Slide 1: Third Quarter 2009
THIRD QUARTER 2009 21 October 2009
Slide 2: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 2 2009-10-21 Third quarter 2009
Slide 3: Highlights Q3
HIGHLIGHTS Q3 • Solid result with all regions performing • Nordic – Good customer intake – Increased focus on postpaid customers • Russia – 7 new regions launched during the quarter – Roll-out according to or better than plan – 1 100 000 new customers • Central Europe – Increased customer market sha
Slide 4: Market Area Nordics
MARKET AREA NORDICS Mobile • Good customer intake driven by all segments Corporate segment • New contract wins in price sensitive market Market strategy • Price leadership in combination with expected quality 4 2009-10-21 Third quarter 2009
Slide 5: Market Area Russia
MARKET AREA RUSSIA Mobile • 40.5 percent EBITDA margin in old regions • Record high net intake – New regions adding 742,000 customers Market strategy • Making the roll-out an efficient machinery • Proven distribution strategy 5 2009-10-21 Third quarter 2009
Slide 6: Russian Footprint
RUSSIAN FOOTPRINT 6 2009-10-21 Third quarter 2009
Slide 7: Net Intake Russia
NET INTAKE RUSSIA New regions Old regions (In thousands) 1200 1000 359 800 600 400 742 379 350 200 449 136 105 84 128 0 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 7 2009-10-21 Third quarter 2009
Slide 8: Market Area Western Europe
MARKET AREA WESTERN EUROPE Fixed Broadband • Launch of VDSL • Gold standard for the group in the corporate segment Market strategy • Investing for the future • Corporate market share 7 percent – Marks the potential 8 2009-10-21 Third quarter 2009
Slide 9: Market Area Central Europe
MARKET AREA CENTRAL EUROPE Mobile • Overall solid customer intake • Defend market position and expand when possible Market strategy • Economic turmoil creates opportunities for a price leader 9 2009-10-21 Third quarter 2009
Slide 10: Economic Development
ECONOMIC DEVELOPMENT Our response to the economic downturn: • EBITDA hurdle for a core business maintained at 20 percent • Mobile on own infrastructure should target mid 30 percent • ROCE target for the group 20 percent 10 2009-10-21 Third quarter 2009
Slide 11: The Best Deal
TELE2 ALWAYS PROVIDES THE • Price leadership through best in class cost control BEST DEAL • Rewarded quality network • Standardized product portfolio 11 2009-10-21 Third quarter 2009
Slide 12: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 12 2009-10-21 Third quarter 2009
Slide 13: Q3 2009 Group Results
Q3 2009 GROUP RESULTS SEK million Q3 09 Q3 08 Change % Continuing operations, Net Sales 9,763 9,520 3% EBITDA 2,375 2,240 6% - EBITDA margin (%) 24.3% 23.5% Depreciation and joint venture -924 -852 - Depreciation of net sales (%) 9.5% 8.9% One-off items 116 -969 EBIT 1,567 419 Normalized EBIT 1,451
Slide 14: YTD 2009 Group Results
YTD 2009 GROUP RESULTS SEK million YTD 09 YTD 08 Change % Continuing operations, Net Sales 29,376 28,286 4% EBITDA 6,997 6,007 16% - EBITDA margin (%) 23,8% 21,2% Depreciation and joint venture -2,759 -2,715 - Depreciation of net sales (%) 9,4% 9,6% One-off items 53 -1,623 EBIT 4,291 1,669 Normalize
Slide 15: Taxes
TAXES Taxes in income statement (MSEK) One-Off Normal Reported Q1 -196 -77 -273 Q2 - -324 -324 Q3 862 -444 418 666 -845 -179 Taxes in cash flow statement (MSEK) One-Off Normal Reported Q1 -359 -97 -456 Q2 - -124 -124 Q3 - -98 -98 -359 -319 -678 15 2009-10-21 Third quarter 2009
Slide 16: "Our" Currencies
“OUR” CURRENCIES YTD Average Fixing rate Currency 09 vs. 08 Sep 09 vs Dec 08 EUR / EUR pegged 14 % -6% RUB -6% - 11 % USD 27 % - 10 % 16 2009-10-21 Third quarter 2009
Slide 17: Net Assets in Foreign Currencies
NET ASSETS IN FOREIGN CURRENCIES 30 1,1 1,0 6,2 20 7,0 Other 5,9 RUB 6,1 EUR pegged 10 EUR 12,1 10,4 0 Year-end 2008 Q3 2009 Total 25.3 bSEK Total 24.5 bSEK 17 2009-10-21 Third quarter 2009
Slide 18: Cash Flow for Q3 2009
CASH FLOW FOR Q3 2009 SEK million Q3 09 Q3 08 OPERATING ACTIVITIES Cash flow from operations, other 2,433 2,405 Taxes paid –98 –90 Changes in working capital 252 279 CASH FLOW FROM OPERATING ACTIVITIES 2,587 2,594 INVESTING ACTIVITIES CAPEX –1,065 –930 Cash Flow after CAPEX 1,522 1,664 Acquisition a
Slide 19: Cash Flow for YTD 2009
CASH FLOW FOR YTD 2009 SEK million YTD 09 YTD 08 OPERATING ACTIVITIES Cash flow from operations, other 6,385 6,236 Taxes paid –678 –257 Changes in working capital 710 –20 CASH FLOW FROM OPERATING ACTIVITIES 6,417 5,959 INVESTING ACTIVITIES CAPEX –3,292 –3,375 Cash Flow after CAPEX 3,125 2,584 Acquis
Slide 20: Group Financial Profile
GROUP FINANCIAL PROFILE Net debt Net debt incl. JV Net debt/ EBITDA 2008 Net debt incl. JV/ EBITDA 2008 25 000 3,5 3 20 000 2,5 15 000 2 10 000 1,5 1 5 000 0,5 0 0 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 07 07 07 08 08 08 08 09 09 09 20 2009-10-21 Third quarter 2009
Slide 21: ROCE
ROCE 19,0% 18,0% 17,0% 16,0% 15,0% 14,0% 13,0% 12,0% 11,0% 10,0% 9,0% 8,0% 7,0% 6,0% Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2007 2008 2009 21 2009-10-21 Third quarter 2009
Slide 22: Net Intake per Segment
NET INTAKE PER SEGMENT Mobile Fixed broadband Fixed telephony 1500 1000 500 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 -500 22 2009-10-21 Third quarter 2009
Slide 23: Group Customer Stock
GROUP CUSTOMER STOCK Group Customer Stock Group Mobile Customer Stock Mobile Fixed Broadband Fixed Telephony Post paid voice Pre paid voice Mobile Internet 30 000 25 000 25 000 20 000 20 000 15 000 15 000 10 000 10 000 5 000 5 000 0 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Slide 24: Group Q3 2009 Net Sales
GROUP Q3 2009 NET SALES Mobile Fixed broadband Fixed telephony Other 12000 10000 8000 6000 4000 2000 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 24 2009-10-21 Third quarter 2009
Slide 25: Group Q3 2009 EBITDA
GROUP Q3 2009 EBITDA Mobile Fixed broadband Fixed telephony Other Group EBITDA margin 3 000 25% 2 500 24% 2 000 23% 1 500 22% 1 000 21% 500 0 20% -500 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 19% 25 2009-10-21 Third quarter 2009
Slide 26: Mobile Q3 2009 EBITDA
MOBILE Q3 2009 EBITDA Mobile Mobile EBITDA margin 1 800 30% 1 700 25% 20% 1 600 15% 1 500 10% 1 400 5% 1 300 0% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 26 2009-10-21 Third quarter 2009
Slide 27: Swedish Mobile Margin
SWEDISH MOBILE MARGIN Temporary negatively affected by increased costs for hardware related to post- paid customers 37% 36% 35% 34% 33% 32% 31% 30% Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Today, cost upfront If we had matched the cost for hardware with instalments from customers 27 2009-10-21 Third
Slide 28: MoU and ARPU Development
MoU AND ARPU DEVELOPMENT Sweden Russia 230 240 70 220 60 210 220 230 50 210 220 40 200 200 210 30 190 20 190 200 10 180 180 190 0 170 Q1 08 Q2 08 Q3 08 Q4 08 Q2 09 Q3 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 ARPU MoU ARPU MoU • Relatively strong development despite challenging economical times –
Slide 29: Fixed Broadband Q3 2009 EBITDA
FIXED BROADBAND Q3 2009 EBITDA Fixed broadband Fixed broadband EBITDA margin 400 25% 300 20% 15% 200 10% 100 5% 0 0% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 -100 -5% 29 2009-10-21 Third quarter 2009
Slide 30: Fixed Telephony Q3 2009 EBITDA
FIXED TELEPHONY Q3 2009 EBITDA Fixed Telephony Fixed telephony EBITDA margin 500 30% 29% 28% 27% 400 26% 25% 24% 300 23% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 30 2009-10-21 Third quarter 2009
Slide 31: Group Q3 2009 EBIT
GROUP Q3 2009 EBIT Mobile Fixed broadband Fixed telephony Other Group EBIT margin 2 000 16% 1 500 14% 12% 1 000 10% 500 8% 6% 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 4% -500 2% -1 000 0% 31 2009-10-21 Third quarter 2009
Slide 32: Group Q3 2009 Capex
GROUP Q3 2009 CAPEX Mobile Fixed broadband Fixed telephony Other Capex/sales 1 500 15% 1 000 10% 500 5% 0 0% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 32 2009-10-21 Third quarter 2009
Slide 33: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Concluding remarks Harri Koponen 33 2009-10-21 Third quarter 2009
Slide 34: Concluding Remarks
CONCLUDING REMARKS Top priorities • Best Deal • Roll-out of new regions in Russia – All new regions launched by 1H 2010 • Targeting a long term mobile EBITDA margin in the mid 30’s • Mobile challenger 34 2009-10-21 Third quarter 2009
Slide 35: Q&A
Q&A 35 2009-10-21 Third quarter 2009
Slide 36: The Best Deal
THE BEST DEAL 36 2009-10-21 Third quarter 2009
Slide 37: Appendix A
Appendix A 37 2009-10-21 Third quarter 2009
Slide 38: Tele2 Sweden Mobile
TELE2 SWEDEN MOBILE Mobile subscriber Net intake 3 400 140 3 350 120 100 3 300 80 3 250 60 3 200 40 3 150 20 3 100 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 38 2009-10-21 Third quarter 2009
Slide 39: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) Mobile net sales EBITDA marg. EBIT marg. 2 000 40,00% 35,00% 1 950 30,00% 1 900 25,00% 20,00% 1 850 15,00% 10,00% 1 800 5,00% 1 750 0,00% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 39 2009-10-21 Third quarter 2009
Slide 40: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) Post paid voice Pre paid voice Mobile Internet 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 40 2009-10-21 Third quarter 2009
Slide 41: Tele2 Norway Mobile
TELE2 NORWAY MOBILE Mobile subscriber Net intake 465 25 460 20 455 15 450 445 10 440 5 435 0 430 -5 425 420 -10 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 41 2009-10-21 Third quarter 2009
Slide 42: Tele2 Norway Mobile (contd)
TELE2 NORWAY MOBILE (contd) Mobile net sales EBITDA marg. 670 12,00% 660 10,00% 650 640 8,00% 630 6,00% 620 610 4,00% 600 2,00% 590 580 0,00% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 42 2009-10-21 Third quarter 2009
Slide 43: Tele2 Russia Mobile
TELE2 RUSSIA MOBILE Mobile subscriber Net intake 14 000 1400 12 000 1200 10 000 1000 8 000 800 6 000 600 4 000 400 2 000 200 0 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 43 2009-10-21 Third quarter 2009
Slide 44: Tele2 Russia Mobile (contd)
TELE2 RUSSIA MOBILE (contd) Mobile subscriber Net intake 14 000 1400 12 000 1200 10 000 1000 8 000 800 6 000 600 4 000 400 2 000 200 0 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 44 2009-10-21 Third quarter 2009
Slide 45: Tele2 Baltic Mobile
TELE2 BALTIC MOBILE Mobile subscriber Net intake 3 600 60 3 500 40 3 400 20 3 300 0 3 200 -20 3 100 -40 3 000 -60 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 45 2009-10-21 Third quarter 2009
Slide 46: Tele2 Baltic Mobile (contd)
TELE2 BALTIC MOBILE (contd) Estonia net sales Lithuania net sales Latvia net sales EBITDA marg. 1200 36,00% 1000 34,00% 800 32,00% 600 30,00% 400 28,00% 200 0 26,00% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 46 2009-10-21 Third quarter 2009
Slide 47: Tele2 Croatia Mobile
TELE2 CROATIA MOBILE Mobile subscriber Net intake 900 80 800 70 700 60 600 50 500 40 400 30 300 200 20 100 10 0 0 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 47 2009-10-21 Third quarter 2009
Slide 48: Tele2 Croatia Mobile (contd)
TELE2 CROATIA MOBILE (contd) Mobile net sales EBITDA marg. 400 0,00% 350 -5,00% -10,00% 300 -15,00% 250 -20,00% 200 -25,00% 150 -30,00% 100 -35,00% 50 -40,00% 0 -45,00% Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 48 2009-10-21 Third quarter 2009
Slide 49: Appendix B
Appendix B 49 2009-10-21 Third quarter 2009
Slide 50: Sweden Outlook
SWEDEN OUTLOOK • Tele2 will continue to target higher market share in the postpaid segment, which in the longer term will lead to: – Higher customer intake – Improved ARPU – Lower churn Resulting in – Higher customer lifetime value • In the short term, this strategy will lead to higher total acquisi
Slide 51: Russia Outlook
RUSSIA OUTLOOK • Subscriber base should be able to reach18-19 million by YE 2011 • Maintain ARPU growth at 5% by 2011 • EBITDA margin 2010-2011 – Old regions’ EBITDA margin should evolve in the range of 40-45 percent – New regions’ EBITDA margin should break even 2 years from launch – Russia’s total
Slide 52: Net Debt and Dividend Targets
NET DEBT AND DIVIDEND TARGETS • Shareholder remuneration – “Tele2’s intention over the medium term is to pay a progressively increasing ordinary dividend” • Long-term financial leverage – “Tele2’s longer-term financial leverage, defined as the net debt /EBITDA ratio, should be in line with the indus
Slide 53: Net Debt and Dividend Targets
NET DEBT AND DIVIDEND TARGETS • Cost control – best in class • System makeover – we have started the journey – Significant potential through cost savings and improved business intelligence 53 2009-10-21 Third quarter 2009
Slide 54: Financial Items Q3
FINANCIAL ITEMS Q3 SEK million Q3 09 Q3 08 Change External Net interest expenses –111 –132 21 Exchange rate differences, external 138 –209 347 Other financial items –10 –16 6 17 -357 374 Exchange rate differences, intragroup 182 67 115 Financial items 199 -290 489 54 2009-10-21 Third quarter 2009
Slide 55: Financial Items YTD
FINANCIAL ITEMS YTD SEK million YTD 09 YTD 08 Change External Net interest expenses –349 –314 -35 Exchange rate differences, external 64 –93 157 Other financial items –41 –71 30 -326 -478 -152 Exchange rate differences, intragroup –50 58 108 Financial items -376 -420 44 55 2009-10-21 Third quarter 2
Slide 56: The Best Deal
THE BEST DEAL 56 2009-10-21 Third quarter 2009