2. Agenda
About Q1 2011
Financial review
Guidance and Concluding remarks
2 2010-10-20
3. Highlights Q1
• Group
– Total customer base amounting to more than 31 million customers. Net
customer intake for the group 399,000
– Net sales grew by 0.5 percent. Currency-adjusted net sales grew by 7
percent, driven by mobile sales
– EBITDA grew by 4 percent. Currency-adjusted EBITDA grew by 11
percent. EBITDA margin amounted to 26 (25) percent
• Russia
• Nordic
• Central Europe & Eurasia
• Western Europe
3 2010-10-20
4. Highlights Tele2 Russia
• 547,000 (949,000) new
customers in Q1 2011
• Net sales grew by 17
percent. Currency-
adjusted net sales grew
by 27 percent
EBITDA 12'M ROLLING CUSTOMER BASE
SEK MILLION / PERCENT MILLIONS
4000 37% 20
36% 19
3000 18
35%
2000 34% 17
16
33%
1000 15
32%
14
0 31%
13
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
12
EBITDA 12'M rolling EBITDA-margin 12'M rolling Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
4 2010-10-20
6. Mobile market overview
MOBILE MARKET SHARES MOBILE MARKET SHARES
PERCENT OF ACTIVE SUBSCRIBERS PERCENT OF RETAIL REVENUES
40% 35%
35% 30%
30% 25%
25%
20%
20%
15%
15%
10%
10%
5% 5%
0% 0%
2006 2007 2008 2009 1Q10 2Q10 3Q10 4Q10 2006 2007 2008 2009 1Q10 2Q10 3Q10 4Q10
Mobile TeleSystems VimpelCom MegaFon Tele 2 Mobile TeleSystems VimpelCom MegaFon Tele 2
Average TELE2 share (all Russia) – 8.4%
Average TELE2 share (old regions) – 39% *
Average TELE2 share (new regions) – 16% *
Average TELE2 share (total 37) – 29% *
* T2 Initial Measurement 2011
Source: AC&M Consulting – 4Q10 Report, Mayson Analysis – Voice Quarterly Metrics, Dec 2010
6 2010-10-20
7. Mobile data market
DATA REVENUE as of 4Q10 BIG4 DATA REVENUE BREAKDOWN
SHARE OF TOTAL REVENUE (FEDERAL) PERCENT, 4Q10 (TELE2 REGIONS)
MTS Vimpelcom MegaFon Tele2 17%
11%
28%
MTS
9%
8% Megafon
7%
Vimpelcom
21%
Tele2
34%
• EDGE enabled mobile network
• Great price and smart packaging
• Large difference between major cities vs. rural areas
7 * Tele2 regions internal, BIG 3 – J’son & Partners, 2011, otherwise AC&M, 2010
2010-10-20
8. Tele2’s regional expansion opportunities
COVERAGE MAP
Population (Million)
Total Market 142
New licences 11.5
Tele2 61
Won licences 1
Combined 62
Moscow
The results of the first GSM tender: Tele2 got licences in all 4 new regions in the
first round
8 2010-10-20
9. Highlights Tele2 Sweden
• Increased mobile revenue growth of 17 percent
• 45,000 (29,000) postpaid customers added
• Mobile EBITDA margin 30 (35) percent, due to a larger
gross intake of smartphone customers and increased
costs to JVs
• 4G launched in eight major cities
NET SALES
SEK MILLION / PERCENT
2300 20,0%
2200
15,0%
2100
2000 10,0%
1900
5,0%
1800
1700 0,0%
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Mobile net sales Mobile YoY net sales growth
9 2010-10-20
10. Swedish telecom market trends
FIXED VS. MOBILE PERSPECTIVE MOBILE CONNECTIONS SWEDEN
SWE TELECOM REVENUES (%) PERCENT
100%
100%
80% 80%
60% 60%
40% 40%
20% 20%
0%
0%
2001 2002 2003 2004 2005 2006 2007 2008 2009
2010 2011 2012 2013 2014 2015
Fixed Mobile 2G 3G 4G
MOBILE DATA TB USAGE (RESIDENTIAL)
TERABYTE
140 000
120 000
100 000 Mobile data is increasing,
80 000
driven by smartphones and
60 000
40 000 mobile broadband
20 000
0
2010 2011 2012 2013 2014 2015
Sources: Parella Weinberg Partners , Analysys Mason, PTS
10 2010-10-20
11. Smartphones change the customers’
behaviour
Tele2 customers’ demand for data solutions
The Swedish mobile market is increasing rapidly
SMARTPHONES vs. FEATURE PHONES SALES OF DATA PACKAGES
SHARE OF TOTAL MARKET
100%
80%
60% 400%
40%
20%
0%
2009 2010 2011 2012 2013 2014
Smartphones Feature phones Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
POSTPAID RESIDENTIAL WITH CONTRACT
PERCENT
95%
More than 60 percent of Tele2’s prepaid
90%
customers converting to postpaid
85%
80%
change to a smartphone
75%
70%
Q1-09 Q2-09 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11
11 Sources: Analysys Mason
2010-10-20 Sources: Internal data
12. Focused activities give results on
postpaid ASPU
Top 10 phone sales in Tele2
ASPU trend recovered
Stores (Jan-Mar)
1 iPhone4 16 GB
• Focused on attracting and retaining the right
customers 2 iPhone4 32 GB
• Continued the expansion of Tele2 stores
3 Sony Ericsson X10 Mini Pro
• Increased sales of data packaging
• Remade B2B product portfolio 4 Sony Ericsson X10
• Strengthened switching solution offer
5 HTC Desire
6 ZTE Blade
7 Sony Ericsson X8
8 Sony Ericsson X10 Mini
In total, 9 out of 10 sold phones are
9 HTC Wildfire
smartphones
10 HTC Desire HD
12 2010-10-20
13. The 4G roll-out continues
99%
coverage
2010 2011 End of
2012
13 2010-10-20
14. Highlights Tele2 Western Europe
• The Netherlands
- Strengthened the position in the
business segment through the
completion of the BBned acquisition
• Germany
- Continued strong EBITDA contribution
of 33 percent in fixed telephony
EBITDA 12'M ROLLING
SEK million
• Austria 3000
- Continued good progress in 2500
2000
restructuring program leading to
1500
sequential improvement of EBITDA 1000
contribution 500
0
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Netherlands Austria Germany
14 2010-10-20
15. Licence Renewal / Frequency Auction
Auction early 2012
Auction 2015 Auctioned 2010
15 2010-10-20
16. Highlights Tele2 Baltic Region
• Stabilizing economy leading to better operational
environment
- Low consumer confidence delaying improved
spend on communication services
• Investment in network capabilities, as demand for
mobile broadband increases
- Tele2 Estonia was awarded 4G licence
NET INTAKE EBITDA - CAPEX
THOUSANDS SEK MILLION
60 400
40 300
200
20
100
0
0
-20 -100
-40 -200
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Estonia Lithuania Latvia EBITDA CAPEX EBITDA - CAPEX
16 2010-10-20
18. Highlights Tele2 in Kazakhstan
• Preparing for launch in late April
- Tele2 in Kazakhstan relaxed on
commercial activities in Q1 2011, leading
to lower net intake
• Mobile network covering almost 70% of the
population
- 2G/3G enabled infrastructure
• Focus on widening the distribution network
throughout the country
• Interconnect lowered as of 2011 with good
support from NRA
18 2010-10-20
19. Agenda
About Q1 2011
Financial review
Guidance and Concluding remarks
19 2010-10-20
20. Q1 2011 group results
SEK million Q1 11 Q1 10 Change %
Net Sales 9 573 9 527
EBITDA 2 457 2 358 4%
- EBITDA margin (%) 26% 25%
Depreciation and Joint Ventures -897 -809
- Depreciation of Net sales (%) 9% 8% Mainly due to spectrum
rebalancing in 900 MHz
One-off items 99 -3 band
EBIT 1 659 1 546 7%
Normalized EBIT 1 560 1 549
- Normalized EBIT margin (%) 16% 16%
Financial items -62 42
Taxes -371 -339
Net profit/loss 1 226 1 249
Net result, discontinued operations -13 19
Net result total operations 1 213 1 268
20 2010-10-20
21. Currency movements (vs. SEK)
YoY Difference in
YTD Ave FX Rates, 2011 vs. 2010
EUR -11.0%
RUB -8.0%
End of Quarter Spot rate
vs. 31/12-2010
EUR -1%
RUB -1%
EUR/EUR pegged and RUB currencies
approximately 2/3 of sales and EBITDA
21 2010-10-20
22. Currency adjusted Sales and EBITDA
CURRENCY ADJUSTED SALES, +7% CURRENCY ADJUSTED EBITDA TOTAL, +11 %
SEK MILLION SEK MILLION
10 000 3 000
9 000 0% 8%
2 500
8 000
-3% 2 000 17%
7 000
6 000 27% 1 500 43%
5 000
1 000
4 000 5%
-6%
3 000 500
2 000
0
1 000
0 -500
Q1 10 Q1 11 Q1 10 Q1 11
Kazakhstan MA Nordic MA Russia Kazakhstan MA Nordic MA Russia
MA Central Europe MA Western Europe MA Central Europe MA Western Europe
22 2010-10-20
23. Taxes
Taxes in income statement Q1 11 Q1 10
Normal -371 -339
One-Off - -
Total -371 -339
Taxes in cash flow Q1 11 Q1 10
Normal -225 -233
Deferred tax assets amounted to SEK 3.1 (3.6) billion
23 2010-10-20
24. Cash flow for Q1 2011
SEK million Q1 11 Q1 10
OPERATING ACTIVITIES
Cash flow from operations, before paid tax 2 589 2 341
Cash flow from operations, paid taxes -225 -233
Changes in working capital -310 183
Cash flow from operating activities 2 054 2 291
INVESTING ACTIVITIES
CAPEX -933 -608
Cash flow after CAPEX 1 121 1 683
Acquisition and sale of shares and participations, net -14 -819
CASH FLOW AFTER INVESTING ACTIVITIES 1 107 864
Negative change in working capital affected by increased
instalment sales of handsets and some other pre-payments
24 2010-10-20
25. Group financial profile
NET DEBT INCL. JV / EBITDA 2010
SEK BILLION / RATIO
20
1,80
18
1,60
16
1,40
14
1,20
12
1,00
10
8 0,80
6 0,60
4 0,40
2 0,20
0 0,00
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Net debt incl. JV Pro forma incl. proposed May dividend Net debt incl. JV / EBITDA 2010
25 2010-10-20
26. Bal. sheet consideration / Fin. leverage
C When available, invest in value accretive
M&A / New growth
M&A or new business opportunities
A opportunities meeting Tele2’s strict financial hurdles
S
H
G
E
Shareholder Enhance shareholder value by distributing
N recurring cash to shareholders
remuneration
E
R
A
T
I
O Cash / Buffer Retain financial buffer
N
Prudent assessment based on (a) status of its operations, (b) future strategic opportunities,
(c) competitive landscape and (d) general macro economic status
26 2010-10-20
27. Net debt and dividend targets
Shareholder remuneration
“Tele2 will seek to pay a progressive ordinary dividend of no less 50
percent of net income excluding one-off items. Extraordinary dividends
and the authority to purchase Tele2’s own shares will be recommended or
sought when the anticipated total return to shareholders is deemed to be
greater than the achievable returns from the deployment of the capital
within the group's operating segments or the acquisition of assets within
Tele2’s economic requirements.”
Balance sheet
“Tele2 has a target net debt to EBITDA ratio of between 1.25 and 1.75
times over the medium term. The company’s longer term financial
leverage should be in line with the industry and the markets in which it
operates and reflect the status of its operations, future strategic
opportunities and contingent.”
27 2010-10-20
28. Group EBITDA, Sales and Capex
GROUP EBITDA GROUP SALES
SEK MILLION / PERCENT SEK MILLION
3 000 30% 12 000
28% 10 000
2 000
26% 8 000
1 000 6 000
24%
0 22% 4 000
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 2 000
Mobile Fixed broadband 0
Fixed telephony Other Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Group EBITDA margin Mobile Fixed broadband Fixed telephony Other
GROUP CAPEX ROCE
SEK MILLION PERCENT
1 400 25%
1 200
1 000 20%
800
15%
600
400 10%
200
0 5%
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
0%
Mobile Fixed broadband Fixed telephony Other Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
28 2010-10-20
29. Group mobile EBITDA
GROUP MOBILE EBITDA
SEK MILLION / PERCENT
2 500 40%
35%
2 000
30%
1 500 25%
20%
1 000 15%
10%
500
5%
0 0%
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11
Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO)
Mobile EBITDA margin on own infrastructure Total mobile EBITDA margin
29 2010-10-20
30. Sweden mobile revenue explained
SWEDEN MOBILE REVENUE WATERFALL
SEK MILLION
189 (+10%) 2237 (+17%)
129 (+7%)
1919
Revenue Q1 10 Underlying mobile Mobile equipment Revenue Q1 11
30 2010-10-20
31. Sweden mobile EBITDA explained
SWEDEN MOBILE EBITDA WATERFALL
SEK MILLION
112 22 -101
-28
664 669
EBITDA Q1 GM1 Other Expansion / SUNAB/N4M EBITDA Q1
10 Call center 11
31 2010-10-20
32. Agenda
About Q1 2011
Financial review
Guidance and Concluding remarks
32 2010-10-20
33. Tele2’s general group targets
• Best Deal position
• Targeting a long-term
mobile EBITDA margin on own
infrastructure of 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
33 2010-10-20
34. Concluding remarks
Russia 2011: Also an investment year
• Strong customer intake and • Russia
EBITDA contribution in market
area Russia • Kazakhstan
Nordic
• Solid mobile revenue growth in • Sweden
market area Nordic - 4G
Western Europe
• Further strengthening its position • Norway
in the consumer and business
segments - 3G
Central Europe and Eurasia
• Tele2 in Kazakhstan getting
ready for commercial launch
34 2010-10-20
