Slide 1: Harri Koponen, President & CEO
HARRI KOPONEN President & CEO 11
Slide 2: From Realignment to Transformation
FROM REALIGNMENT TO TRANSFORMATION 22
Slide 3: What Do Customers Want?
WHAT DO CUSTOMERS WANT? CUSTOMERS MOBILITY FAST AND ONLY PAY EVERYWHERE INSTANT SERVICE FOR VALUE! Connected and Quick response… Customers can get available anywhere Customers do not accept music, movies, TV, Coverage and quality to wait telephony, etc for is key… Time is money / free onli
Slide 4: Effects on the Telecom Industry?
EFFECTS ON THE TELECOM INDUSTRY? VOICE BECOMES DATA BECOMES EVERYTHING MOBILE MOBILE BECOMES IP Customers will “cut Data will follow voice Photons replace the cord”, moving Customers want “access electrons from fixed to mobile anywhere” Traffic is IP-based Austria and Finland is “Quali
Slide 5: Future Customer Needs
TRANSFORMATION PHASE COMPOSING A PRODUCT PORTFOLIO THAT GOES IN LINE WITH FUTURE CUSTOMER NEEDS 55
Slide 6: Core Service
CORE SERVICE 66
Slide 7: B2B Segment
OUR CORE SERVICES ARE PRICE LEADING AND QUALITIATIVE MOBILE COMMUNICATION WITH INCREASED FOCUS ON B2B SEGMENT 77
Slide 8: Q3 2008
Q3 2008 88
Slide 9: Tele2 in Brief
TELE2 IN BRIEF 24 million customers in 11 countries Mobile operations in 9 countries Fixed broadband operations in 6 countries Fixed telephony operations in 8 countries 99
Slide 10: Russian Operations
RUSSIAN OPERATIONS Existing Business New Licenses 1010
Slide 11: EBITDA
EBITDA 2500 2000 Fixed broadband Fixed telephony 1500 Mobile 1000 500 0 Q3 2008 Q3 2007 -500 1111
Slide 12: EBITDA Development
0 500 1000 1500 2000 2500 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 EBITDA DEVELOPMENT Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 1212
Slide 13: Q3 2008 Summary
Q3 2008 SUMMARY SEK million Q3-08 Q3-07 Growth % Net Sales 9,891 9,509 4% EBITDA 2,248 1,750 28% EBIT1) 1,394 863 62% 1) Excluding one-off items of SEK -950 (-1,319) million related to impairment loss in Germany 1313
Slide 14: Summary
SUMMARY MOBILE: Focus even more on growth in mobile, mobile internet and corporate services FIXED BROADBAND: Continue to improve profitability FIXED TELEPHONY: Maximize cash flow of a mature asset 1414
Slide 15: Lars Nilsson, CFO
LARS NILSSON CFO 1515
Slide 16: Profit & Loss
PROFIT & LOSS (All figures in MSEK) Q3-08 Q3-07 Continuing operations, Net Sales 9,833 10,060 EBITDA 2,246 1,747 - EBITDA margin (%) 22.8% 17.4% Depreciation and joint venture -852 -884 - Depreciation of net sales (%) -8.7% -8.8% One-off items -971 -306 EBIT 423 557 Normalized EBIT 1,394 863 - Norma
Slide 17: Cash Flow for Q3
CASH FLOW FOR Q3 (All figures in MSEK) Q3-08 Q3-07 CF from continuing operations, excl taxes paid 2,315 1,208 Taxes paid -90 -489 Change in WC 279 615 Cash flow from operating activities 2,594 1,823 CAPEX -930 -1,188 - CAPEX as percentage of revenue (%) 9.5% 11.8% Other investing activities 2,137 5,
Slide 18: Cash Flow for 9M
CASH FLOW FOR 9M (All figures in MSEK) 9M-08 9M-07 CF from continuing operations, excl taxes paid 5,979 3,149 Taxes paid -257 -1,381 Change in WC -20 229 Cash flow from operating activities 5,959 3,378 CAPEX -3,375 -3,854 - CAPEX as percentage of revenue (%) 11.6% 11.1% Other investing activities 1,
Slide 19: Net Debt to EBITDA
NET DEBT TO EBITDA NET DEBT SEK 5.2 BILLION 3 2,5 2 1,5 1 0,5 0 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 1919
Slide 20: Funding Q3 2008
FUNDING Q3 2008 (All figures in BSEK) Amount Maturity Tele2 external loans 6.2 - Revolving bank facility 4.4 Nov 2009 - Private placements 1.5 2011-2013 - CP 0.3 Mar/Apr 2009 - Total undrawn credit facilities 19.2 Nov 2009 Long term financing strategy - Increase diversification of funding sources 20
Slide 21: Financial Comments
FINANCIAL COMMENTS FINANCIAL VIEW: Short term the company needs to take into consideration the uncertainties in the financial markets and act accordingly. Hence, Tele2 will not utilize the current share buy-back mandate. The company will instead maintain a strong financial position. TAX: Corporate t
Slide 22: Financial Comments: Russia
FINANCIAL COMMENTS: RUSSIA FINANCIAL IMPACT OF THE 17 NEW LICENSES 2008: The operational expenditures are estimated to SEK 40-60 million and the capital expenditures are estimated to SEK 100-300 million 2009: The operational expenditures are estimated to SEK 300-500 million and capital expenditures
Slide 23: Financial Comments: Russia
FINANCIAL COMMENTS: RUSSIA FINANCIAL IMPACT OF THE 17 NEW LICENSES Up to 12 regions out of 17 will have been launched as 2009 New operations should be able to reach an EBITDA break- even three years after commercial launch date The longer term market share in the 17 new regions should not deviate si
Slide 24: Net Intake by Segment
NET INTAKE BY SEGMENT NET CUSTOMER INTAKE DRIVEN BY MOBILE (Approx. 700 thousand) 1200 1000 800 600 Fixed broadband Fixed telephony 400 Mobile 200 0 -200 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -400 -600 2424
Slide 25: Net Sales by Segment
NET SALES BY SEGMENT MOBILE +12% YEAR ON YEAR 10 000 9 000 8 000 7 000 6 000 Fixed broadband 5 000 Fixed telephony 4 000 Mobile 3 000 2 000 1 000 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 2525
Slide 26: EBITDA by Segment
EBITDA BY SEGMENT EBITDA MARGIN 22.8% Mobile 27.8% Fixed Telephony 27.7% 2 300 1 800 Fixed broadband 1 300 Fixed telephony Mobile 800 300 -200 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -700 2626
Slide 27: EBIT by Segment
EBIT BY SEGMENT NORMALIZED EBIT MARGIN 14.2% Mobile 23.8% Fixed Telephony 22.9% 2 000 1 500 Fixed broadband 1 000 Fixed telephony Mobile 500 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -500 -1 000 2727
Slide 28: Capex by Segment
CAPEX BY SEGMENT CAPEX TO SALES RATIO 9.5% 1400 1200 1000 800 Fixed broadband Fixed telephony 600 Mobile 400 200 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 2828
Slide 29: Financial Summary
FINANCIAL SUMMARY STRUCTURE: Move from realignment to transformation. Long term net debt/EBITDA target in line with industry and the markets in which Tele2 operates and the status of its operations and future strategic opportunities. FINANCIAL POSITION: Tele2 will not in the near future utilize the
Slide 30: Questions?
QUESTIONS? 3030