Tele2 Ab Class A · OMXSTO:TEL2_A
Tele2 Ab Class A — Investor Day (2021)
75 slides from Tele2 Ab Class A's investor day presentation, 2021
Slide 1: Tele2 Capital Markets Day
Tele2 Capital Markets Day
Slide 2: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 3: Today's Presenters
Today’s Presenters Kjell Johnsen Samuel Skott President and CEO, Tele2 Group EVP, Chief Commercial Officer Karin Svensson Yogesh Malik EVP, People and Change EVP, CTIO Mikael Larsson Stefan Trampus Group CFO EVP, Tele2 B2B
Slide 4: Smartest Telco in the World
SMARTEST TELCO IN THE WORLD Enabling a society of unlimited possibilities
Slide 5: Our medium term ambition: Leading Telco
Our medium term ambition LEADING TELCO In the Nordic & Baltic region 3-year horizon Superior Best industry High employee Lead in customer experience shareholder return engagement sustainability Our growth strategy Reignite growth Recognized leader Continued growth in Sweden Consumer in Sweden B2B &
Slide 6: A Model for Superior Shareholder Remuneration
A Model for Superior Shareholder Remuneration Low single digit growth in EUSR Mid single digit growth in underlying EBITDAaL Capex excl spectrum and leases of SEK 2.8-3.3bn Strong Operating Cash Flow Even stronger Equity Free Cash Flow Superior Shareholder Remuneration
Slide 7: Leading Brands Capturing Value From Full Market
Leading Brands Capturing Value From Full Market Dual Brand Strategy to Drive Both Price and Volume Covering the Whole Consumer Market Willingness to pay premium Techies Explorers Collecting for convenience Sceptics Collectors Do-gooders Status seekers FOMOs Price hunters
Slide 8: Clear Focus on Each Segment in Sweden B2B
Clear Focus on Each Segment in Sweden B2B SME Large Public Ambition Ambition Ambition Take back market share by offering Improve Large private segment Maintain and defend our Public Segment simplified packages and bundling's based profitability by increasing higher margin asset by carefully choosing
Slide 9: High Exposure to One of the Most Attractive Telco Markets in Europe
High Exposure to One of the Most Attractive Telco Markets in Europe Market structure – Three player markets Keeping or growing market share Tele2 mobile service revenue market share EE 45% LV 40% LT 35% 30% Rational FMC 25% – Only more-for-more FMC playbook 20% – Tele2’s mobile-centric bundle of mob
Slide 10: Strong Track Record of Growth, Set to Continue
Strong Track Record of Growth, Set to Continue EUSR Development Organic Mobile ASPU Growth 15% 1,800 EUSR (MSEK) 10% 5% 1,600 Lithuania 0% Latvia -5% 1,400 Estonia -10% 1,200 -15% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020 1,000 Lithuania Latvia 8
Slide 11: Key Strategic Initiatives
Key Strategic Initiatives Consolidate brands in Sweden Continue growth in the Baltics and Tele2 to be the leading premium brand prepare for FMC Continue the Comviq success story Consolidate and decommission IT Balanced growth through volume and value systems over next 6 quarters Invest for growth in
Slide 12: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 13: Three key drivers of B2C growth
Three key drivers of B2C growth Next phase of convergence with two leading brands covering the full market Value led connectivity strategy supported by continued volume growth Stable TV & Play development through continued modernization
Slide 14: Next Phase of Convergence
NEXT PHASE OF CONVERGENCE
Slide 15: FMC 1.0: All About Building Loyalty in Overlapping Base
FMC 1.0: All About Building Loyalty in Overlapping Base … to maintain value & product Successful FMC uptake in Building further loyalty in hold of existing Fixed & Mobile overlapping base base customers FMC uptake at 80% of the Positive churn reduction effects The FMC base >x2 the product hold overl
Slide 16: Next Phase of FMC: A Truly Convergent Customer Experience
Next Phase of FMC: A Truly Convergent Customer Experience A truly convergent customer experience Tapping into a much larger cross- & upsell covering the full household needs opportunity Sizing the potential for FMC growth in the consumer business Across brands; Thousand, Households (HHs) Unified Cus
Slide 17: One Converged Premium Brand to Unlock FMC Potential
One Converged Premium Brand to Unlock FMC Potential The new Tele2 Key milestone in journey of Unlimited possibilities – Two of Sweden’s strongest brands combined, creating one Unlimited Internal Transformation Customer Experience premium brand – Enhanced and simplified customer experience with super
Slide 18: Value Led Connectivity Strategy
VALUE LED CONNECTIVITY STRATEGY
Slide 19: Value Creation Through More-For-More Pricing
Value Creation Through More-For-More Pricing Increasing demands Pricing cycle Increased ASPU Customers request higher broadband Improvements and upgrades to justify higher prices Consequently, more customers are having speeds and mobile data allowances better services paying higher prices Tele2 Mobi
Slide 20: Supported By Continued Volume Growth
Supported By Continued Volume Growth Cross-sell opportunity in Continue momentum in Continue momentum in next phase of FMC Comviq postpaid growth Broadband growth – Drive volume through accelerated cross- and upsell in – Maintain strong volume growth balanced with more- – Maintain growth after Com H
Slide 21: Modernizing TV & Play
MODERNIZING TV & PLAY
Slide 22: Strong and Stable Position in the TV Market
Strong and Stable Position in the TV Market Market growth Is coming We have a strong position Sustain profitability despite from SVOD, but Pay-TV is and capabilities EUSR decline here to stay – Stable household penetration of digital Pay-TV (DTV) – Large TV customer base for cross- and upselling – V
Slide 23: 2020 Was an Eventful Year With Start of 2021 Showing Signs of Stabilization
2020 Was an Eventful Year With Start of 2021 Showing Signs of Stabilization 2020 was an eventful year But we also laid the foundation for modernizing Stabilization is in sight out TV business – DTV ASPU year-on-year development trending towards TV4 conflict late 2019 pre-COVID levels Digitalization
Slide 24: Further Stabilization Through Continued Modernization Based on Aggregation Business Model
Further Stabilization Achieved Through Continued Modernization Based on Aggregation Business Model Evolution of TV & Play Future TV & Play Experience Next Gen TV Hub and App centric proposition combined in renewed viewing experience TiVo Cater to linear viewing habits Next Gen STB TV Hub Modernize S
Slide 25: Three Key Drivers of B2C Growth
Three Key Drivers of B2C Growth Taking the next step in FMC journey by accelerating cross- and upsell, now with our fully converged premium brand Tele2 and our simple, digital brand Comviq Investing to meet increasing market demand for connectivity and continue to generate value through our more-for
Slide 26: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 27: Introducing a Deep Dive Into Tele2 B2B
Introducing a Deep Dive Into Tele2 B2B Updated B2B Financial Change Strategy Ambition
Slide 28: Strategic Direction
Strategic Direction Recognized leader in Sweden B2B & IoT Utilization of Digitalization & Segmented Operational Tele2 assets communication customer focus excellence partner Objective to achieve long-term profitable growth
Slide 29: Strong Capabilities and Assets
Strong Capabilities and Assets We have been able to retain strong capabilities and assets even if we have had challenges in recent years Market position Mobile #2 in Sweden Portfolio Fixed #2 in Sweden H&A #1 in Sweden IoT Top 10 Europe Infrastructure Competence
Slide 30: Digitalization and Communication Partner
Digitalization and Communication Partner MARKET NEW NEW BEHAVIOR & POLITICAL TRENDS TECHNOLOGY EXPECTATIONS AMBITIONS Collaboration Productivity Workplace Agility Insights Sustainability Employee Health CUSTOMER NEEDS OUR To be the trusted digitalization & AMBITION communication partner OUR We want
Slide 31: Tele2's Role in a Digitalized Society
Tele2’s Role in a Digitalized Society Digitalization in the market accelerates the need of adoption among our customers, where Tele2 takes clear steps to meet those needs Workplace agility & Digitalization & efficiency collaboration improvement in public New technology Sustainability, Productivity &
Slide 32: Segmented Customer Focus
Segmented Customer Focus SME Large Public Ambition Ambition Ambition Take back market share by offering Improve Large private segment profitability Maintain and defend our Public Segment simplified packages and bundling's based on by increasing higher margin sale, grow asset by carefully choosing ou
Slide 33: Small- and Medium Enterprise: Key drivers & customer needs
Small- and Medium Enterprise Take back market share in SME by offering simplified packages and bundlings based on customer needs 6% ~1/3** Turn around trend in Fixed 25 % Key drivers & customer needs Easy to use Fixed Device Simplified mobile Flexible WoW Security portfolio Positive RGU trend in Q1
Slide 34: Large Private Enterprise: Key drivers & customer needs
Large Private Enterprise Improve Large private segment profitability by increasing higher margin sale, grow through 5G Enterprise Networks & Mobile bundlings ~1/3** EBITDA turnaround Effortless usage Key drivers & customer needs 27 % 41 % Customization 5G enterprise networks opportunities Combinatio
Slide 35: Public Enterprise: Key drivers & customer needs
Public Enterprise Maintain and defend our Public Segment asset by carefully choosing our new bets and continue delivering reliable solutions for a sustainable society ~1/3** 15 % Stabilizing Mobile ASPU Key drivers & customer needs Reliable com. solutions Integration to customer processes Grow engag
Slide 36: Operational Excellence
Operational Excellence PORTFOLIO QUALITY OF SIMPLIFICATION & DATA & ANALYTICS OPTIMIZATION SERVICE & FUTURE PROOF IT AUTOMATION SYSTEMS 5% YoY increase of NBO model for UC profitability Portfolio Average Top 2 in NPS/CSAT 100% of customers All data sources in order handled entire B2B customer improv
Slide 37: A Turnaround Towards Growth
A Turnaround Towards Growth The EBITDA impact trend is gradually improving, and we can see a turnaround towards growth for Tele2 Sweden B2B EUSR development Key factors illustrative – Fixed legacy decline phased out by 2023 – More selective approach in Large Private & Public – Covid return to new no
Slide 38: Positive Signs in Several Strategic Focus Areas
Positive Signs in Several Strategic Focus Areas We are already seeing positive signs in several strategic focus areas supporting our ambition to turnaround to EUSR growth -27% Q1 2021 YoY in reduced churn on Mobile Post Paid RGUs in the small segment Significant profit improvements +25% YoY in IoT E
Slide 39: Key Takeaways
Key Takeaways Updated B2B Financial ambition Signs of change strategy in place • Important role to play in • Return to revenue growth • Positive signs that support both digitalization profitability improvement and EUSR turnaround • Clear focus areas and strategic • Improving EBITDA trend ambition
Slide 40: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 41: Our Context, Strategic Initiatives, Enabling Factors
OUR STRATEGIC ENABLING CONTEXT INITIATIVES FACTORS
Slide 42: Our Context
OUR CONTEXT
Slide 43: DCT – Our New IT and Network Organization
DCT – Our New IT and Network Organization Fixed infrastructure – 3,5M households reach and 1,7 households connected with our HFC DIGITAL CAPABILITIES Significant spectrum advantage & TECHNOLOGY Strong customer base Advanced services e.g. TV & IoT End-to-End mindset Strong network sharing agreements
Slide 44: End-to-End
End-to-End Embracing End-to-End through a unified customer, IT & network perspective Always asking ourselves what it means for the customer maintains a strict customer focus Billions of touchpoints, transactions and network metrics provide us with a complete 360° customer view Customer impact Custom
Slide 45: A reliable home essential utility
GB A reliable home essential utility
Slide 46: Continuously Improving our Operating Model
Continuously Improving our Operating Model Network sharing makes us Automation to optimize Simplifying our assets cost-efficient processes Our operating model and sustainability focus make Tele2 the most energy efficient operator in Sweden Source: Company reported figures, Internal analysis
Slide 47: Strategic Initiatives
STRATEGIC INITIATIVES eae ete ee ee oe eee en ee = ee
Slide 48: Strategic Pillars
STRATEGIC PILLARS Superior reliability Enabling new Leading by quality and revenues digital telco simplification
Slide 49: Our IT Journey After the Merger
Our IT Journey After the Merger > 6 different IT stacks Simplified target systems with modern architecture Online Online Online Shops Shops Shops Customer care Customer care Customer care Solutions sales Mass-market Case M Case M Billing CRM Billing CRM Case M Billing CRM Migrations & decommissionin
Slide 50: Building Architecture to Enable Digital Customer Experience
Building Architecture to Enable Digital Customer Experience Inhouse capabilities to become a true digital telco… …with interactions according to customer preference Fit for purpose Strong open-source IT-stacks capabilities Solutions sales Mass-market Encapsulating complexity into simple Transparency
Slide 51: 10G Fixed Access Network Modernization with Remote-Phy
10G Fixed Access Network Modernization with Remote-Phy Physical cabel modem Virtualized cable modem termination termination system system core Analog optics Coaxial devices Ethernet Metro IP over Ethernet Uplink x10 25% 70% Increased Downstream Capacity Fewer Less Power capacity & Increase Customer
Slide 52: 10G Fixed Access Network Roll-out
10G Fixed Access Network Roll-out Highly data-driven CX Centric 22k 1.7M Landlords Households Automated P&L Optimized
Slide 53: Full Network Modernization
Full Network Modernization RAN modernization Mobile Core and IP network First in Sweden and 5G rollout modernization with real 5G -20% -31% -48% -60% 2021 2022 2023 2024 Aiming for lowest Simplicity and quality uplift New business production costs per GB opportunities Decreased Mobile Access Standar
Slide 54: SUNAB Closedown in Progress with Customer Experience in Mind
SUNAB Closedown in Progress with Customer Experience in Mind 90% >15% VoLTE share Closedown plan of total voice minutes 70% of sites 25% Today Goal End 2021 Closedown of SUNAB Past 3 years 3G Network Closedown Goal 2021 Accelerating VoLTE Total sites in Tele2’s Networks Streamlining to one single ne
Slide 55: A Significantly Better Network and Customer Experience
A Significantly Better Network and Customer Experience Delivering next level …and a mobile network with >100% …performed with lower reliability and quality… increased capacity… total JV Opex 2G 3G 4G 5G N4M -3% -8% -12% -18% SUNAB GB 2020 2021 2022 2023 2024
Slide 56: Proactive Capex management to serve increased demands
Proactive Capex management to serve increased demands Meet the customer demands of tomorrow on premium user experience throughout the entire customer journey End-to-End Unlock new business opportunities Steady historical growth of Fixed Data Steady historical growth of Mobile Data The share of 3G da
Slide 57: Enabling Factors
ENABLING FACTORS
Slide 58: Grass Root Analytics
Grass Root Analytics Customer & Business Data E2E CX Insight Network & Operations Data KPIs & Processes Culture & Skills Architecture Technology
Slide 59: Enabling Our Success by the Way We Work
Enabling Our Success by the Way We Work Aligned Effectively Before at site utilizing Big autonomy and Effective tools fit for purpose Room Planning for remote ways of with over 1000 collaboration Now remote participants working with full agility
Slide 60: Key Takeaways
Key Takeaways 3 1 Making Easy & Simple 2 1 RAN Networks Bran dX 6 2 SWEDEN 4G 5G 3G Full Modernization 2G Enable Grass Root Analytics
Slide 61: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 62: Strong Growth in OCF
Strong Growth in OCF Reducing steady state capex • Entire Swedish RAN consolidated into Net4Mobility Top-line growth, cost cutting, and • More efficient fixed network with Remote Phy a capex efficient model leads to strong operating cash flow growth • Fewer IT systems • Fewer CPEs and more digital s
Slide 63: High Cash Conversion
High Cash Conversion This means that we only need low single digit service revenue growth to achieve strong cash flow growth Tele2 Group cash conversion* 80% 70% 60% 50% 40% 30% 20% 10% 0% 2015 2016 2017 2018 2019 2020 Cash conversion = operating cash flow / underlying EBITDAaL
Slide 64: Sustainable Distribution of Over 100% of Equity Free Cash Flow
Sustainable Distribution of Over 100% of Equity Free Cash Flow Growing underlying EBITDAaL and equity free cash flow leads to higher shareholder remuneration in accordance with our distribution policy – No significant spectrum ahead Room for additional – Predictable taxes and working capital Even st
Slide 65: Additional Shareholder Remuneration
Additional Shareholder Remuneration On top of EFCF growth and the re-levering effect we have additional opportunities to crystalize value for shareholders The Netherlands Previous state Current state 25% ownership in number Number 4 player 1 player in mobile Mobile only FMC capabilities through fixe
Slide 66: Aiming For a Consistently Growing Ordinary Dividend
Aiming For a Consistently Growing Ordinary Dividend Ordinary dividend, SEK bn (in the year it was paid) 4.1 3.8 3.2 3.0 2.9 2.7 2.6 2.4 2.2 2.0 2.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Slide 67: Superior Shareholder Remuneration
Superior Shareholder Remuneration EFCF growth through EUSR growth, cost efficiencies and low capex Re-levering growing underlying EBITDAaL at 2.5-3.0x and distributing the cash Additional monetization of non-core assets.
Slide 68: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 69: Lead in Sustainability - Update
Lead in Sustainability - Update First telco in Nordics and Baltics to be climate neutral in our own operations. Approved science-based target Positive trend for ESG-rating results for several years in a row Implementing the recommendations of the Task-force on Climate Related Financial Disclosures F
Slide 70: Lead in sustainability – Our Four Focus Areas
Lead in sustainability – Our Four Focus Areas Advance circular economy to Boost innovation for combat climate change sustainability By 2025 Tele2 will develop winning offerings for By 2025 Tele2 will use connectivity combined relevant customer segments in B2B and B2C, with innovative technology to c
Slide 71: Employee Engagement
Employee Engagement Keeping employee engagement high and evolving Tele2:s culture to maintain a competitive advantage Diverse & Inclusive workplace: Ambition is to be gender balanced in the end of 2023 How happy are you working for Tele2 EMPLOYEES 69% 68% 67% 60% 31% 32% 33% 40% 2018 2019 2020 2023
Slide 72: Agenda
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Slide 73: Key Strategic Initiatives
Key Strategic Initiatives Consolidate brands in Sweden Continue growth in the Baltics and Tele2 to be the leading premium brand prepare for FMC Continue the Comviq success story Consolidate and decommission IT Balanced growth through volume and value systems over next 6 quarters Invest for growth in
Slide 74: Our medium term ambition: Leading Telco
Our medium term ambition LEADING TELCO In the Nordic & Baltic region 3-year horizon Superior Best industry High employee Lead in customer experience shareholder return engagement sustainability Our growth strategy Reignite growth Recognized leader Continued growth in Sweden Consumer in Sweden B2B &
Slide 75: Disclaimer
Disclaimer This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following p