Slide 1: Fourth Quarter 2014
FOURTH QUARTER 2014 30th of January 2015 Tele2 AB
Slide 2: Q4 2014 in brief
Q4 2014 in brief TELE2
Slide 3: Tele2 Group – Financial overview
Tele2 Group –Financial overview Net sales EBITDA EBITDA margin CAPEX (SEK billion) (SEK billion) (percent) (SEK billion) 6.88 1.41 21 1.03 (6.59) (1.49) (23) (1.05) Q4 Financial Highlights – Strong mobile end-user service revenue growth for the Group at 7%, driven by improved monetization of mobile
Slide 4: Mobile end-user service revenue
Mobile end-user service revenue Sweden 5% Baltics 4% (SEK million) (SEK million) 444 474 447 1,775 1,716 1,815 1,865 1,856 431 415 Tele2 Group (SEK million) 7% 3,094 3,252 3,205 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 3,006 2,904 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Netherlands Kazakhstan 12% (SEK million) 15% (SEK
Slide 5: Momentum in mobile end-user service revenue for the last two years
Momentum in mobile end-user service revenue for the last two years Year-on-year growth for mobile end-user service revenue, Tele2 Group Q4 14 Q3 14 Q2 14 7% Q1 14 8% Q4 13 7% Q3 13 7% Q2 13 9% Q1 13 7% Q4 12 7% Q3 12 8% 6% 6% 5
Slide 6: Tele2's Way2Win
Tele2’s Way2Win Vision We will be champions of customer value in everything we do Mission We are challengers, fast-movers and will always offer our customers what they need for less Where we focus How we win Europe and Focused Winning Mobile access is Residential and Value Step-Change Eurasia are ou
Slide 7: Significant events in the quarter
Significant events in the quarter Focused • 4G network in the Netherlands opened on January 1st 2015 Technology • 90% 4G population coverage achieved in Estonia Choices Value • In launching Tele2.0 in Sweden we continue to lead the market in Champion offer-innovation which strengthens our challenger
Slide 8: Country Performance
Country Performance TELE2
Slide 9: Tele2 Sweden
Tele2 Sweden Net sales EBITDA Game changing move in the market (SEK million) (SEK million) through successful launch of Tele2.0 1,025 60% 4,000 3,156 3,021 3,111 3,124 3,373 1,000 882 880 50% 3,500 858 825 3,000 800 40% 2,500 33% 600 30% 2,000 27% 27% 28% 26% 1,500 400 20% 1,000 200 10% 500 0 - 0% Q
Slide 10: Mobile data monetization continues…
Mobile data monetization continues… Top-up development Tele2 Residential Intake mix (‘Volym’ offer) (Revenue, SEK million) Key takeaways • Successful shift of customers from 44 smaller to bigger data buckets 40 • A majority of customers now choosing 38% 44% 53% data buckets bigger than 1GB 61% 27 •
Slide 11: … and is increasing our revenue and EBITDA
… and is increasing our revenue and EBITDA ASPU development Mobile development (Postpaid residential) (Q4 14 vs Q4 13) +13% +5% Mobile end-user service revenue +10% Mobile EBITDA Q1 14 Q2 14 Q3 14 Q4 14 11
Slide 12: Tele2 Netherlands
Tele2 Netherlands Net sales EBITDA Mobile customers (SEK million) (SEK million) (Consumer postpaid, thousands) 799 1,600 342 60% 1,372 1,320 1,318 1,369 1,432 360 257 267 778 1,400 310 50% 1,200 260 206 173 754 1,000 40% 210 800 160 30% 727 600 25% 110 19% 20% 20% 400 60 15% 200 12% 10% 10 0 -40 0%
Slide 13: Ready for take-off
Ready for take-off 4G network roll-out plan Percentage of 4G handsets in customer base Q1 2015 35% Begin new and existing 30% customer transfer 25% Q2 – Q4 2015 20% Continued roll-out 15% of network 10% Q1 2016 5% Expected national 0% coverage Q1 Q2 Q3 Q4 2014 13
Slide 14: Tele2 Kazakhstan
Tele2 Kazakhstan Net sales EBITDA Average usage per subscriber (SEK million) (SEK million) (MB, four quarter rolling average) Interconnect cut and currency devaluation x9 25 22 450 17% 400 365 382 20 17 349 350 294 309 15 12% 300 10 250 3 6% 7% 200 5 1 4% 1% 2% 150 0 0% 100 -2% -3% -5 50 - -10 -7 -8
Slide 15: Underlying trends continue to be positive
Underlying trends continue to be positive Voice traffic development Gross intake quality index (Minutes) ~65% 800 700 600 500 Tenge 400 300 200 100 0 Q1 14 Q2 14 Q3 14 Q4 14 Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov 2013 2014 15
Slide 16: Tele2 Croatia and Tele2 Lithuania
Tele2 Croatia and Tele2 Lithuania Croatia net sales Croatia EBITDA Croatia Q4 Highlights (SEK million) (SEK million) 500 80 72 – Secured 15 MHz additional spectrum 396 390 372 40% 400 329 in the 1,800 band in order to continue 299 60 300 39 30% to improve network quality. 40 33 20% 200 22 25 18% 100
Slide 17: Tele2 Latvia and Tele2 Estonia
Tele2 Latvia and Tele2 Estonia Latvia net sales Latvia EBITDA Latvia Q4 Highlights (SEK million) (SEK million) 250 230 213 223 235 236 100 83 82 – Strong end-user service revenue 60% 200 80 72 62 67 growth of 11%. 150 60 40% 31% 35% 35% – Launch of HD Voice service. 100 40 29% 30% 20% 50 20 0 0 0% Q
Slide 18: Tele2 Austria and Tele2 Germany
Tele2 Austria and Tele2 Germany Austria net sales Austria EBITDA Austria Q4 Highlights (SEK million) (SEK million) 98 – Launch of triple-play offer (including 306 311 60% 291 299 308 78 65 62 62 TV) in the residential segment. 300 58 58 49 40% 200 38 – Growth focus will concentrate on the 21% 17% 19
Slide 19: To sum it up - Data monetization is improving our EBITDA
To sum it up -Data monetization is improving our EBITDA At a company level And especially on our own networks Tele2 Group mobile EBITDA Tele2 Group mobile EBITDA own networks only, (SEK million) (excluding the Netherlands, Germany and Austria, SEK million) 6% 18% 1,217 1,265 1,017 1,039 1,107 963 93
Slide 20: Financial Overview
Financial Overview TELE2
Slide 21: Group result Q4 2014
Group result Q4 2014 SEK million Q4 2014 Q4 2013 ▲% Net sales 6,876 6,585 4.4% EBITDA 1,412 1,490 -5.2% EBITDA margin (%) 20.5% 22.6% -2.1% Depreciation & associated companies -708 -765 -7.5% Depreciation of net sales (%) -10.2% -11.6% 1.3% One-off items 31 11 EBIT 735 736 -0.1% Normalized EBIT 704
Slide 22: Group result YTD December
Group result YTD December SEK million FY 2014 FY 2013 ▲% Net sales 25,955 25,757 0.8% EBITDA 5,926 5,891 0.6% EBITDA margin (%) 22.8% 22.9% 0.0% Depreciation & associated companies -2,710 -2,909 -6.8% Depreciation of net sales (%) -10.4% -11.2% 0.8% One-off items 274 -434 EBIT 3,490 2,548 37.0% Norm
Slide 23: Cash flow
Cash flow SEK million Q4 2014 Q4 2013 FY 2014 FY 2013 OPERATING ACTIVITIES Cash flow from operations, excl taxes and interest 1,531 1,387 6,045 7,117 Interest paid -58 -51 -280 -374 Taxes paid -93 -109 -327 -479 Change in working capital -58 293 -860 -451 Cash flow from operating activities 1,322 1,
Slide 24: Cash flow excluding Norway and Russia
Cash flow excluding Norway and Russia SEK million Q4 2014 Q4 2013 FY 2014 FY 2013 OPERATING ACTIVITIES Cash flow from operations, excl taxes and interest 1,526 1,415 5,989 5,832 Interest paid -59 -52 -287 -298 Taxes paid -93 -109 -327 -302 Change in working capital -57 220 -714 -249 Cash flow from o
Slide 25: Debt position and ratio
Debt position and ratio Pro forma net debt / EBITDA 12 m rolling SEK billion / Ratio 20.0 2.00 17.5 1.75 15.0 1.50 12.5 1.25 0.0 0.0 10.0 0.0 0.0 1.00 0.0 0.0 2.2 7.5 2.0 2.0 0.75 8.3 7.9 7.9 7.2 6.8 5.0 0.50 2.5 0.25 0.0 0.00 Dec 2013 Mar 2014 Jun 2014 Sep 2014 Dec 2014 Extraordinary dividend, prop
Slide 26: The Challenger Program
The Challenger Program Ramp-up of indicative costs and Productivity improvement: 1 BSEK (5%) benefits over 4 years Benefits Restructuring costs / investments 2015 2015 2016 2016 2017 2017 2018 2018 Today Target Target * Indicative program benefits and costs. Analysis phase will identify and validate
Slide 27: We are analyzing our ideas and estimate 3-6 months before commencing execution
We are analyzing our ideas and estimate 3-6 months before commencing execution We will come back with more details at Q2 reporting on 21 July 2015, and will report on progress quarterly until full benefits have been realized 2014 2015 2016 2017 2018 Investment phase Benefits phase TODAY 21/7 27
Slide 28: Guidance
Guidance 2015 2015 – 2017 Mobile end-user EBITDA Net debt/EBITDA service revenue (SEK billion) Mid-single digit % growth 5.8 – 6.0 1.5 – 2.0x Net sales CAPEX Dividend growth (SEK billion) (SEK billion) 25.5 – 26.5 3.8 – 4.0 10% 28 Note: Guidance excludes Tele2 Norway. Net debt/EBITDA and dividend gu
Slide 29: Conclusion
Conclusion TELE2
Slide 30: Q4 2014 in short
Q4 2014 in short Summary – Mobile data monetization continues – Positive momentum in end-user service revenue for the 14th consecutive quarter – Tele2.0 has led to a game changing move in the Swedish telecom market – 4G network in the Netherlands launched – Highest ever quarterly mobile end-user ser
Slide 31: Key priorities for 2015 to drive further data monetization
Key priorities for 2015 to drive further data monetization Focused Technology • Roll out of 4G network in the Netherlands Choices Value • Realize our ambitions for the Tele2.0 launch in Sweden Champion Step-Change • The Challenger Program Productivity Winning People • Accelerate knowledge sharing &
Slide 32: Q&A
Q&A TELE2
Slide 33: The End
THE END