Q3 presentation final

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Q3 presentation

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<ul><li> 1. 23rd of October 2014Tele2 AB</li></ul> <p> 2. 2 3. Note: All numbers exclude Norway and in parenthesis are Q3 2013.Net sales(SEK billion)EBITDA(SEK billion)CAPEX(SEK billion)EBITDA margin(percent)(6.50)(1.47)(23)(0.66)Q3 Financial HighlightsStrong quarter with mobile end-user service revenue growth of 8%EBITDA year-on-year growth of 14%Growth in CAPEX driven by progress in the Netherlands roll outGrowth is broad based across all markets3 4. Note: Mobile end-user service revenue excludes interconnect and equipment sales.*Kazakhstan growth adjusted for currency fluctuations mainly due to devaluation.Sweden(SEK million)Tele2 Group(SEK million)Baltics(SEK million)Netherlands(SEK million)Kazakhstan(SEK million)8%424%7% (21%*)3%6%3,0083,0062,9043,0943,252Q3 13Q4 13Q1 14Q2 14Q3 141,7671,7751,7161,8151,865Q3 13Q4 13Q1 14Q2 14Q3 14259261273308321Q3 13Q4 13Q1 14Q2 14Q3 14462431415444474Q3 13Q4 13Q1 14Q2 14Q3 14240251216225257Q3 13Q4 13Q1 14Q2 14Q3 14 5. 5Year-on-year growth for mobile end-user service revenue, Tele2 GroupQ3 12Q4 12Q1 13Q2 13Q3 13Q4 13Q1 14Q2 14Q3 14CAGR 7.3% 6. Strong quarter with mobile end-user service revenue growth of 6% fueled by continued strong data usageConsumer broadband turnaround continues. The MNO roll out remains on plan, the service is currently being tested by friendly usersPositive net intake at 108,000 and EBITDA momentum continues6Continued growth and a strengthened EBITDA margin at 18%The Baltics show a trend of recovery with strengthened EBITDA margins 7. 7 8. -40%60%-MobileFixed broadbandFixed telephonyOtherEBITDA marginNet sales(SEK million)EBITDA(SEK million)A strong quarter with many new and extended business contractsMobile:Strong net intake of 28,000 supporting the end-user service revenue growth of 6%.Consumer: 64% of postpaid handset customers are now on data bucket price plans and sales shifted towards bigger data buckets. The continued increase in sales of data top-ups during the quarter also confirms the healthy increase in data consumption.Business: Continued strong mobile revenue growth, driven by increased customer stock as well as continued strong intake within cloud PBX. Only 18 months after its launch, the PBX service is #2 in the market.Q3 Highlights83,0783,1563,0213,1113,12405001,0001,5002,0002,5003,0003,500Q3 13Q4 13Q1 14Q2 14Q3 149008588258821,02529%27%27%28%33%0%10%20%30%40%50%60%-2004006008001,000Q3 13Q4 13Q1 14Q2 14Q3 14 9. -40%60%-MobileFixed broadbandFixed telephonyOtherEBITDA marginNet sales(SEK million)EBITDA(SEK million)CAPEX(SEK million)Q3 HighlightsOverall:Whilst preparing for MNO launch we are managing customer intake and acquisition cost.MNO: Continued ramp-up in CAPEX, up 25% versus last quarter. Network has been validated by Samsung and friendly users are currently testing the service.Consumer: Mobile customer base was up 24,000, showing growth for the 12thconsecutive quarter. The turnaround for consumer broadband continues with positive net intake for the quarter.91,3831,3721,3201,3181,36902004006008001,0001,2001,4001,600Q3 13Q4 13Q1 14Q2 14Q3 1427134225726720620%25%19%20%15%0%10%20%30%40%50%60%-401060110160210260310360Q3 13Q4 13Q1 14Q2 14Q3 14120401259372445Q3 13Q4 13Q1 14Q2 14Q3 14 10. Q412Q113Q213Q313Q413Q114Q214Q314-40%60%-MobileEBITDA margin357365294309349-50100150200250300350400Q3 13Q4 13Q1 14Q2 14Q3 14Overall: Positive net intake at 108,000. In line with our stated strategy to focus on quality customers is paying off with ASPU up 27% year-on-year.Data: Steady increase on data usage during the last three years.EBITDA: Momentum continues as a result of data growth and increased operational scale.Net sales(SEK million)EBITDA(SEK million)Average usage per subscriber(MB, four month rolling average)Q3 Highlights10Interconnect cut and currency devaluation-34-71322-10%-2%0%1%6%-25%-20%-15%-10%-5%0%5%10%15%-40-30-20-1001020Q3 13Q4 13Q1 14Q2 14Q3 14x7 11. -40%60%-MobileEBITDA marginCroatia Net sales(SEK million)Croatia EBITDA(SEK million)Croatia Q3 HighlightsLithuania Net sales(SEK million)Lithuania EBITDA(SEK million)Lithuania Q3 HighlightsContinued to deliver strong results driven by further efficiency improvements.LTE was launched.Continued growth achieving a net intake of 33,000 customers.Strong financials due to increased roaming revenues during summer and increased prices in anticipation of coming frequency fee increase. 113723962993293900100200300400500Q3 13Q4 13Q1 14Q2 14Q3 14482225337213%6%8%10%18%0%10%20%30%40%-20406080Q3 13Q4 13Q1 14Q2 14Q3 1410910210812714333%31%36%38%38%0%20%40%60%-50100150Q3 13Q4 13Q1 14Q2 14Q3 143343273043303750100200300400Q3 13Q4 13Q1 14Q2 14Q3 14 12. -40%60%-MobileFixed telephonyOtherEBITDA marginLatvia Net sales(SEK million)Latvia EBITDA(SEK million)Latvia Q3 HighlightsEstonia Net sales(SEK million)Estonia EBITDA(SEK million)Estonia Q3 HighlightsImproved EBITDA margin through reduced operational costs despite price pressure in the market.First operator in the Estonian market to launch data bucket price plans including unlimited voice and SMS. 12Launched roaming data buckets in EU countries to enable customers to use more data abroad.Introduced new tariff plans for data usage in the market.230230213223235050100150200250Q3 13Q4 13Q1 14Q2 14Q3 14727262678331%31%29%30%35%0%20%40%60%-20406080100Q3 13Q4 13Q1 14Q2 14Q3 14182172154161165050100150Q3 13Q4 13Q1 14Q2 14Q3 14433739384124%22%25%24%25%0%20%40%60%-1020304050Q3 13Q4 13Q1 14Q2 14Q3 14 13. Austria Net sales(SEK million)Austria EBITDA(SEK million)Austria Q3 HighlightsGermany Net sales(SEK million)Germany EBITDA(SEK million)Germany Q3 HighlightsGrowth in mobile with a net intake of 19,000 customers. 13Focus on growing B2B customer base and improving Tele2 brand awareness.Successful up-sell of high speed packages within the existing customer base.-40%60%-MobileFixed broadbandFixed telephonyOtherEBITDA margin3133062912993080100200300Q3 13Q4 13Q1 14Q2 14Q3 14776549586225%21%17%19%20%0%20%40%60%020406080100Q3 13Q4 13Q1 14Q2 14Q3 14213226229226232050100150200250Q3 13Q4 13Q1 14Q2 14Q3 1418323431358%14%15%14%15%-60%-10%40%-30-10103050Q3 13Q4 13Q1 14Q2 14Q3 14 14. 14 15. 15SEK millionQ3 2014Q3 2013% Net sales6,5846,5001.3% EBITDA1,6821,47114.3% EBITDA margin (%)25.5%22.6%2.9% Depreciation &amp; associated companies-678-724-6.4% Depreciation of net sales (%)-10.3%-11.1%0.8% One-off items--450EBIT1,004297238.0% Normalized EBIT1,00474734.4% Normalized EBIT margin (%)15.2%11.5%3.8% Financial items-46-159Taxes-232-261Net profit, continuing operations726-123-690.2% Discontinued operations-103-48Net profit623-171-464.3% 16. 16SEK millionYTD 2014YTD 2013FY 2013% Net sales19,07919,17225,757-0.5% EBITDA4,5144,4015,8912.6% EBITDA margin (%)23.7%23.0%22.9%0.7% Depreciation &amp; associated companies-2,002-2,144-2,909-6.6% Depreciation of net sales (%)-10.4%-11.1%-11.2%0.7% One-off items243-445-434EBIT2,7551,8122,54852.0% Normalized EBIT2,5122,2572,98211.3% Normalized EBIT margin (%)13.2%11.8%11.6%1.4% Financial items50-372-551Taxes-673-749-1,029Net profit, continuing operations2,132691968208.5% Discontinued operations-33013,73013,622Net profit1,80214,42114,590-87.5% 17. 17SEK millionQ3 2014Q3 2013YTD 2014YTD 2013FY 2013OPERATING ACTIVITIESCash flow from operations, excl taxes and interest1,6601,5014,5145,7307,117Interest paid-62-99-222-323-374Taxes paid-63-31-234-370-479Change in working capital-92-14-802-744-451Cash flow from operating activities1,4431,3573,2564,2935,813INVESTING ACTIVITIESCAPEX paid-968-862-3,062-4,228-5,241Cash flow after paid CAPEX47549519465572Shares and other financial assets-18-5170917,24517,235Cash flow after investing activities45744490317,31017,807 18. 18SEK millionQ3 2014Q3 2013YTD 2014YTD 2013FY 2013OPERATING ACTIVITIESCash flow from operations, excl taxes and interest1,6351,4494,4634,4175,832Interest paid-65-96-228-246-298Taxes paid-63-31-234-193-302Change in working capital-2511-657-469-249Cash flow from operating activities1,4821,3333,3443,5094,983INVESTING ACTIVITIESCAPEX paid-861-606-2,455-3,352-4,184Cash flow after paid CAPEX621727889157799Shares and other financial assets-12-3727-9-11Cash flow after investing activities6097241,616148788 19. 19Pro forma net debt / EBITDA 12 m rollingSEK billion / Ratio7.67.26.88.37.90.000.250.500.751.001.251.501.752.000.02.55.07.510.012.515.017.520.0Sep 2013Dec 2013Mar 2014Jun 2014Sep 2014Pro forma net debtPro forma net debt to EBITDA 20. 20Note: Guidance excludes Tele2 NorwayNet sales(SEK billion)EBITDA(SEK billion)CAPEX(SEK billion) 21. 21 22. SummaryPrioritiesConstant focus on MNO roll out in the Netherlands and KazakhstanCement the position of Tele2 Sweden as the leader in mobile data servicesReassess our cost structure in anticipation of closing the Norwegian dealHigh quality quarter with strong results delivered across the boardSweden particularly strong, mobile end-user service revenue growth of 6%The 4G roll out in the Netherlands shows continued progress and investment on trackFocus on quality customer intake in Kazakhstan has been paying off with positive net intake22 23. 23</p>