FIRST QUARTER 2010
21 April 2010
2010-04-212 First quarter 2010
AGENDA
About Q1 2010
Financial review
Concluding remarks
2010-04-213 First quarter 2010
Robust operational result • Nordic
– Sweden mobile revenue grew by 3 percent – Mobile margin Sweden 35 percent
• Russia– Highest ever EBITDA contribution
• EBITDA amounted to 719 SEK million
– 949 000 new customers
• Central Europe & Eurasia– Sustained cash flow contribution– Welcoming Kazakhstan, our newest member in the Tele2
group
• Western Europe– Further success in corporate segment
HIGHLIGHTS Q1
2010-04-214 First quarter 2010
HIGHLIGHTS TELE2 SWEDEN
• Adding 29 000 new postpaid
customers, of which:
– 15 000 mobile internet
– 14 000 mobile voice
• Continued revenue growth
– Driven by mobile
• EBITDA amounted to 794 SEK
million
• Continued focus on growth in
postpaid segment 28%
29%
30%
31%
32%
33%
34%
35%
36%
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
EBITDA margin - New accounting standard
EBITDA margin - Old accounting standard
• New accounting treatment for
handsets sold with monthly
instalments
2010-04-215 First quarter 2010
HIGHLIGHTS TELE2 RUSSIA
0
200
400
600
800
1000
1200
1400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
20%
22%
24%
26%
28%
30%
32%
34%
36%
38%
Net Intake - New regions Net Intake - Old regions EBITDA margin
2010-04-216 First quarter 2010
• Gold standard for the group in the corporate segment
– Successful Best Deal strategy
• EBITDA increased to SEK 611 (594) million in the quarter
HIGHLIGHTS TELE2 NETHERLANDS
2010-04-217 First quarter 2010
-200
-100
0
100
200
300
400
500
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
EBITDA CAPEX EBITDA - CAPEX
HIGHLIGHTS TELE2 BALTIC REGION
2010-04-218 First quarter 2010
AGENDA
About Q1 2010
Financial review
Concluding remarks
2010-04-219 First quarter 2010
Q1 2010 GROUP RESULTS
6711,268Net result
19719Net result, discontinued operations
4741,249Net result, continuing operations
-281-339Taxes
-59242Financial items
13,7%16,2%- Normalized EBIT margin (%)
1,3471,546Normalized EBIT
1,3511,549EBIT
-4
9,1%
-893
22,8%
2,244
9,828
Q1 09
-3One-off items
8,5%- Depreciation of net sales (%)
-809Depreciation and joint venture
24,7%- EBITDA margin (%)
5%2,358EBITDA
-3%9,535Continuing operations, Net Sales
Change %Q1 10SEK million
2010-04-2110 First quarter 2010
TAXES
-339-339-Q1
NormalOne-Off ReportedTaxes in income statement (MSEK)
-233-233-Q1
NormalOne-Off ReportedTaxes in cash flow statement (MSEK)
In 2010: Tele2 forecast a corporate tax rate of approximately 22 (earlier 20)
percent excluding one-off items. The tax payment will affect cash flow by
approximately SEK 800 (earlier 700) million due to better than expected
operational performance in Tele2 Russia.
2010-04-2111 First quarter 2010
CASH FLOW FOR Q1 2010
682
-97
585
1,683
-819
864
Cash Flow after CAPEX
Acquisition and sale of shares and participations, net
-1,149-608CAPEX
1,831
364
1,923
-456
Q1 09
INVESTING ACTIVITIES
2,291CASH FLOW FROM OPERATING ACTIVITIES
183Changes in working capital
2,341
-233
OPERATING ACTIVITIES
Cash flow from operations, less paid taxes
Taxes paid
Q1 10SEK million
2010-04-2112 First quarter 2010
ROCE
6%7%8%9%
10%11%12%13%14%15%16%17%18%19%20%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2007 2008 2009 2010
2010-04-2113 First quarter 2010
GROUP FINANCIAL PROFILE
0
5 000
10 000
15 000
20 000
25 000
Q2
07
Q3
07
Q4
07
Q1
08
Q2
08
Q3
08
Q4
08
Q1
09
Q2
09
Q3
09
Q4
09
Q1
10
(SE
K m
illio
n)
0
0,5
1
1,5
2
2,5
Net debt Net debt incl. JV
Net debt/ EBITDA 2009 Net debt incl. JV/ EBITDA 2009
2010-04-2114 First quarter 2010
GROUP NET INTAKE PER SEGMENT
-400
-200
0
200
400
600
800
1 000
1 200
1 400
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
Mobile Fixed broadband Fixed telephony
2010-04-2115 First quarter 2010
GROUP CUSTOMER STOCK
Group Mobile Customer Stock
0
5 000
10 000
15 000
20 000
25 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In t
housands)
Prepaid voice Postpaid voice Mobile Internet
Group Customer Stock
0
5 000
10 000
15 000
20 000
25 000
30 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In t
housands)
Mobile Fixed Broadband Fixed Telephony
• Strong intake in the mobile segment
– Driven by Russia adding 949 000 new customers
2010-04-2116 First quarter 2010
GROUP EBITDA
-500
0
500
1 000
1 500
2 000
2 500
3 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
20%
22%
24%
26%
Mobile Fixed broadband Fixed telephony
Other Group EBITDA margin
2010-04-2117 First quarter 2010
GROUP MOBILE EBITDA
1 300
1 350
1 400
1 450
1 500
1 550
1 600
1 650
1 700
1 750
1 800
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
20%
22%
24%
26%
28%
30%
32%
34%
Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO)
Mobile EBITDA margin on own infratsructure Total mobile EBITDA margin
2010-04-2118 First quarter 2010
MoU AND ARPU DEVELOPMENT
Russia
30
40
50
60
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
SE
K
180
200
220
240
ARPU MoU
Sweden
160
180
200
220
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
SE
K
180
200
220
240
260
ARPU MoU
• Relatively stable development– Swedish ARPU being diluted by an increasing customer base in Mobile Internet and
softness in corporate customer MoU
2010-04-2119 First quarter 2010
TELE2 GOING FORWARD
• Best Deal position – Perceived price leader
– Expected quality
• Targeting a long term mobile EBITDA margin on own infrastructure at least 35 percent
• All operations should have the ambition of reaching ROCE of at least 20 percent
• The capability to reach a top 2 position, in terms of customer market share, in an individual country or region
2010-04-2120 First quarter 2010
SWEDEN OUTLOOK
• Tele2 will continue to target the postpaid segment, which in the longer term will lead to:
– Increased ARPU
– Lower churn
• In the short term, this strategy will lead to higher total acquisition costs
resulting in:
– A full year EBITDA margin in the range of 33-35 percent depending on
customer intake
2010-04-2121 First quarter 2010
RUSSIA OUTLOOK
• Subscriber base should be able to reach 19-20 million by YE 2011
• Maintain ARPU growth at 5 percent by 2011
• EBITDA 2010-2011
– Old regions’ EBITDA margin should stabilize at 45 percent
– New regions’ EBITDA margin should break even 2 years from launch
– EBITDA contribution from new regions should be in the range of SEK -600
to -800 million
– Russia’s total EBITDA margin should develop in the range of 27-32
percent
• Capex 2010-2011
– Accumulated Capex in Russia should be in the range of SEK 4.5-5.0
billion
• Selected acquisitions – when available and under right conditions
2010-04-2122 First quarter 2010
CROATIA OUTLOOK
”WE WILL REACH EBITDA BREAK
EVEN DURING 2H 2010”
2010-04-2123 First quarter 2010
AGENDA
About Q1 2010
Financial review
Concluding remarks
2010-04-2124 First quarter 2010
CONCLUDING REMARKS
Nordic
• Continued revenue growth
Russia
• Record high EBITDA
Central Europe and Eurasia
• Stable cash flow contribution
Western Europe
• Solid operational performance
2010 an investment year
• Russia
• Kazakhstan
• 4G Sweden
• 3G Norway
2010-04-2125 First quarter 2010
Q&A
2010-04-2126 First quarter 2010
Appendix A
2010-04-2127 First quarter 2010
TELE2 SWEDEN MOBILE
2 800
2 900
3 000
3 100
3 200
3 300
3 400
3 500
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
0
20
40
60
80
100
120
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-04-2128 First quarter 2010
TELE2 SWEDEN MOBILE (contd)
1 600
1 650
1 700
1 750
1 800
1 850
1 900
1 950
2 000
2 050
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
20%
24%
28%
32%
36%
40%
Mobile net sales EBITDA marg. EBIT marg.
2010-04-2129 First quarter 2010
TELE2 SWEDEN MOBILE (contd)
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
Postpaid voice Prepaid voice Mobile Internet
2010-04-2130 First quarter 2010
TELE2 NORWAY MOBILE
360
380
400
420
440
460
480
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
tho
usa
nd
s)
-10
-5
0
5
10
15
20
25
(In
tho
usa
nd
s)
Mobile subscribers Net intake
2010-04-2131 First quarter 2010
TELE2 NORWAY MOBILE (contd)
450
500
550
600
650
700
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
Mobile net sales EBITDA marg.
2010-04-2132 First quarter 2010
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
18 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
tho
usa
nd
s)
0
200
400
600
800
1 000
1 200
1 400
(In
tho
usa
nd
s)
Mobile subscribers Net intake
TELE2 RUSSIA MOBILE
2010-04-2133 First quarter 2010
TELE2 RUSSIA MOBILE (contd)
0
500
1 000
1 500
2 000
2 500
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
29%
30%
31%
32%
33%
34%
35%
36%
Mobile net sales EBITDA marg.
2010-04-2134 First quarter 2010
TELE2 BALTIC MOBILE
0
400
800
1 200
1 600
2 000
2 400
2 800
3 200
3 600
4 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
-100
-80
-60
-40
-20
0
20
40
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-04-2135 First quarter 2010
TELE2 BALTIC MOBILE (contd)
0
200
400
600
800
1000
1200
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
25%
30%
35%
40%
Estonia net sales Lithuania net sales Latvia net sales EBITDA marg.
2010-04-2136 First quarter 2010
TELE2 CROATIA MOBILE
250
350
450
550
650
750
850
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(In
th
ou
sa
nd
s)
-40
-20
0
20
40
60
80
100
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-04-2137 First quarter 2010
TELE2 CROATIA MOBILE (contd)
0
50
100
150
200
250
300
350
400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Mobile net sales EBITDA marg.
2010-04-2138 First quarter 2010
Appendix B
2010-04-2139 First quarter 2010
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 industry and the
markets in which it operates”
• Short-term consideration
– “The company needs to take the uncertainties in the financial
markets into consideration and act accordingly”
2010-04-2140 First quarter 2010
Appendix C
2010-04-2141 First quarter 2010
FINANCIAL ITEMS Q1 2010
-592
-20
-325
-267
-166
-139
Q1 09
42
-2
-90
132
-11
-77
Q1 10
634
18
235
399
155
62
Change
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
External
Net interest expenses
SEK million
2010-04-2142 First quarter 2010
“OUR” CURRENCIES
-14,4 %
-2,2 %
-9,1 %
YTD Average
10 vs. 09
- 12,4 %USD
0,4 %RUB
- 11,3 %EUR / EUR pegged
Fixing rate
Mar 10 vs. Mar 09Currency
2010-04-2143 First quarter 2010
12,5 11,1
7,16,6
8,68,8
2,71,6 0,9
0
10
20
30
Year-end 2009 Q1 2010
(SE
K b
illio
n)
EUR EUR pegged RUB KZT Other
NET ASSETS IN FOREIGN CURRENCIES
Total 29.9 bSEK Total 30.2 bSEK
2010-04-2144 First quarter 2010
400
800
1 200
1 600
2 000
2 400
2 800
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
Cash f low after CAPEX Cash flow from operating activities
CASH FLOW DEVELOPMENT
2010-04-2145 First quarter 2010
GROUP FIXED BROADBAND EBITDA
0
100
200
300
400
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
0%
5%
10%
15%
20%
25%
Fixed broadband Fixed broadband EBITDA margin
2010-04-2146 First quarter 2010
GROUP FIXED TELEPHONY EBITDA
0
100
200
300
400
500
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
25%
26%
27%
28%
29%
30%
Fixed telephony Fixed telephony EBITDA margin
2010-04-2147 First quarter 2010
GROUP EBIT
-1 000
-500
0
500
1 000
1 500
2 000
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
Mobile Fixed broadband Fixed telephony
Other Group EBIT margin
2010-04-2148 First quarter 2010
GROUP CAPEX
0
200
400
600
800
1000
1200
1400
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10
(SE
K m
illio
n)
0%
2%
4%
6%
8%
10%
12%
14%
Mobile Fixed broadband Fixed telephony
Other Capex/sales
In 2010: Tele2 forecasts a CAPEX level in the range of SEK 4,600 – 4,800 million
2010-04-2149 First quarter 2010
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