cmd2011 - niklas sonkin - market area central europe and eurasia

Capital Markets Day 2011

Market Area Central Europe and EurasiaNiklas Sonkin

Sep 20112 Capital Markets Day 2011

July 2011

Current Focus1. Stability and improvements in Baltics2. Growth in revenue, profits and market share in Croatia3. Establish Tele2 in all regions and continue to grow rapidly in Kazakhstan4. Explore geographical expansion opportunities in Central Europe and

Eurasia

Market Area OverviewPopulation appr. 28 million

Tele2 Customer Base

appr. 5 million or 18 % of population

Represents 11% of total net sales Q2 2011:

Latvia: 3% Croatia: 3%

Lithuania: 3% Kazakhstan: 0%

Estonia: 2%


Baltics


2006 2007 2008 2009 2010 2011 2012-20%

-15%

-10%

-5%

0%

5%

10%

15%

Estonia Latvia Lithuania

GDP

2006 2007 2008 2009 2010 2011 2012-30%

-20%

-10%

0%

10%

20%

30%


Retail Sales

2006 2007 2008 2009 2010 2011 2012-4%

0%

4%

8%

12%

16%


CPI Inflation

2006 2007 2008 2009 2010 2011 20120%

4%

8%

12%

16%

20%


Unemployment

Sou

rces

: Cen

tra

l Ba

nk o

f Est

oni

a,S

EB

Sw

ede

n, C

ent

ral

Bur

eau

of S

tatic

tics

Lat

via,

SE

B L

ithua

nia

Macroeconomic KPIs


Estonia – Market FactsRevenue Market Share EBITDA Market Share

Customer Market Share

2008 2009 2010 1H 110%

10%

20%

30%

40%

50%

60%

70%

20%

22% 22% 23%

59% 57% 59% 58%

22%

21% 19% 20%

Tele2 EMT Elisa

2008 2009 2010 1H 110%

10%

20%

30%

40%

50%

60%

27% 28% 28% 28%

49% 49% 48% 47%

23% 23% 24% 25%

Tele2 EMT Elisa

2008 2009 2010 1H 1110%

20%

30%

40%

50%

34% 33% 34% 35%

45% 45% 44%40%

21% 22% 22%26%

Tele2 EMT Elisa

Key topics CEO and management change in 2011 4G roll-out starts 2012 Technical upgrade (radio, core swap) Increase of efficiency going forward Focus on Smartphones and Data MTR reductions in 2012


2008 2009 2010 1H 20110%

10%

20%

30%

40%

50%

60%

38% 39% 37% 36%

57%53% 52% 53%

5%8% 10% 12%

Tele2 LMT Bite

2008 2009 2010 1H 2011-10%

0%10%20%30%40%50%60%70%80%

40% 39% 37% 39%

70% 69% 66%61%

-9% -7%-3% 0%

Tele2 LMT Bite

2008 2009 2010 1H 20110%

10%

20%

30%

40%

50%

60%48% 46% 43% 43%

46% 46% 43% 42%

5% 8%14% 15%

Tele2 LMT Bite

Latvia – Market FactsRevenue Market Share EBITDA Market Share


Key topics Auction for LTE frequencies (2012) Technical upgrade (radio, core

swap) Maintain high efficiency Focus on Smartphones and Data MTR reductions in 2012


2008 2009 2010 1H 201120%

25%

30%

35%

40%

45%

26%

30% 31%

32%

43%

39% 38% 37%

31% 31% 32%

31%

Tele2 Omnitel Bite

2008 2009 2010 1H 201110%

20%

30%

40%

50%

60%

26%

33% 32% 35%

50%

42%39%

33%

25% 25%29% 33%

Tele2 Omnitel Bite

2008 2009 2010 1H 201110%15%20%25%30%35%40%45%50%55%

45% 45%48% 49%

31% 30% 28% 28%

21%24% 23% 21%

Tele2 Omnitel Bite

Lithuania – Market FactsRevenue Market Share EBITDA Market Share


Key topics Maintain market leadership position Increase focus on B2B segment Technical upgrade (radio, core swap) Maintain high efficiency Focus on Smartphones and Data MTR reductions in 2012


Croatia


2006 2007 2008 2009 2010 2011 2012-8%

-6%

-4%

-2%

0%

2%

4%

6% 5% 5%

2%

-6%

-1%

1%2%

2006 2007 2008 2009 2010 2011 20120%

1%

2%

3%

4%

5%

6%

7%

3%3%

6%

2%

1%

3%

4%

2006 2007 2008 2009 2010 2011 20126%

7%

8%

9%

10%

11%

12%

13%

11%

10%

8%

9%

12% 12%

11%

Eur

ost

at,C

roat

ian

bure

au

of s

tatic

tics

GDP Retail Sales

CPI Inflation Unemployment

Macroeconomic KPIs

2006 2007 2008 2009 2010 2011-20%

-15%

-10%

-5%

0%

5%

10%

5%

8%

5%

-14%

-1%

4%


2008 2009 2010 1H 2011-10%

10%

30%

50%

70%

-9% -6%-1% 1%

62% 63% 60% 63%

46% 43% 41%36%

Tele2 T-Mobile VIPnet

2008 2009 2010 1H 20110%

10%

20%

30%

40%

50%

60%

7%11% 13% 14%

50% 48% 46% 46%

43% 42% 41% 40%


0%

10%

20%

30%

40%

50%

60%

9% 9% 10% 10% 11% 13%17% 18%

51% 53% 53% 53% 51% 52%48% 48%

40% 38% 36% 35% 38% 35%35% 34%


Revenue Market Share EBITDA Market Share


Croatia – Market Facts


EBITDAHRK Million

Free Cash FlowHRK Million

Estimate Estimate

Croatia – Market Facts and New Guidence

• Tele2 Croatia is cash flow positive (EBITDA-CAPEX-Change in WC) on quarterly basis from now on

• The EBITDA margin for Tele2 Croatia’s operation should reach 20 percent by Q3 2013.

• Tele2 Croatia is cash flow positive (EBITDA-CAPEX-Change in WC) on quarterly basis from now on

• The EBITDA margin for Tele2 Croatia’s operation should reach 20 percent by Q3 2013.

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

-80

-60

-40

-20

0

20

40

60

-61

-39-31

-37-30

210

3 19

36

Q1 09

Q2 09

Q3 09

Q4 09

Q1 10

Q2 10

Q3 10

Q4 10

Q1 11

Q2 11

Q3 11

-160

-120

-80

-40

0

40

80

-131

-85

-46

-20

-109

27

0

-41

-142

-17

37


Way Forward

Q1 2010: Transformation program commenced

Q2 2010: EBITDA break ahead of plan

Q2 2011: New marketing strategy launched

Q3 2011: Free cash flow milestone achieved

Continue revenue market share growth

Continue to improve gross margins

Continue to protect the cost leadership and price leadership positions

Key achievements

Operational Highlights and Way Forward

Operational Highlights


Key Achievements

The New Brand Platform – I ovce i novce

A New Product Plan – Higher Value Smart Phone Users

New Store Concept


Summary KPI Performance

Sou

rce

- H

end

al R

ese

arch

Cro

atia

Various KPIs have contributed to our revenue market share and EBITDA growth performance

Various KPIs have contributed to our revenue market share and EBITDA growth performance

2010 July 2011

Price Leadership Position 19% 25% pQuality Perception 19% 30% pAd Awareness 15% 45% pBrand Awareness (Top of Mind) 10% 16% pBrand consideration 13% 25% p

Q4 2009 Q2 2011

Gross Margin 39% 56% pQ2 2010 Q2 2011

Total Market EBITDA 830 MSEK 700 MSEK q


Kazakhstan


2006 2007 2008 2009 2010 2011 20120%

2%

4%

6%

8%

10%

12% 11%

9%

3%

1%

7% 7% 7%

GDP

CPI Inflation Unemployment

Retail Sales

2006 2007 2008 2009 2010 2011 20120%

5%

10%

15%

20%

25%

30%

23%21%

17%

4%

25%

22% 21%

2006 2007 2008 2009 2010 2011 20120%

2%

4%

6%

8%

10%

12%

14%

16%

18%

9%

11%

17%

7% 7%8%

6%

2006 2007 2008 2009 2010 2011 20120%

1%

2%

3%

4%

5%

6%

7%

8%

9%8%

7%7% 7%

6%5% 5%

Sou

rce:

IH

S G

lob

al I

nsig

ht,

Sta

tistic

Age

ncy

of K

aza

khst

an

Macroeconomic KPIs


Kazakhstan Mobile Market Overview

Strong growth of the mobile market

High transmission prices

UMTS2100 licenses were issued to the existing GSM operators at a price of 25 MEUR each on January 2011

The fixed line market is dominated by Kazakh Telecom with 3.3 million lines

Relatively low MoU (around 100 min.), compared to neighboring countries, suggests there is room for market competition in Kazakhstan


Frequency band Channel Technology

900 11 MHz GSM/UMTS

1800 5 MHz GSM

2100 20 MHz UMTS

Tele2 Kz

Tele2 Sweden

51% 49%

Tele2 Kazakhstan Company Overview

Asianet Holding


Almaty

Karagandy

Astana

Aktobe

Oral

Aktau

Kyzyl-Orda

Kostanay

Petropavl

Pavlodar

Shymkent

Taraz

Semey

Oskemen

All Regions Launched by Year-End


Memorandum between the operators to make 20% MTR reduction as of Jan 1, 2011

• TELE2 KZ reduced MTR with Kcell by 20%, from Nov 15, 2010• TELE2 KZ reduced MTR with Beeline by 15%, from Jan 1, 2011

MTRs will be reduced consequently on a yearly basis

Russia Kazakhstan0

0.02

0.04

0.06

0.08

0.1

0.12

MTR

Average MTR in Russia and KazakhstanUSD


2010

/12/

01

2011

/01/

01

2011

/02/

01

2011

/03/

01

2011

/04/

01

2011

/05/

01

2011

/06/

01

2011

/07/

01

2011

/08/

01

2011

/09/

010

200,000

400,000

600,000

800,000

1,000,000

1,200,000

Jan 2011 Feb 2011 Mar 2011 Apr 2011 May 2011 Jun 2011 Jul 20110

1

2

3

4

5

6

7

0

10

20

30

40

50

60

70

80

90

ARPU USD MOU

ARPUMoUMin

Number of subscribers

Customer Base MOU and ARPUUSD


Tele2 expects its customer base in Kazakhstan to be able to reach the range of 2.3-2.5 million by year-end 2012.

The EBITDA margin for Tele2 Kazakhstan’s operation should reach break-even by 2H 2013.

Tele2 Kazakhstan is targeting a long-term mobile customer market share of 30 percent.

Long term profitability and ROCE are estimated to be in line with Tele2 Group targets.

Long Term Guidance

cmd2011 - niklas sonkin - market area central europe and eurasia

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