FIRST
QUARTER
2015
April 21st, 2015
Tele2 AB
Highlights from the quarter
Value
Champion
Focused
Technology
Choices
• 4G network in the Netherlands now at 70 percent population coverage.
• Network swap project announced in Croatia.
Step-Change
Productivity
• The Challenger Program will ramp up over the next 3 years and is expected
to deliver full benefits of SEK 1 billion per annum from 2018 onwards.
Winning People
& Culture
2
• Data monetization continues in Sweden following launch of Tele2.0.
• Substantial increase in GB data offer, driving increased ASPU.
• Transparency International Sweden ranked Tele2 number one out of the
largest Sweden based companies for transparency in corporate reporting.
Monetization of data continues
Year-on-year growth, Tele2 Group
3
Mobile end-user service
revenue
Mobile EBITDA
Average data usage
per subscriber
+10%
+10%
~40%
Continuous momentum in
mobile end-user service revenue
Year-on-year growth for mobile end-user service revenue, Tele2 Group
CAGR: 6.5%
9.6%
8.7%
8.1%
7.9%
6.5%
6.5%
Q2 13
Q3 13
6.7%
6.7%
Q1 14
Q2 14
6.6%
5.7%
Q4 12
4
Q1 13
Q4 13
Q3 14
Q4 14
Q1 15
Market year-on-year development
Mobile end-user service revenue
Data growth
(MNO networks)
Sweden:
+5%
~50%
Estonia:
+7%
Germany:
+12%
KZ
Kazakhstan:
+46%
Latvia:
+7%
Netherlands:
+12%
KZ
CEE
CEE
Lithuania:
+7%
Austria:
+3%*
SE
SE
Croatia:
+8%
Q1 14
5
* Total net sales
Q1 15
Tele2 Sweden
Net sales
EBITDA and EBITDA margin
(SEK million)
(SEK million)
+4%
3,021
+18%
1,200
4,000
3,130
3,000
900
976
Strong mobile YoY development
90%
70%
825
50%
2,000
600
1,000
300
0
0
27%
Q1 14
Q1 15
31%
30%
10%
-10%
Q1 14
Q1 15
+5%
Mobile end-user
service revenue
+20%
Mobile
EBITDA
Q1 Highlights
6
–
Overall: During the quarter Tele2 Sweden launched ‘Big Buckets’ to give costumers better value and encourage further data
usage. Early signs indicate a positive development in terms of ASPU and customer satisfaction.
–
Consumer: We are utilizing our dual-brand strategy and early signs show good development in consideration and NPS in our
target groups along with strong development in customer satisfaction..
–
Business: Strong mobile revenue growth of three percent, driven by the Large Enterprise segment. New contracts were
signed with Husqvarna and HiFab, and existing contracts with Kriminalvården and Volvo were expanded.
Increasing ASPU
Top-ups continue in our customer base…
…which together with ‘Big Buckets’ continue to
drive ASPU growth
Top-up development Tele2 Residential
(Revenue, SEK million)
40
Intake mix
Tele2 Residential Postpaid (small screen)
44
38
>5GB: 30%
27
ASPU development
20
Tele2 Residential Postpaid (small screen)
+15%
Q114
Q214
Q314
Postpaid TOTAL
7
Q414
MBB TOTAL
Q115
Tele2 Baltics
Net sales
EBITDA and EBITDA margin
Mobile end-user service revenue
(SEK million)
(SEK million)
(SEK million)
+7%
800
671
719
600
400
200
0
Q1 14
Q1 15
350
300
250
200
150
100
50
0
+11%
+7%
60080%
209
31%
231
32%
415
444
474
447
444
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
500
60%
400
30040%
200
20%
100
00%
Q1 14
Q1 15
Q1 Highlights
8
–
Revenue decline stopped in the quarter, with strong mobile end-user service revenue development at 7 percent.
–
As the first player in the market, Tele2 Latvia has launched a pan-Baltic unlimited voice and SMS tariff.
–
4G network launched in Lithuania, with a current 70 percent population coverage, complementing our existing network.
–
Tele2 Estonia successfully continued the expansion into the international data carrier market with new important customer intake.
–
Continued focus on aggressive LTE rollout in all countries.
Tele2 Netherlands
Net sales
EBITDA and EBITDA margin
Mobile customers Tele2 NL
(SEK million)
(SEK million)
(Thousands)
+6%
1,500
1,320
-45%
1,402
300
860
60%
840
257
820
50%
250
1,250
200
1,000
750
150
500
100
250
50
141
19%
10%
0
0
Q1 14
Q1 15
Q1 14
Q1 15
800
780
30%
760
740
20%
720
10%
700
0%
680
40%
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
Q1 Highlights
9
–
14th consecutive quarter of growth in the mobile customer base.
–
4G network opened on the 1st of January meeting the obligations of the 4G license. Tele2 now provides extensive coverage in the
Randstad area (including Amsterdam, Rotterdam, The Hague and Utrecht).
–
Commenced the transfer of customers onto our 4G network, following a thorough period of positive customer network testing.
–
EBITDA was impacted by expansion, network and increased national roaming costs.
Tele2 outdoor 4G coverage, April 1st 2015
10
–
Transfer of existing customers onto the 4G
network well underway.
–
Current outdoor population coverage
estimated to be over 70%.
–
Remain on-track for nationwide outdoor
population coverage by Q1 2016.
Tele2 Kazakhstan
Net sales
EBITDA and EBITDA margin
(SEK million)
(SEK million)
+36%
500
399
400
294
300
200
100
0
0
Q1 14
Q1 15
1
0
0%
0%
Q1 14
Q1 15
Customer development
180
160
700%
140
600%
120
500%
100
80
400%
60
300%
40
200%
20
100%
0
0%
Jul Aug Sep Oct Nov Dec Jan Feb Mar
2014
Net intake
(thousands)
35%
30%
25%
20%
15%
10%
2015
% subscribers who stop using
services 1 month after acquisition
Q1 Highlights
11
–
Highly competitive situation with both Tele2 and Altel offering bucket tariff plans at much lower prices than K-Cell or Beeline.
–
Despite the competitiveness of the market. Tele2 has created a positive momentum – our bucket tariff plan, improved distribution and
brand awareness are yielding results.
–
Net intake very strong at 429,000. Positive monthly net intake trend since October 2014.
Financial Overview
Financial highlights
Net sales
(SEK billion)
Mobile end-user
service revenue
(SEK billion)
EBITDA
(SEK billion)
CAPEX
(SEK billion)
13
Q1 2014
Q1 2015
Trend
6.15
6.51
+6%
2.90
3.18
+10%
1.36
1.43
+5%
0.71
0.94
+32%
Mobile end-user service revenue
Tele2 Group
Development per market
(SEK million)
(SEK million)
3,300
+10%
3,094
3,000
3,252
3,205
3,184
27
3,200
99
3,205
3,184
2,904
3,100
32
29
93
3,000
2,000
2,900
2,904
1,000
2,800
0
Q1 14
14
Q2 14
Q3 14
Q4 14
Q1 15
2,700
Q1 14
Sweden
Baltics
Netherlands Kazahkstan
RoW
Q1 15
EBITDA
Tele2 Group
Development per market
(SEK million)
(SEK million)
1,600
+5%
1,550
2,000
1,800
1,682
1,600
1,400
1,470
1,412
1,362
1,428
1,200
1,000
25.5%
800
600
22.1%
23.2%
20.5%
21.9%
400
200
0
Q1 14
Q2 14
Q3 14
Q4 14
EBITDA margin
15
Q1 15
44%
42%
1,500
40%
38%
1,450
36%
34%
32%
1,400
30%
28%
26%
1,350
24%
22%
1,300
20%
18%
16%
1,250
14%
12%
1,200
10%
22
151
10
-116
1,428
-1
1,412
1,362
Q1 14
Sweden
Baltics
Netherlands Kazahkstan
RoW
Q1 15
CAPEX
Tele2 Group
Development per market
(SEK million)
(SEK million)
1,200
+32%
1,100
1,400
29%
27%
1,200
1,000
25%
1,030
938
1,000
800
850
861
23%
21%
709
53
900
17% 800
15.0%
13.4%
13.1%
14.4%
11.5%
39
15%
13% 700
11%
-23
709
9% 600
7%
200
0
Q1 14
16
938
142
19%
600
400
18
Q2 14
Q3 14
Q4 14
CAPEX / Net sales
Q1 15
5% 500
Q1 14
Sweden
Baltics
Netherlands Kazahkstan
RoW
Q1 15
Free cash flow
Total operations
Tele2 Group
Development
(SEK million)
(SEK million)
+83%
600
475
400
274
238
200
0
Q1 14
Q2 14
Q3 14
Q4 14
Q1 15
-96
-200
-400
-600
17
-555
44%
42%
40%
38%
36%
34%
32%
30%
28% 0
26%
-100
24%
-200
22%
20%
-300
18%
-400
16%
-500
14%
12%
-600
10%
-700
Q1 14
EBITDA Financing
Taxes
Working
capital
480
-555
36
Free cash flow = Cash flow from operating activities and CAPEX paid
10
-144
CAPEX
Q1 15
77
-96
Debt position and ratio
Pro forma net debt / EBITDA 12 m rolling
SEK billion / Ratio
15.0
2.00
1.75
12.5
1.50
10.0
0.0
7.5
5.0
8.3
0.0
0.0
7.9
6.6
1.25
1.00
7.9
6.8
0.75
0.50
2.5
3.3
0.0
0.00
Mar 2014
Pro forma net debt
18
0.25
Jun 2014
Dividend, proposed
Sep 2014
Dec 2014
Mar 2015
Pro forma net debt to EBITDA (inc proposed dividend Q1 15)
The Challenger Program
Ramp-up of indicative* costs and
benefits over 4 years
19
*Indicative program benefits and costs. Analysis phase will identify and validate total
Opex, Capex and Revenue benefits. Baseline: Forecast FY 2014
Productivity improvement: 1 BSEK (5%)
Momentum is building up
We will come back to the market with more details at Q2 reporting on July 21st 2015. From then on we
will report on progress quarterly until full benefits have been realized
2014
2015
2016
Investment phase
Benefits phase
20
Q1
Q2
2017
2018
Q1 2015 Summary
21
Q1 2015 in short and
key priorities moving forward
- Continued data monetization
- Getting ready for 4G launch in Netherlands and Baltics
- Executing on the Challenger Program
Focused
Technology
Choices
22
Value
Champion
Step-Change
Productivity
Winning People
& Culture
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
Mobile access is
our core business
Europe and
Eurasia are our
markets
How we win
Residential and
Business
Focused
Technology
Choices
The Tele2 Way
23
Value
Champion
Step-Change
Productivity
Winning
People &
Culture
THE
END