Slide 1: Second Quarter 2015
SECOND QUARTER 2015 July 21st, 2015 Tele2 AB
Slide 2: Highlights from the quarter
Highlights from the quarter Value • Positive net intake across the Group. Champion Focused Technology • 4G network in the Netherlands now at 80 percent population coverage. Choices Step-Change • Challenger program is now delivering results. Productivity Winning People • Scored in the 91st percentile
Slide 3: Monetization of data continues
Monetization of data continues Year-on-year growth, Tele2 Group Mobile end-user service Average data usage Mobile EBITDA revenue per mobile subscriber +7% +2% ~55% 3 Average usage data excludes traffic on MNVO networks.
Slide 4: Continuous momentum in mobile end-user service revenue
Continuous momentum in mobile end-user service revenue Year-on-year growth for mobile end-user service revenue, Tele2 Group +7.5% 9.6% 8.7% 7.9% 8.1% 7.4% 6.5% 6.5% 6.7% 6.7% 6.6% Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 4
Slide 5: Market year-on-year development
Market year-on-year development Mobile end-user service revenue Data growth (MNO networks) Sweden: ~70% +1% Estonia: +6% Germany: Kazakhstan: +6% +65% Latvia: +8% Netherlands: +8% Lithuania: +4% Austria: -1%* Croatia: Q2 14 Q2 15 +7% Sweden CEE Kazakhstan 5 * Total net sales
Slide 6: Tele2 Sweden
Tele2 Sweden Net sales EBITDA and EBITDA margin Mobile net intake (SEK million) (SEK million) (thousands) 0% +3% 52 3,111 3,101 1000 882 908 60% 900 50% 28 800 700 40% 600 500 28% 29% 30% Q2 14 Q3 14 Q4 14 Q1 15 400 Q2 15 20% 300 200 10% -8 100 0 0% Q2 14 Q2 15 Q2 14 Q2 15 -43 -58 Q2 Highlights – Ov
Slide 7: Tele2 Baltics
Tele2 Baltics Net sales EBITDA and EBITDA margin Mobile net intake (SEK million) (SEK million) (thousands) +7% +3% 767 232 238 714 250 60% 50% 10 200 40% 150 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 32% 31% 100 30% -9 -3 20% 50 10% 0 0% Q2 14 Q2 15 Q2 14 Q2 15 -74 -62 Q2 Highlights – Mobile end user service re
Slide 8: Tele2 Netherlands
Tele2 Netherlands Net sales EBITDA and EBITDA margin VULA (SEK million) (SEK million) Broadband speed/Population coverage +5% -45% 1,390 1,318 300 267 60% 90% 90% 85% 85% 250 50% 200 40% 150 147 30% 45% 100 20% 20% 27% 50 11% 10% 0 0% Q2 14 Q2 15 Q2 14 Q2 15 Current Q4 16 ≤ 20Mb/s ≤ 40Mb/s 2 ≤ 100Mb
Slide 9: Tele2 Kazakhstan
Tele2 Kazakhstan Net sales EBITDA and EBITDA margin Mobile net intake (SEK million) (SEK million) (thousands) +54% +200% 475 471 10 9 10% 428 9 9% 309 8 8% 7 7% 6 6% 5 5% 213 205 4 3 4% 3 3% 108 2 2% 2% 1 1% 1% 0 0% Q2 14 Q2 15 Q2 14 Q2 15 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 Highlights – Despite tough
Slide 10: Financial Overview
Financial Overview TELE2
Slide 11: Financial highlights
Financial highlights Q2 2014 Q2 2015 Trend Net sales (SEK billion) 6.34 6.61 +4% Mobile end-user service revenue 3.09 3.32 +7% (SEK billion) EBITDA (SEK billion) 1.47 1.39 -5% CAPEX (SEK billion) 0.85 1.13 +33% 11
Slide 12: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +7.4% 20 146 3,205 3,252 3,205 3,324 3,324 3,184 3,094 24 26 14 3,094 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Sweden Baltics Netherlands Kazahkstan RoW Q2 15 12
Slide 13: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) -5% 1800 90.00% 1,682 1600 80.00% 1,470 1,412 26 6 1,428 1,393 1400 70.00% 1200 60.00% 1,470 1000 50.00% 6 5 1,412 800 40.00% -120 1,393 600 30.00% 23.2% 25.5% 400 20.5% 21.9% 21.1% 20.00% 200 10.00% 0 0.00% Q2 14 Q3 14 Q4 14 Q1 1
Slide 14: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) +33% 90.00% 1300 80.00% 1,134 47 70.00% 1100 1,030 51 1,134 60.00% 105 938 900 850 861 50.00% 90 40.00% 700 -9 30.00% 20.00% 850 500 13.4% 15.0% 17.2% 14.4% 13.1% 10.00% 300 0.00% Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q2 14 Sweden Baltics
Slide 15: Free cash flow
Free cash flow Total operations Tele2 Group Development (SEK million) (SEK million) 600 500 475 Working Discontinued Q2 14 EBITDA Interest etc Taxes capital CAPEX operations Q2 15 400 300 274 274 238 200 -77 -25 100 -58 Q2 15 0 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 -100 -96 -200 -251 -300 35 -268 -268 -400
Slide 16: Debt position and ratio
Debt position and ratio Pro forma net debt / EBITDA 12 m rolling SEK billion / Ratio 15.0 2.00 1.75 12.5 1.50 10.0 6.6 10.1 1.25 7.5 8.3 1.00 7.9 7.9 0.75 5.0 0.50 2.5 3.3 0.25 0.0 0.00 Jun 2014 Sep 2014 Dec 2014 Mar 2015 Jun 2015 Pro forma net debt Dividend, announced Pro forma net debt to EBITDA (
Slide 17: Challenger Program
CHALLENGER PROGRAM Step-change productivity
Slide 18: How we will deliver SEK 1 Bn in productivity improvements
How we will deliver SEK 1 Bn Simplify Discipline Consolidate Transform in productivity improvements Simplify 60% of products harmonized on shared platforms Discipline 80% of spend strategically sourced & procured Consolidate 20% reduction in IT OpEx as share of revenue Transform 25% of staff in shar
Slide 19: Challenger is starting to deliver – simplification for our customers
Challenger is starting to deliver Simplify Discipline Consolidate Transform – simplification for our customers Product Simplification Product Harmonization ─ Currently 8,300 products ─ 4,000 products in scope for harmonization ─ Plan to close >20% ─ Plan to double amount of harmonized products 19
Slide 20: Challenger is starting to deliver – driving discipline
Challenger is starting to deliver Simplify Discipline Consolidate Transform – driving discipline Return on Marketing SMS A2P Online Investment ─ New, improved & ─ Improved marketing ─ Tools and processes to consolidated partnerships analytics collect & analyze online data ─ Monetizing B2C SMS in ─ M
Slide 21: Challenger is starting to deliver – consolidating technology
Challenger is starting to deliver Simplify Discipline Consolidate Transform – consolidating technology NOC Consolidation Workplace Optimization ─ Consolidated network operations ─ Roll-out new group-wide IT purchasing platform ─ Relocation to Riga has started ─ Implementation completed in Latvia 21
Slide 22: Challenger is starting to deliver – transforming our operations
Challenger is starting to deliver Simplify Discipline Consolidate Transform – transforming our operations Finance Customer Service Germany Shared Operations ─ Finance Shared Service ─ Optimization of non ─ Restructuring our German Center in Riga est. Q3 customer-facing back office business to align
Slide 23: A multi-year investment program that will realize significant benefits
A multi-year investment program Simplify Discipline Consolidate Transform that will realize significant benefits Ramp-up of costs and benefits over 4 years Productivity improvement: SEK 1 Bn Benefits One-off program costs 2015 2016 2017 2018 Today Target 23 Baseline: Actuals 2014
Slide 24: Momentum is building
Momentum is building More than 30 initiatives have kicked off since December. We will report quarterly on progress. 2014 2015 2016 2017 2018 Investment phase Benefits phase Q2 24
Slide 25: Q2 2015 Summary
Q2 2015 Summary TELE2
Slide 26: Q2 2015 in short and key priorities moving forward
Q2 2015 in short and key priorities moving forward - Continued focus on Data monetization - Getting ready for 4G launch in Netherlands and the Baltics - Executing on the Challenger Program Focused Value Step-Change Winning People Technology Champion Productivity & Culture Choices 26
Slide 27: Tele2's Way2Win
Tele2’s Way2Win Vision We will be champions of customer value in everything we do Mission We are challengers, fast-movers and will always offer our customers what they need for less Where we focus How we win Europe and Focused Winning Mobile access is Residential and Value Step-Change Eurasia are ou
Slide 28: The End
THE END