02-09 Fourth quarter 2009