Slide 1: Fourth Quarter and Full-Year Results 2008
FOURTH QUARTER AND FULL-YEAR RESULTS 2008 10 February 2008
Slide 2: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 2 2009-02-10 Fourth quarter and full-year 2008
Slide 3: Highlights Q4 and FY 2008
HIGHLIGHTS Q4 AND FY 2008 • Robust fourth quarter and full year results • Russia – Passing 10.4 million customers – Roll-out of new regions on track • Central Europe – Stable operational development in the Baltic region despite difficult economic environment – Croatia adding more than 230,000 custom
Slide 4: Economic Impact
ECONOMIC IMPACT • Robust Q4 and FY 2008 results, with little or no impact from economic downturn – Difficult to predict to what extent consumer telecom spending will be affected in 2009 • Tele2 is well prepared, both financially as well as operationally, to deal with various scenarios • Economic dow
Slide 5: Financial Highlights Q4 2008
FINANCIAL HIGHLIGHTS Q4 2008 • Robust financial performance in Q4 2008 – Revenue of SEK 10,313 million, up 7 percent – EBITDA of SEK 2,173 million, up 47 percent – Cash flow after capex SEK 704 (-343) million • Low financial gearing with net debt to EBITDA 0.9 times*) • Progressive view on dividend
Slide 6: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 6 2009-02-10 Fourth quarter and full-year 2008
Slide 7: Q4 2008 Group Results
Q4 2008 GROUP RESULTS SEK million Q4 08 Q4 07 Change % Continuing operations, Net Sales 10,313 9,599 7% EBITDA 2,168 1,418 53% - EBITDA margin (%) 21% 15% Depreciation and joint venture -964 -960 - Depreciation of net sales (%) 9% 10% One-off items -19 -417 EBIT 1,185 41 Normalized EBIT 1,251 369 -
Slide 8: FY 2008 Group Results
FY 2008 GROUP RESULTS SEK million FY 08 FY 07 Change % Continuing operations, Net Sales 39,505 40,056 -1% EBITDA 8,175 6,320 29% - EBITDA margin (%) 21% 16% Depreciation and joint venture -3,682 -3,799 - Depreciation of net sales (%) 9% 9% One-off items -1,642 -1,184 EBIT 2,851 1,337 Normalized EBIT
Slide 9: Other Financial Items
OTHER FINANCIAL ITEMS 2008 Full Year 2008 Q4 External fx -110 -171 Intergroup fx -441 -345 Other net -62 9 Total: Other financial items -613 -507 2008 Full Year 2008 Q4 Exchage rate differencies* 3,146 2,491 * recognized directly in shareholders equity 9 2009-02-10 Fourth quarter and full-year 2008
Slide 10: Tax Expectation
TAX EXPECTATION • Reported tax for 2008 amounted to SEK -120 million. Tax payment affecting cash flow amounted to SEK -377 million • In 2009 Tele2 forecast a corporate tax rate of approximately 20 percent excluding one-off items • The tax payment will affect 2009 cash flow by approximately SEK 700-8
Slide 11: Cash Flow for Q4 2008
CASH FLOW FOR Q4 2008 SEK million Q4 08 Q4 07 Operating activities, excl taxes paid 1,930 1,528 Taxes paid -120 -189 Change in WC 127 -367 Cash flow from operating activities 1,937 972 CAPEX -1,223 -1,315 Cash Flow after CAPEX 704 -343 11 2009-02-10 Fourth quarter and full-year 2008
Slide 12: Cash Flow for FY 2008
CASH FLOW FOR FY 2008 SEK million FY 08 FY 07 Operating activities, excl taxes paid 8,166 6018 Taxes paid -377 -1,530 Change in WC 107 -138 Cash flow from operating activities 7,896 4,350 CAPEX -4,608 -5,169 Cash Flow after CAPEX 3,288 -819 12 2009-02-10 Fourth quarter and full-year 2008
Slide 13: Dividend Proposal
DIVIDEND PROPOSAL • Tele2’s intention over the medium term is to pay a progressive ordinary dividend to its shareholders • The board of Tele2 AB has decided to recommend an increase of the ordinary dividend by 11 percent to SEK 3.50 (3.15) per share • The board has also decided to recommend a specia
Slide 14: Group Financial Profile
GROUP FINANCIAL PROFILE 20 000 3 18 000 Net debt incl. JV 16 000 2,5 14 000 2 Net debt 12 000 10 000 1,5 8 000 Net debt/ 6 000 1 EBITDA incl. JV 4 000 0,5 Net debt/ 2 000 EBITDA 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 07 07 07 07 08 08 08 08 • Net debt amounted to SEK 4,952 (5,198) million – 0.6 times FY 2008 E
Slide 15: New Credit Facility
NEW CREDIT FACILITY • 3-year revolving credit facility agreement of SEK 12 billion • The deal was successfully oversubscribed • Tele2 will use this facility to: – Develop its business organically – Refinance its existing revolving credit facilities maturing in November 2009 – Keep an optimal capital
Slide 16: Group Q4 2008 Net Sales
GROUP Q4 2008 NET SALES 12 000 10 000 8 000 Other Fixed broadband 6 000 Fixed telephony 4 000 Mobile 2 000 0 Q3 Q4 Q1 Q2 Q3 Q4 07 07 08 08 08 08 • Mobile net sales SEK 6,502 million, up 14 percent – Russia the main growth driver, up 40 percent • Fixed Broadband net sales SEK 1,637 million, up 8 perc
Slide 17: Group Q4 2008 EBITDA
GROUP Q4 2008 EBITDA 2 500 25,00% Other 2 000 20,00% Fixed broadband 1 500 15,00% 1 000 Fixed telephony 10,00% 500 Mobile 0 5,00% Group EBITDA Q3 Q4 Q1 Q2 Q3 Q4 margin -500 0,00% 07 07 08 08 08 08 • Group EBITDA margin 21 percent – Normal seasonality affecting Q4 2008 – Estonia and Norway affected b
Slide 18: Mobile Q4 2008 EBITDA
MOBILE Q4 2008 EBITDA 2 000 30,00% 1 800 1 600 25,00% 1 400 20,00% Mobile 1 200 1 000 15,00% 800 Mobile EBITDA 600 10,00% margin 400 5,00% 200 0 0,00% Q3 Q4 Q1 Q2 Q3 Q4 07 07 08 08 08 08 • Mobile EBITDA margin 25 percent – Normal seasonal pattern in Q4 2008 mainly driven by Christmas campaigns – One
Slide 19: Fixed Broadband Q4 2008 EBITDA
FIXED BROADBAND Q4 2008 EBITDA 100 8,00% 6,00% 50 4,00% 0 2,00% Q3 Q4 Q1 Q2 Q3 Q4 0,00% Fixed broadband -50 -2,00% 07 07 08 08 08 08 -100 -4,00% Fixed broadband -6,00% EBITDA margin -150 -8,00% -10,00% -200 -12,00% -250 -14,00% • Fixed broadband EBITDA margin 5 percent – Less emphasis on market shar
Slide 20: Fixed Telephony Q4 2008 EBITDA
FIXED TELEPHONY Q4 2008 EBITDA 500 30,00% 450 400 25,00% 350 20,00% Fixed Telephony 300 250 15,00% 200 Fixed telephony 150 10,00% EBITDA margin 100 5,00% 50 0 0,00% Q3 Q4 Q1 Q2 Q3 Q4 07 07 08 08 08 08 • Fixed telephony EBITDA margin 27 percent – Focus on maintaining relative performance – Improve op
Slide 21: Group Q4 2008 EBIT
GROUP Q4 2008 EBIT 2 000 16,00% 14,00% Other 1 500 12,00% Fixed broadband 1 000 10,00% 500 8,00% Fixed telephony 6,00% Mobile 0 Q3 Q4 Q1 Q2 Q3 Q4 4,00% -500 Group EBIT 07 07 08 08 08 08 2,00% margin -1 000 0,00% • Group EBIT margin 12 percent excluding one-off items • Improved operational performanc
Slide 22: Group Q4 2008 Capex
GROUP Q4 2008 CAPEX 1600 16,00% 1400 14,00% 1200 12,00% Other 1000 10,00% Fixed broadband 800 8,00% Fixed telephony 600 6,00% Mobile 400 4,00% Capex/sales 200 2,00% 0 0,00% Q3 Q4 Q1 Q2 Q3 Q4 07 07 08 08 08 08 • Group Capex SEK 1,328 million or 13 percent of net sales – FY 2008 capex/sales ratio 11 p
Slide 23: Financial Summary
FINANCIAL SUMMARY • Overall solid operational performance – No or little impact from difficult economic environment • Mobile and fixed telephony the main profit drivers – Russia developing well, with roll-out of new regions following plan • Fixed broadband seeing good improvement – Still need for fu
Slide 24: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 24 2009-02-10 Fourth quarter and full-year 2008
Slide 25: General Market Trends in Mobile
GENERAL MARKET TRENDS IN MOBILE • Customer intake still robust – More price sensitive and interested in SIM only offers • MoU still growing, with mobile traffic taking a larger share of total minutes carried • Pricing environment for basic voice fairly stable • Good interest in mobile internet servi
Slide 26: Tele2 Sweden Mobile
TELE2 SWEDEN MOBILE 3 400 140 3 300 120 • Revenue growth of 6.5 percent 100 • Slowing customer activity in 3 200 voice services 80 3 100 Mobile subscriber – Lower pre-paid intake Net intake 60 – Renewed interest in SIM only 3 000 40 • 15.000 new mobile internet 2 900 20 user – Total base 170,000 2 8
Slide 27: Tele2 Norway Mobile
TELE2 NORWAY MOBILE 465 25 460 20 455 • Reconfirmed price position 15 450 • Strong net intake adding 10 445 Mobile subscriber 19,000 customers Net intake 440 5 • Tough competition negatively 435 0 affecting ARPU 430 -5 • EBITDA contribution negatively affected by increased sales and 425 -10 Q3 07 Q4
Slide 28: Tele2 Russia Mobile
TELE2 RUSSIA MOBILE 12 000 700 600 • Revenue growth of 40 percent 10 000 • More than 10.4 million 500 8 000 customers 6 000 400 Mobile subscriber • Robust ARPU development Net intake 300 • Successful launch of Krasnodar 4 000 200 region 2 000 100 • Roll-out of new GSM licenses on track 0 0 Q3 07 Q4
Slide 29: Tele2 Baltic Mobile
TELE2 BALTIC MOBILE 3 600 60 • Challenging economic 50 3 550 environment 40 3 500 • Robust revenue 30 3 450 Mobile subscriber development despite 20 3 400 Net intake current economic climate 10 3 350 – Positive currency effect 0 3 300 -10 • Price leadership creating opportunities 3 250 -20 Q3 07 Q4
Slide 30: Tele2 Croatia Mobile
TELE2 CROATIA MOBILE 800 80 • Total customer base more 700 70 than doubled in 2008 600 60 – Improved marketing 500 50 strategy Mobile subscriber 400 40 Net intake – Better quality of service 300 30 – Net adds Q4 2008 200 20 amounting to 76,000 100 10 • Opex affected by higher 0 Q3 07 Q4 07 Q1 08 Q2
Slide 31: Regulation
REGULATION Important topics for Tele2 • Interconnect • Access to fiber (extension of current ULL legislation) • Frequency re-farming 31 2009-02-10 Fourth quarter and full-year 2008
Slide 32: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 32 2009-02-10 Fourth quarter and full-year 2008
Slide 33: Concluding Remarks
CONCLUDING REMARKS • Robust fourth quarter and full year results • Improved total dividend amounting to SEK 5 • Solid liquidity profile after Q1 2009 refinancing • Top priorities in 2009 – Tele2 will continue to focus on cost discipline in all parts of the organization • Tele2 should use its cost ad
Slide 34: Q&A
Q&A 34 2009-02-10 Fourth quarter and full-year 2008