Slide 1: Second Quarter 2014
SECOND QUARTER 2014 16" of July 2014 , Tele2 AB TELE2
Slide 2: Q2 2014 in brief
Q2 2014 in brief TELE2
Slide 3: Q2 Financial Highlights
Net sales EBITDA EBITDA margin CAPEX (SEK billion) (SEK billion) (percent) (SEK billion) (6.42) (1.47) (23) (0.71) Q2 Financial Highlights – Sale of Norwegian operations for a cash value of SEK 5.3 billion – Total mobile net customer intake 286,000 – Mobile end-user service revenue grew by 7 percent
Slide 4: Mobile end-user service revenue by market
Sweden 4% Baltics -1% (SEK million) (SEK million) 1 746 1 767 1 775 1 716 1 815 447 462 431 444 Tele2 Group 415 (SEK million) 7% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 2 900 3 008 3 006 2 904 3 094 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Netherlands Kazakhstan 1% (SEK million) 36% (SEK million) (21%*) 273 308 240 251
Slide 5: Solid progress in consumer mobile and B2B MNO roll out
Solid progress in both consumer mobile and B2B MNO roll out is gathering pace, CAPEX is up over 40 percent quarter-on-quarter Strong net intake of 213,000 Encouraging performance with 45,000 net intake and 10 percent EBITDA margin Sale of Norwegian operations for a cash value of SEK 5.3 billion 5
Slide 6: Country Performance
Country Performance TELE2
Slide 7: Sweden Q2 Highlights
Net sales EBITDA A strong quarter with many new and (SEK million) (SEK million) extended business contracts 3 139 3 078 3 156 3 021 3 111 856 900 858 882 825 29% 28% 27% 27% 27% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Mobile Fixed broadband Mobile Fixed broadband Fixed telephony
Slide 8: Netherlands Q2 Highlights
Net sales EBITDA Net intake Fixed Broadband (SEK million) (SEK million) (Thousands) 1 349 1 383 1 372 1 320 1 318 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 321 342 0 271 257 267 -2 -4 24% 25% -6 20% 20% 19% -8 -10 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 -12 -14 Mobile Fixed broadband Mobile
Slide 9: Kazakhstan Q2 Highlights
Net sales EBITDA Net intake (SEK million) (SEK million) (Thousands) 309 357 365 213 333 294 309 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 1 3 -14 20 -2% 0% 1% -10% Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 -16% -7 -34 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 -52 Mobile -393 Mobile EBITDA Margin Interconnect cut and currency devaluati
Slide 10: Croatia and Lithuania Q2 Highlights
Croatia Net sales Croatia EBITDA Croatia Q2 Highlights (SEK million) (SEK million) 333 372 396 329 48 – Strong net intake at 45,000 299 33 22 22 25 – YoY EBITDA growth 50 percent 13% 10% – More uncertain regulatory 7% 6% 8% environment as local government Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q2 13 Q3 13 Q4
Slide 11: Latvia and Estonia Q2 Highlights
Latvia Net sales Latvia EBITDA Latvia Q2 Highlights (SEK million) (SEK million) – Network-swap finalized 219 230 230 213 223 69 72 72 67 62 – Attention to service excellence and 32% 31% 31% 29% 30% performance is defending our position in a highly competitive pricing environment Q2 13 Q3 13 Q4 13 Q1
Slide 12: Austria and Germany Q2 Highlights
Austria Net sales Austria EBITDA Austria Q2 Highlights (SEK million) (SEK million) 311 313 306 291 299 77 77 – Focus is growing B2B customer base 65 58 and improving brand awareness 49 25% 25% – EBITDA margin affected by our 21% 19% 17% investment in growth and marketing spending to increase brand Q
Slide 13: Financial Overview
Financial Overview TELE2
Slide 14: Q2 2014 income statement
SEK million Q2 2014 Q2 2013 ▲% Net sales 6,343 6,424 -1.3% EBITDA 1,466 1,474 -0.5% EBITDA margin (%) 23.1% 22.9% 0.2% Depreciation & associated companies -680 -705 -3.5% Depreciation of net sales (%) -10.7% -10.9% 0.2% One-off items 1 3 EBIT 787 772 1.9% Normalized EBIT 786 769 2.2% Normalized EBIT
Slide 15: YTD 2014 income statement
SEK million YTD 2014 YTD 2013 FY 2013 ▲% Net sales 12,495 12,672 25,757 -1.4% EBITDA 2,825 2,923 5,869 -3.4% EBITDA margin (%) 22.6% 23.1% 22.8% -0.5% Depreciation & associated companies -1,324 -1,420 -2,909 -6.8% Depreciation of net sales (%) -10.5% -11.1% -11.2% 0.6% One-off items 243 5 -434 EBIT
Slide 16: Cash flow including Norway
SEK million Q2 2014 Q2 2013 YTD 2014 YTD 2013 FY 2013 OPERATING ACTIVITIES Cash flow from operations, excl taxes and interest 1,459 1,481 2,854 4,229 7,117 Interest paid -96 -50 -160 -224 -374 Taxes paid -46 -7 -171 -339 -479 Change in working capital -11 -63 -710 -730 -451 Cash flow from operating
Slide 17: Cash flow excluding Norway
SEK million Q2 2014 Q2 2013 YTD 2014 YTD 2013 FY 2013 OPERATING ACTIVITIES Cash flow from operations, excl taxes and interest 1,448 1,437 2,821 2,961 5,810 Interest paid -98 -59 -163 -150 -298 Taxes paid -46 -7 -171 -162 -302 Change in working capital -149 -56 -625 -474 -237 Cash flow from operating
Slide 18: Pro forma Net Debt / EBITDA 12m rolling
Pro forma Net Debt / EBITDA 12m rolling (1) SEK billion / Ratio 10,0 2,00x 8.3 8,1 7,6 1,75x 8,0 7,2 6,8 1,50x 6,0 1,25x 4,0 1,00x 2,0 0,75x 0,0 0,50x Jun-13 sep-13 dec-13 mar-14 jun-14 Pro forma Net Debt Pro forma Net Debt to EBITDA 18 (1) Net debt includes Kazakhstan put option
Slide 19: Tele2 has agreed to sell Tele2 Norway to TeliaSonera
Tele2 has agreed to sell Tele2 Norway to TeliaSonera Attractive value Successful monetisation of Norwegian operations Tele2 poised for continued success 19 Enterprise value of SEK 5.1 billion, equivalent to a cash value of SEK 5.3 billion 1.2x EV/Sales 2013, 42 x EV/EBITDA 2013 Capital gain of aroun
Slide 20: Financial guidance
Net Sales EBITDA CAPEX (SEK billion) (SEK billion) (SEK billion) 24.8 – 25.2 5.7 – 5.8 3.5 – 3.8 Rationale In addition to the sale of Tele2 Norway, the revenue part of the financial guidance has been impacted by: • The devaluation of the Kazakhstan currency • Generally lower handset sales within our
Slide 21: Conclusion
Conclusion TELE2
Slide 22: Summary and Priorities
Summary – Disposal of Tele2 Norway makes us stronger going forward and crystalizes value for shareholders – Strong net intake driven by Kazakhstan, Croatia, the Netherlands and Germany – Mobile end-user service revenue year-on-year growth of 7% Priorities – Constant focus on MNO roll out in the Neth
Slide 23: Q&A
Q&A TELE2
Slide 24: The End