Slide 1: Third Quarter 2017
THIRD QUARTER 2017 October 19, 2017 Tele2 AB
Slide 2: Group highlights – Q3 2017
Group highlights – Q3 2017 % Change % Change SEK billion Q3 2017 Reported LFL Mobile end-user service revenue 3.9 9% 7% Net sales 7.5 13% 1% EBITDA 1.8 21% 12% LFL is constant currencies and pro forma for TDC Sweden 2 Note: All figures in this presentation exclude Tele2 Austria unless otherwise stat
Slide 3: Tele2’s Way2Win
Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Baltic Sea Investment IoT Cash Positively Connecting Digital First Challenger Challenger Markets Generators Fearless Things our Customer Cost Brands Customers Experience Structure Love Re
Slide 4: Delivering on our long term strategy
Delivering on our long term strategy Positively • Strong uptake of new commercial propositions across the Group Fearless • Comviq awarded strongest telecom brand in Sweden Brands • Tele2 wins best telecom retail chain and webshop in the Netherlands • Baltics mobile end-user service revenue up 12%, E
Slide 5: Baltic Sea Challenger
Baltic Sea Challenger TELE2
Slide 6: Sweden – Financials
Sweden – Financials Net sales, LFL Mobile end-user service EBITDA and EBITDA margin, (SEK million) revenue, LFL (SEK million) LFL (SEK million) -2% -1.5% -6% 4,332 1,191 3,900 3,932 3,921 1,969 1,959 1,922 1,930 1,939 1,091 1,121 3,833 1,045 1,040 TDC 4,029 1,885 1,928 1,068 1,028 3,095 31% 28% 29%
Slide 7: Sweden Consumer – Stable despite RLAH
Sweden Consumer – Stable despite RLAH Consumer mobile end-user Share of postpaid sales with Customer satisfaction service revenue bundle >3GB (Tele2 Media & Insight) +1% 63% 65% 83% 82% 86% 83% Q3 16 Q3 17 Q3 16 Q3 17 Q3 16 Q3 17 Tele2 Comviq Q3 Highlights – Mobile end-user service revenue grew by 3
Slide 8: Sweden B2B – Synergies ahead of plan
Sweden B2B – Synergies ahead of plan B2B net sales, LFL B2B Large net sales, LFL YTD integration synergies (SEK million) (SEK million) -2% -2% SEK 137 million 0 Q3 16 Q3 17 Q3 16 Q3 17 Q3 Highlights – Net sales down due to weak customer additions in previous quarters, continued price competition and
Slide 9: Baltics – Financials
Baltics – Financials Net sales Mobile end-user service EBITDA (SEK million) revenue (SEK million) (SEK million) +11% +12% +18% 983 339 935 949 314 884 859 564 582 287 286 521 533 522 264 32% 33% 33% 34% 28% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3
Slide 10: Baltics – Strong growth despite RLAH
Baltics – Strong growth despite RLAH ASPU development Share of 4G capable MBB end-user service revenue smartphones in base +11% +37% 45% 37% Q3 16 Q3 17 Q3 16 Q3 17 Q3 16 Q3 17 Q3 Highlights – Higher ASPU driven by continued prepaid to postpaid migration and strong uptake of new commercial propositi
Slide 11: Investment Markets
Investment Markets TELE2
Slide 12: Netherlands – Financials
Netherlands – Financials Net sales Mobile end-user service EBITDA (SEK million) revenue (SEK million) (SEK million) -6% +27% +103m 509 531 1,583 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 1,577 1,489 451 1,478 1,390 419 438 151 101 18 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 -2 -23 Q3 Highligh
Slide 13: Netherlands – Strong momentum
Netherlands – Strong momentum Spontaneous brand awareness Share of total new postpaid Usage on own network & brand consideration (Memo2) (GfK) 93% 53% 50% 30% 72% 38% 39% 24% 54% 18% 10% Q3 16 Q3 17 Aug 16 Aug 17 Sep 16 Sep 17 Awareness Consideration Handset SIM only Voice Data Q3 Highlights – Conti
Slide 14: Kazakhstan – Financials
Kazakhstan – Financials Net sales Mobile end-user service EBITDA and EBITDA margin (SEK million) revenue (SEK million) (SEK million) +14% +19% +114% 702 713 547 649 653 495 506 160 169 470 573 426 122 92 79 22% 26% 19% 14% 13% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Q4 16 Q
Slide 15: Kazakhstan – Network integration completed
Kazakhstan – Network integration completed Customer base ASPU development Integration (thousand) +7% +13% ~1,740 sites merged Q3 16 Q3 17 Q3 16 Q3 17 Q3 Highlights – Customer growth driven by successful dual brand strategy and expansion of distribution network – Positive ASPU development driven by n
Slide 16: Financial Overview
Financial Overview TELE2
Slide 17: Mobile end-user service revenue
Mobile end-user service revenue Tele2 Group Development per market (SEK million) (SEK million) +9% 3,907 3,927 17 3,927 80 6 112 3,709 3,723 61 54 3,597 3,597 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Sweden Baltics NL KZ RoW Oth Q3 17 17
Slide 18: EBITDA
EBITDA Tele2 Group Development per market (SEK million) (SEK million) +21% 1,848 18 9 1,848 90 103 1,670 52 1,583 53 1,523 1,523 1,411 22.8% 24.5% 22.0% 20.6% 17.8% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Sweden Baltics NL KZ RoW Oth Q3 17 EBITDA margin 18
Slide 19: CAPEX
CAPEX Tele2 Group Development per market (SEK million) (SEK million) -31% 1,052 766 757 766 14 615 -46 532 -100 6 532 -78 -30 11.5% 13.3% 8.1% 9.8% 7.1% Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q3 16 Sweden Baltics NL KZ RoW Oth Q3 17 CAPEX / Sales 19
Slide 20: Free cash flow
Free cash flow Total operations Tele2 Group Development (SEK million) (SEK million) +54% 1,290 54 1,290 89 226 0 325 -6 838 820 838 -236 394 178 Q3 16 EBITDA Interest Taxes Working CAPEX Discontinued One-off Q3 17 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 etc. capital paid operations items 20 Free cash flow = C
Slide 21: Operating cash flow
Operating cash flow EBITDA less CAPEX 12 m rolling, SEK million 4,012 4,175 3,765 3,353 3,345 3,320 3,407 3,246 3,314 3,357 3,337 -619 -1,178 -1,344 -1,015 -1,504 -1,625 -1,940 -2,223 -2,282 -2,196 -1,934 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Baltic Sea Challenger & Rest
Slide 22: Debt position and financial leverage
Debt position and financial leverage Total operations, Economic net debt to EBITDA 12 m rolling SEK billion Leverage 2.5 12.5 2.0 10.0 1,88 1.7 1.5 7.5 12.0 11.0 10.4 10.7 1.0 5.0 10.3 2.5 0.5 0.0 0.0 Sep 2016 Dec 2016 Mar 2017 Jun 2017 Sep 2017 Economic net debt Economic net debt to EBITDA Economic
Slide 23: Challenger program ahead of plan
Challenger program ahead of plan Baseline 2016 actual 2018 target Key progress areas since inception Simplify % of products harmonized 30% 40% 60% New revenue streams on shared platforms Sales & marketing efficiency Discipline % of spend strategically 40% 75% 80% Network & IT consolidation sou
Slide 24: Financial guidance 2017 – Upgraded
Financial guidance 2017 – Upgraded Mobile end-user High-single digit service revenue % growth* Net sales (SEK billion) 30 – 31 EBITDA (SEK billion) 6.4 – 6.6 CAPEX (SEK billion) 2.9 – 3.2 24 * Based on LFL which is constant currencies and pro forma for Altel and TDC Sweden
Slide 25: Summary
Summary TELE2
Slide 26: Key priorities moving forward
Key priorities moving forward Fearlessly liberate people to live a more connected life Growth from continued data monetization Return Sweden to growth despite RLAH Further leverage our momentum in Baltics, Netherlands and Kazakhstan Execute on Challenger and synergy programs Positively Con
Slide 27: Tele2’s Way2Win
Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Baltic Sea Investment IoT Cash Positively Connecting Digital First Challenger Challenger Markets Generators Fearless Things our Customer Cost Brands Customers Experience Structure Love Re
Slide 28: The End
THE END