Slide 1: First Quarter 2009
FIRST QUARTER 2009 22 April 2009
Slide 2: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 2 2009-04-22 First quarter 2009
Slide 3: Highlights Q1
HIGHLIGHTS Q1 • Robust first quarter with good sales growth and solid EBITDA • Nordic – New partnership in Sweden to build a joint LTE network – Swedish mobile operations benefiting from SUNAB JV with stable EBIT contribution – EBITDA contribution from Swedish fixed telephony and broadband expanding
Slide 4: Economic Impact
ECONOMIC IMPACT • Macro economic conditions are still deteriorating • The effects of the global recession can be observed in some parts of Tele2’s operations • The company has acted – Contingency plans in place to prevent an impact of the economic slowdown – Measures include scrutinizing both operat
Slide 5: Financial Highlights Q1 2009
FINANCIAL HIGHLIGHTS Q1 2009 • Robust financial performance in Q1 2009 – Revenue of SEK 10,120 million, up 6 percent – EBITDA of SEK 2,227 million, up 34 percent – Cash flow after Capex SEK 682 (508) million • Low financial gearing with net debt to EBITDA 0.7 times*) • Progressive view on dividend –
Slide 6: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 6 2009-04-22 First quarter 2009
Slide 7: Q1 2009 Group Results
Q1 2009 GROUP RESULTS SEK million Q1 09 Q1 08 Change % Continuing operations, Net Sales 10,120 9,527 6% EBITDA 2,227 1,660 34% - EBITDA margin (%) 22,0% 17,4% Depreciation and joint venture -894 -930 - Depreciation of net sales (%) 8,7% 9,1% One-off items -4 83 EBIT 1,329 813 Normalized EBIT 1,333 7
Slide 8: Financial Items
FINANCIAL ITEMS SEK million Q1 09 Q1 08 Diff External Net interest expenses –139 –88 –51 Exchange rate differences, external –166 102 -268 Other financial items –20 –8 –12 -325 6 -331 Exchange rate differences, intragroup –267 –34 –233 Financial items -592 -28 -564 Stronger USD + 7 % 8 2009-04-22 Fi
Slide 9: Intragroup FX
INTRAGROUP FX SEK million Q1 09 Q1 08 Diff Exchange rate differences, intragroup -267 -34 -233 Other comprehensive income -122 -295 173 -389 -329 -60 • Total intragroup FX affecting Q1 389 million SEK, partly reported in Income statement and partly in Comprehensive income Weaker RUB – 7 % 9 2009-04-
Slide 10: "Our" Currencies
“OUR” CURRENCIES Currency vs. Q1 2008 vs. 31 dec 2008 EUR + 16 % - RUB -5% -7% ”BALTICS” + 16 % - USD + 34 % +7% • USD private placement 220 MUSD 10 2009-04-22 First quarter 2009
Slide 11: Net Assets in Foreign Currencies
NET ASSETS IN FOREIGN CURRENCIES 100% 8% 8% 80% 22% 24% Other 60% 22% 21% Baltics Russia 40% EUR 20% 48% 47% 0% Year-end 2008 Q1 2009 Total 25.4 bSEK Total 25.4 bSEK 11 2009-04-22 First quarter 2009
Slide 12: Taxes
TAXES • Reported tax for Q1 2009 amounted to SEK -273 million whereof -186 was related to the S.E.C tax dispute. Tax payment affecting cash-flow amounted to SEK 456 million • In 2009 Tele2 forecasts a corporate tax rate of approximately 20% excluding one-off items • The tax payment will affect 2009
Slide 13: Cash Flow for Q1 2009
CASH FLOW FOR Q1 2009 SEK million Q1 09 Q1 08 OPERATING ACTIVITIES Taxes paid -456 -320 Cash flow from operations, other 1,892 1,745 Changes in working capital 395 82 CASH FLOW FROM OPERATING ACTIVITIES 1,831 1,507 INVESTING ACTIVITIES CAPEX -1,149 -999 Cash Flow after CAPEX 682 508 Acquisition of s
Slide 14: Dividend Proposal
DIVIDEND PROPOSAL • Tele2’s intention over the medium term is to pay a progressive ordinary dividend to its shareholders • The board of Tele2 AB has decided to recommend an increase of the ordinary dividend by 11 percent to SEK 3.50 (3.15) per share • The board has also decided to recommend a specia
Slide 15: Balance Sheet Q1 2009
BALANCE SHEET Q1 2009 SEK million Q1 09 Q1 08 Assets FIXED ASSETS 34,446 32,866 CURRENT ASSETS 11,815 15,485 ASSETS 46,261 48,351 Equity and liabilities SHAREHOLDERS' EQUITY 28,746 27,173 LONG-TERM LIABILITIES 5,633 5,731 SHORT-TERM LIABILITIES 11,882 15,447 EQUITY AND LIABILITIES 46,261 48,351 15 2
Slide 16: Group Financial Profile
GROUP FINANCIAL PROFILE 20 000 3 18 000 Net debt incl. JV 16 000 2,5 14 000 2 Net debt 12 000 10 000 1,5 8 000 Net debt/ 6 000 1 EBITDA incl. JV 4 000 0,5 Net debt/ 2 000 EBITDA 0 0 07 08 07 09 08 Q1 Q3 Q1 Q1 Q3 • Net debt amounted to SEK 4,433 (4,935) million in Q1 2009 – 0.5 times FY 2008 EBITDA –
Slide 17: Net Intake per Segment
NET INTAKE PER SEGMENT 1000 800 600 400 Fixed broadband 200 Fixed telephony 0 Mobile -200 Q4 Q1 Q2 Q3 Q4 Q1 07 08 08 08 08 09 -400 -600 • Tele2 has experienced a general slowdown in customer activity affecting overall intake • Mobile customer base increasing by 239,000 new users 17 2009-04-22 First
Slide 18: Group Q1 2009 Mobile
GROUP Q1 2009 MOBILE 25 000 20 000 15 000 Mobile Internet 0.2 million Pre paid voice 15.7 million 10 000 Post paid voice 3.7 million 5 000 0 Q2 08 Q3 08 Q4 08 Q1 09 • Total number of mobile customers 19.6 million Q1 2009 18 2009-04-22 First quarter 2009
Slide 19: Group Q1 2009 Net Sales
GROUP Q1 2009 NET SALES 12 000 10 000 8 000 Other Fixed broadband 6 000 Fixed telephony 4 000 Mobile 2 000 0 Q4 Q1 Q2 Q3 Q4 Q1 07 08 08 08 08 09 • Mobile net sales SEK 6 175 million, up 9 percent – Favorable currency movement contributed by approximately SEK 500 million in quarter • Fixed Broadband
Slide 20: Group Q1 2009 EBITDA
GROUP Q1 2009 EBITDA 2 500 25,00% Other 2 000 20,00% Fixed broadband 1 500 15,00% Fixed telephony 1 000 10,00% 500 Mobile 0 5,00% Group EBITDA Q4 Q1 Q2 Q3 Q4 Q1 margin -500 0,00% 07 08 08 08 08 09 • Group EBITDA margin 22 percent – Lithuania delivering new record EBITDA margin of 37 percent – Improv
Slide 21: Mobile Q1 2009 EBITDA
MOBILE Q1 2009 EBITDA 2 000 30,00% 1 800 1 600 25,00% 1 400 20,00% Mobile 1 200 1 000 15,00% 800 Mobile EBITDA 600 10,00% margin 400 5,00% 200 0 0,00% Q4 Q1 Q2 Q3 Q4 Q1 07 08 08 08 08 09 • Mobile EBITDA margin 23 percent – Launch costs in Russia affecting the quarter. FY 2009 expecting opex of SEK 5
Slide 22: Fixed Broadband Q1 2009 EBITDA
FIXED BROADBAND Q1 2009 EBITDA 300 15,00% 250 200 10,00% 150 100 5,00% Fixed broadband 50 0,00% 0 Fixed broadband -50 Q4 Q1 Q2 Q3 Q4 Q1 -5,00% EBITDA margin -100 07 08 08 08 08 09 -150 -10,00% -200 -250 -15,00% • Fixed broadband EBITDA margin 13 percent – Excellent performance in Tele2 Netherlands d
Slide 23: Fixed Telephony Q1 2009 EBITDA
FIXED TELEPHONY Q1 2009 EBITDA 500 30,00% 450 400 25,00% 350 20,00% Fixed Telephony 300 250 15,00% 200 Fixed telephony 150 10,00% EBITDA margin 100 5,00% 50 0 0,00% Q4 Q1 Q2 Q3 Q4 Q1 07 08 08 08 08 09 • Fixed telephony EBITDA margin 27 percent – Focus on maintaining relative performance 23 2009-04-2
Slide 24: Group Q1 2009 EBIT
GROUP Q1 2009 EBIT 2000 16,00% Other 14,00% 1500 12,00% Fixed broadband 1000 10,00% Fixed telephony 500 8,00% 6,00% Mobile 0 Q4 Q1 Q2 Q3 Q4 Q1 4,00% -500 07 08 08 08 08 09 Group EBIT 2,00% margin -1000 0,00% • Group EBIT margin 13% percent excluding one-off item • Improved operational performance in
Slide 25: Group Q1 2009 Capex
GROUP Q1 2009 CAPEX 1600 16,00% 1400 14,00% 1200 12,00% Other 1000 10,00% Fixed broadband 800 8,00% Fixed telephony 600 6,00% Mobile 400 4,00% Capex/sales 200 2,00% 0 0,00% Q4 Q1 Q2 Q3 Q4 Q1 07 08 08 08 08 09 • Group Capex SEK 1,168 million or 12 percent of net sales – FY 2009 expectation in the ran
Slide 26: Financial Summary
FINANCIAL SUMMARY • Overall solid operational performance • EBIT positive in all markets except for Croatia • All segments showing strong results • Robust liquidity profile after refinancing and strong cash flow However, the effects of the global recession can be observed in some parts of Tele2’s op
Slide 27: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 27 2009-04-22 First quarter 2009
Slide 28: General Market Trends in Mobile
GENERAL MARKET TRENDS IN MOBILE • Customer intake affected by current macro environment – More price sensitive and interested in SIM only offers • No clear trend in MoU – Some markets showing slowdown in usage • Pricing environment for basic voice fairly stable • Good interest in mobile Internet ser
Slide 29: Tele2 Sweden Mobile
TELE2 SWEDEN MOBILE 3 400 140 3 350 120 • Revenue growth of 3 percent 3 300 • Slowing customer activity in 100 3 250 voice services 3 200 80 Mobile subscriber – Lower pre-paid intake due to 3 150 60 Net intake higher churn 3 100 – Better post-paid intake and 40 3 050 prolonged interest in SIM-only 2
Slide 30: Tele2 Sweden Mobile (contd)
TELE2 SWEDEN MOBILE (contd) 4 000 3 500 3 000 2 500 Mobile Internet 0.2 million 2 000 Pre paid voice 1.9 million 1 500 Post paid voice 1.3 million 1 000 500 0 Q2 08 Q3 08 Q4 08 Q1 09 • Total number of mobile customers 3.4 Q1 2009 30 2009-04-22 First quarter 2009
Slide 31: Tele2 Norway Mobile
TELE2 NORWAY MOBILE 465 25 460 20 455 • Tele2 staying the price leader 15 450 despite tough market 10 Mobile subscriber conditions 445 5 Net intake • Underlying customer intake 440 0 7,000 in Q1 2009 435 – 11,000 customers cancelled 430 -5 due to inactivity 425 -10 • ARPU positively impacted by a Q4
Slide 32: Tele2 Russia Mobile
TELE2 RUSSIA MOBILE • Revenue growth in local 12 000 700 currency 20 percent 10 000 600 – Overall result affected negatively by FX movements 500 8 000 • More than 10.6 million 400 6 000 Mobile subscriber customers Net intake 300 – Net intake in the quarter lower 4 000 200 than internal expectation 2
Slide 33: Tele2 Baltic Mobile
TELE2 BALTIC MOBILE 3 600 60 • Challenging economic 3 550 40 environment 3 500 20 – Lithuania more stable than Estonia/Latvia Mobile subscriber 3 450 0 Net intake – Price competition in Latvia 3 400 -20 fierce • Robust EBITDA 3 350 -40 development despite 3 300 -60 current economic climate Q4 07 Q1
Slide 34: Tele2 Croatia Mobile
TELE2 CROATIA MOBILE 900 80 • The Croatian operations 800 70 developing according to 700 600 60 plan 50 500 Mobile subscriber • Good customer intake in the 40 400 Net intake quarter 30 300 – Improved marketing 200 20 strategy leading to 100 10 improved customer 0 0 perception Q4 07 Q1 08 Q2 08 Q3 08
Slide 35: Regulation
REGULATION Mobile regulation • Europe has been the foundation for many mobile operators • Predictable regulatory agenda important to prolong this trend • Frequency re-farming is a sign of proactive thinking of the national regulators in Sweden – Hopefully a data point that will become a trend throug
Slide 36: Agenda
AGENDA CEO review Harri Koponen Financial review Lars Nilsson Operating review of Mobile Harri Koponen Concluding remarks Harri Koponen 36 2009-04-22 First quarter 2009
Slide 37: Concluding Remarks
CONCLUDING REMARKS • The quarter showed good revenue development together with solid EBITDA contribution • The company has acted on economic slowdown • Solid financial position a good foundation to build upon in 2009 • Top priorities in 2009 – Tele2 will continue to focus on cost discipline in all p
Slide 38: Q&A First quarter 2009
Q&A 38 2009-04-22 First quarter 2009