Slide 1: First Quarter 2011
FIRST QUARTER 2011 April 19, 2011
Slide 2: Agenda
Agenda About Q1 2011 Financial review Guidance and Concluding remarks 2 2010-10-20
Slide 3: Highlights Q1
Highlights Q1 • Group – Total customer base amounting to more than 31 million customers. Net customer intake for the group 399,000 – Net sales grew by 0.5 percent. Currency-adjusted net sales grew by 7 percent, driven by mobile sales – EBITDA grew by 4 percent. Currency-adjusted EBITDA grew by 11 pe
Slide 4: Highlights Tele2 Russia
Highlights Tele2 Russia • 547,000 (949,000) new customers in Q1 2011 • Net sales grew by 17 percent. Currency- adjusted net sales grew by 27 percent EBITDA 12'M ROLLING CUSTOMER BASE SEK MILLION / PERCENT MILLIONS 4000 37% 20 36% 19 3000 18 35% 2000 34% 17 16 33% 1000 15 32% 14 0 31% 13 Q1 10 Q2 10
Slide 5: Mobile market overview
Mobile market overview MOU AND ARPU PREPAID SHARE * MINUTES RUB PERCENT 250 250 96% 240 240 93,9% 230 230 92,8% 93% 92,5% 220 220 210 210 89,6% 89,8% 200 200 90% 190 190 180 180 87% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2006 2007 2008 2009 2010 MoU (left-hand side) RUB (right-hand side) NET ADDITIONS QUARTE
Slide 6: Mobile market overview
Mobile market overview MOBILE MARKET SHARES MOBILE MARKET SHARES PERCENT OF ACTIVE SUBSCRIBERS PERCENT OF RETAIL REVENUES 40% 35% 35% 30% 30% 25% 25% 20% 20% 15% 15% 10% 10% 5% 5% 0% 0% 2006 2007 2008 2009 1Q10 2Q10 3Q10 4Q10 2006 2007 2008 2009 1Q10 2Q10 3Q10 4Q10 Mobile TeleSystems VimpelCom MegaF
Slide 7: Mobile data market
Mobile data market DATA REVENUE as of 4Q10 BIG4 DATA REVENUE BREAKDOWN SHARE OF TOTAL REVENUE (FEDERAL) PERCENT, 4Q10 (TELE2 REGIONS) MTS Vimpelcom MegaFon Tele2 17% 11% 28% MTS 9% 8% Megafon 7% Vimpelcom 21% Tele2 34% • EDGE enabled mobile network • Great price and smart packaging • Large differenc
Slide 8: Tele2's regional expansion opportunities
Tele2’s regional expansion opportunities COVERAGE MAP Population (Million) Total Market 142 New licences 11.5 Tele2 61 Won licences 1 Combined 62 Moscow The results of the first GSM tender: Tele2 got licences in all 4 new regions in the first round 8 2010-10-20
Slide 9: Highlights Tele2 Sweden
Highlights Tele2 Sweden • Increased mobile revenue growth of 17 percent • 45,000 (29,000) postpaid customers added • Mobile EBITDA margin 30 (35) percent, due to a larger gross intake of smartphone customers and increased costs to JVs • 4G launched in eight major cities NET SALES SEK MILLION / PERCE
Slide 10: Swedish telecom market trends
Swedish telecom market trends FIXED VS. MOBILE PERSPECTIVE MOBILE CONNECTIONS SWEDEN SWE TELECOM REVENUES (%) PERCENT 100% 100% 80% 80% 60% 60% 40% 40% 20% 20% 0% 0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Fixed Mobile 2G 3G 4G MOBILE DATA TB USAGE (RESIDENTIAL) TE
Slide 11: Smartphones change the customers' behaviour
Smartphones change the customers’ behaviour Tele2 customers’ demand for data solutions The Swedish mobile market is increasing rapidly SMARTPHONES vs. FEATURE PHONES SALES OF DATA PACKAGES SHARE OF TOTAL MARKET 100% 80% 60% 400% 40% 20% 0% 2009 2010 2011 2012 2013 2014 Smartphones Feature phones Jan
Slide 12: Focused activities give results on postpaid ASPU
Focused activities give results on postpaid ASPU Top 10 phone sales in Tele2 ASPU trend recovered Stores (Jan-Mar) 1 iPhone4 16 GB • Focused on attracting and retaining the right customers 2 iPhone4 32 GB • Continued the expansion of Tele2 stores 3 Sony Ericsson X10 Mini Pro • Increased sales of dat
Slide 13: The 4G roll-out continues
The 4G roll-out continues 99% coverage 2010 2011 End of 2012 13 2010-10-20
Slide 14: Highlights Tele2 Western Europe
Highlights Tele2 Western Europe • The Netherlands - Strengthened the position in the business segment through the completion of the BBned acquisition • Germany - Continued strong EBITDA contribution of 33 percent in fixed telephony EBITDA 12'M ROLLING SEK million • Austria 3000 - Continued good prog
Slide 15: Licence Renewal / Frequency Auction
Licence Renewal / Frequency Auction Auction early 2012 Auction 2015 Auctioned 2010 15 2010-10-20
Slide 16: Highlights Tele2 Baltic Region
Highlights Tele2 Baltic Region • Stabilizing economy leading to better operational environment - Low consumer confidence delaying improved spend on communication services • Investment in network capabilities, as demand for mobile broadband increases - Tele2 Estonia was awarded 4G licence NET INTAKE
Slide 17: Highlights Tele2 Croatia
Highlights Tele2 Croatia • Goal to deliver positive free cash flow 2H 2011 on track • Solid customer intake despite high seasonal churn • Tele2 launched 21 Mbps in its 3G network EBITDA NET INTAKE SEK MILLION THOUSANDS 20 90 10 80 70 0 60 -10 50 -20 40 30 -30 20 -40 10 -50 0 Q1 10 Q2 10 Q3 10 Q4 10
Slide 18: Highlights Tele2 in Kazakhstan
Highlights Tele2 in Kazakhstan • Preparing for launch in late April - Tele2 in Kazakhstan relaxed on commercial activities in Q1 2011, leading to lower net intake • Mobile network covering almost 70% of the population - 2G/3G enabled infrastructure • Focus on widening the distribution network throug
Slide 19: Agenda
Agenda About Q1 2011 Financial review Guidance and Concluding remarks 19 2010-10-20
Slide 20: Q1 2011 group results
Q1 2011 group results SEK million Q1 11 Q1 10 Change % Net Sales 9 573 9 527 EBITDA 2 457 2 358 4% - EBITDA margin (%) 26% 25% Depreciation and Joint Ventures -897 -809 - Depreciation of Net sales (%) 9% 8% Mainly due to spectrum rebalancing in 900 MHz One-off items 99 -3 band EBIT 1 659 1 546 7% No
Slide 21: Currency movements (vs. SEK)
Currency movements (vs. SEK) YoY Difference in YTD Ave FX Rates, 2011 vs. 2010 EUR -11.0% RUB -8.0% End of Quarter Spot rate vs. 31/12-2010 EUR -1% RUB -1% EUR/EUR pegged and RUB currencies approximately 2/3 of sales and EBITDA 21 2010-10-20
Slide 22: Currency adjusted Sales and EBITDA
Currency adjusted Sales and EBITDA CURRENCY ADJUSTED SALES, +7% CURRENCY ADJUSTED EBITDA TOTAL, +11 % SEK MILLION SEK MILLION 10 000 3 000 9 000 0% 8% 2 500 8 000 -3% 2 000 17% 7 000 6 000 27% 1 500 43% 5 000 1 000 4 000 5% -6% 3 000 500 2 000 0 1 000 0 -500 Q1 10 Q1 11 Q1 10 Q1 11 Kazakhstan MA Nor
Slide 23: Taxes
Taxes Taxes in income statement Q1 11 Q1 10 Normal -371 -339 One-Off - - Total -371 -339 Taxes in cash flow Q1 11 Q1 10 Normal -225 -233 Deferred tax assets amounted to SEK 3.1 (3.6) billion 23 2010-10-20
Slide 24: Cash flow for Q1 2011
Cash flow for Q1 2011 SEK million Q1 11 Q1 10 OPERATING ACTIVITIES Cash flow from operations, before paid tax 2 589 2 341 Cash flow from operations, paid taxes -225 -233 Changes in working capital -310 183 Cash flow from operating activities 2 054 2 291 INVESTING ACTIVITIES CAPEX -933 -608 Cash flow
Slide 25: Group financial profile
Group financial profile NET DEBT INCL. JV / EBITDA 2010 SEK BILLION / RATIO 20 1,80 18 1,60 16 1,40 14 1,20 12 1,00 10 8 0,80 6 0,60 4 0,40 2 0,20 0 0,00 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Net debt incl. JV Pro forma incl. proposed May dividend Net debt incl. JV / EBITDA 2010 25 2010-10-20
Slide 26: Bal. sheet consideration / Fin. leverage
Bal. sheet consideration / Fin. leverage C When available, invest in value accretive M&A / New growth M&A or new business opportunities A opportunities meeting Tele2’s strict financial hurdles S H G E Shareholder Enhance shareholder value by distributing N recurring cash to shareholders remuneration
Slide 27: Net debt and dividend targets
Net debt and dividend targets Shareholder remuneration “Tele2 will seek to pay a progressive ordinary dividend of no less 50 percent of net income excluding one-off items. Extraordinary dividends and the authority to purchase Tele2’s own shares will be recommended or sought when the anticipated tota
Slide 28: Group EBITDA, Sales and Capex
Group EBITDA, Sales and Capex GROUP EBITDA GROUP SALES SEK MILLION / PERCENT SEK MILLION 3 000 30% 12 000 28% 10 000 2 000 26% 8 000 1 000 6 000 24% 0 22% 4 000 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2 000 Mobile Fixed broadband 0 Fixed telephony Other Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Group EBITDA margin Mobile
Slide 29: Group mobile EBITDA
Group mobile EBITDA GROUP MOBILE EBITDA SEK MILLION / PERCENT 2 500 40% 35% 2 000 30% 1 500 25% 20% 1 000 15% 10% 500 5% 0 0% Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO) Mobile EBITDA margin on own infrastructure Total mobile EBITDA margin 29 2010-10-20
Slide 30: Sweden mobile revenue explained
Sweden mobile revenue explained SWEDEN MOBILE REVENUE WATERFALL SEK MILLION 189 (+10%) 2237 (+17%) 129 (+7%) 1919 Revenue Q1 10 Underlying mobile Mobile equipment Revenue Q1 11 30 2010-10-20
Slide 31: Sweden mobile EBITDA explained
Sweden mobile EBITDA explained SWEDEN MOBILE EBITDA WATERFALL SEK MILLION 112 22 -101 -28 664 669 EBITDA Q1 GM1 Other Expansion / SUNAB/N4M EBITDA Q1 10 Call center 11 31 2010-10-20
Slide 32: Agenda
Agenda About Q1 2011 Financial review Guidance and Concluding remarks 32 2010-10-20
Slide 33: Tele2's general group targets
Tele2’s general group targets • Best Deal position • Targeting a long-term mobile EBITDA margin on own infrastructure of at least 35 percent • All operations should have the ambition of reaching ROCE of at least 20 percent • The capability to reach a top 2 position, in terms of customer market share
Slide 34: Concluding remarks
Concluding remarks Russia 2011: Also an investment year • Strong customer intake and • Russia EBITDA contribution in market area Russia • Kazakhstan Nordic • Solid mobile revenue growth in • Sweden market area Nordic - 4G Western Europe • Further strengthening its position • Norway in the consumer a
Slide 35: Q&A
Q&A 35 2010-10-20
Slide 36: 36 2010-10-20
36 2010-10-20