Tele2 Q1 2017 Presentation

FIRSTQUARTER 2017 April 24, 2017

Tele2 AB

Group highlights – Q1 2017

2

Q1 2017 % Change Reported

LFL is constant currencies and pro forma for Altel and TDC Sweden

% ChangeLFL

Mobile end-user service revenue 3.7 +19% +10%

EBITDA 1.7 +41% +28%

Net sales 7.9 +22% +3%

SEK billion

Tele2’s Way2Win

Our PurposeWe fearlessly liberate people to live a more connected life

Where We Play How We Win

Positively Fearless Brands

Connecting Things our Customers

Love

Digital First Customer

Experience

Challenger Cost

Structure

Winning People & Culture

Responsible Challenger

IoT Cash Generators

Investment Markets

Baltic Sea Challenger

3

Delivering on our long term strategy

4 LFL is constant currencies and pro forma for Altel and TDC SwedenOperating cash flow is EBITDA – CAPEX, 12 m rolling



Challenger Cost

Structure

Investment Markets

• Netherlands mobile end-user service revenue up 40% • Dutch data and voice on-loading at 87% and 40% respectively • Kazakhstan mobile end-user service revenue up 14%

• Sweden mobile end-user service revenue up 5% and Baltics up 12%• Sweden EBITDA up 10% and Baltics up 16% • Operating cash flow grew by 16% in Sweden and Baltics

• Kazakhstan JV delivering EBITDA margin of 19%• First TDC synergies materializing • Challenger program well on track for SEK 1 billion per annum benefits

• TDC Sweden now co-located with Tele2• Jon James appointed CEO of Tele2 Netherlands

– Net sales flat as strong mobile growth is offset by a decline in fixed business

– Mobile end-user service revenue growth driven by prepaid to postpaid migration, larger data buckets and growth in large enterprise

– Modest sales and marketing activities in the quarter, ahead of the launch of new Tele2 commercial proposition in Q2

– EBITDA growth driven by higher service revenues, lower expansion costs, benefits from Challenger Program as well as TDC synergies

3 053 3 018 3 095

4 029

3 9323 935 3 877 3 9004 332

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Sweden – FinancialsNet sales, LFL(SEK million)

Mobile end-user servicerevenue, LFL (SEK million)

Q1 Highlights

EBITDA and EBITDA margin, LFL (SEK million)

6 LFL is pro forma for TDC Sweden

894 846

1 068

993 9271 191

1 045 1 091

25% 24%

31%

24%28%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

-800

-300

200

700

1 200

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

0% +5% +10%

1 028

1 872

1 758 1 778 1 885 1 928

1 9221 831 1 865 1 969 1 959

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

TDC

Sweden Consumer – Momentum continuesConsumer mobile end-user service revenue

Share of postpaid sales with bundle >3GB

Q1 Highlights

Customer satisfaction (Tele2 Media & Insight)

Q1 16 Q1 17

7

51%

69%

Q1 16 Q1 17

+5%

– Consumer mobile end-user service revenue up 5%, driven by 12% growth in consumer postpaid due to migration to higher ASPU products

– Tele2 and Comviq customers increasingly taking larger data buckets

– Strong trend in Comviq customer satisfaction, while Tele2 is stable

– New Tele2 commercial propositions launched on April 21st

87% 86%78% 84%

Q1 16 Q1 17

Tele2 Comviq

Q1 16 Q1 17

Sweden B2B – Synergies materializingIntegration synergiesB2B net sales, LFL

(SEK million)

Q1 Highlights

B2B Large net sales, LFL(SEK million)

8

Q1 16 Q1 17

0

Q1 17

SEK 19million

– B2B sales stable in both Tele2 Business segment and former TDC Sweden

– B2B Large net sales up due to 8% growth of mobile end-user service revenue, partly offset by lower fixed telephony

– First TDC synergies materializing, mainly driven by migration of the MVNO traffic, which is to be finalized during Q2

+1% +3%

Baltics – Financials

Q1 Highlights

9

Net sales(SEK million)

EBITDA and EBITDA margin(SEK million)

Mobile end-user service revenue (SEK million)

468 477 521 533 522

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

100

200

300

400

500

600

246 256287 264 286

32% 33% 32% 28%33%

0%

10%

20%

30%

40%

50%

60%

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

50

100

150

200

250

300

350

770 787884 935

859

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

100

200

300

400

500

600

700

800

900

1 000

+12% +16%+12%

– Net sales growth driven by increase in both mobile end-user service revenue and equipment sales

– Mobile end-user service revenue growth continues due to prepaid to postpaid migration, data monetization and growth in mobile broadband

– Strong EBITDA performance driven by higher service revenue and Challenger Program benefits

Baltics – Data monetization continues

10

ASPU development Share of 4G capable smartphones in base

Q1 Highlights

MBB end-user service revenue

– Strong ASPU growth driven by increasing postpaid share and migration to larger buckets

– Continued strong increase in smartphone penetration, with room for further growth

– Mobile broadband growth as a result of investments in previous quarters

Q1 16 Q1 17

24%

39%

Q1 16 Q1 17 Q1 16 Q1 17

+9% +52%

Investment Markets

Netherlands – Financials

Q1 Highlights– Net sales up due to strong mobile momentum, partly offset by continued decline in fixed broadband and telephony

– Mobile end-user service revenue increase driven by >20% increase in customer base and ASPU growth of >10%

– EBITDA positively impacted by higher mobile service revenues, lower mobile expansion costs and reduction in NRA costs

– Improved cash contribution from fixed broadband driven by a disciplined investment focus

– Non-recurring item of SEK 95 million compared to SEK 73 million in Q1 201612

Net sales(SEK million)

EBITDA (SEK million)

Mobile end-user service revenue (SEK million)

322 336419 438 451

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

50

100

150

200

250

300

350

400

450

500

-31

-116

-2 -23

151

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

-150

-100

-50

0

50

100

150

200

1 441 1 452 1 478 1 583 1 577

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

200

400

600

800

1 000

1 200

1 400

1 600

1 800

+9% 587%+40%

Netherlands – Momentum despite pressureSpontaneous brand awareness & brand consideration (Memo2)

Share of total new postpaid(GfK)

Usage on own network

Q1 Highlights– Maintaining a decent market share of new postpaid contracts, despite increased price competition

– Good progress in data on-loading driven by network rollout at 99.5% outdoor and 91% indoor population coverage

– 403k active VoLTE customers following iPhone activation at the end of January

– Mobile net intake of 16k, including a -24k one-time clean-up

13

34%

42%41%

52%

Q1 16 Q1 17

Awareness Consideration

20%17%

Feb 16 Feb 17

0%

40%

57%

87%

Mar 16 Mar 17

Voice Data

– Net sales up due to strong mobile momentum

– Mobile end-user service revenue growth driven by increased customer base and higher ASPU

– Positive EBITDA development driven by revenue growth, improved operating leverage and JV synergies

Kazakhstan – Financials

14

Q1 Highlights

LFL is constant currency and pro forma for Altel

Net sales, LFL (SEK million)

EBITDA and EBITDA margin, LFL (SEK million)

Mobile end-user service revenue, LFL (SEK million)

433 449 474 488 495

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

100

200

300

400

500

600

569 600 639734

649

Q1 16 Q2 16 Q3 16 Q4 16 Q1 170

100

200

300

400

500

600

700

800

+713%+14%+14%

15

50

89 97122

3%8%

14% 13%19%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17-30

20

70

120

170

6 298 6 514

Q1 16 Q1 17

Kazakhstan – Continued strong performanceASPU development, LFL Integration

Q1 Highlights

15

Customer base, LFL(thousands)

LFL is pro forma for Altel

– Customer base continues to grow year-on-year

– Strong ASPU driven by continued focus on improving data monetization

– ~630 base station sites merged as network integration continues throughout 2017

~630 sites merged

Q1 16 Q1 17

+3% +9%

Challenger program on track

16

Key progress areas since inception

Sales & marketing efficiency

Network & IT consolidation

Procurement scope increase

Customer service optimization

Administration efficiency

New revenue streamsSimplify

% of products harmonized on shared platforms

Discipline% of spend strategically

sourced & procured

Consolidate% of reduction in IT OpEx

as share of revenue

Transform% of staff in

Shared Operations

2016 actual 2018 targetBaseline

30% 40% 60%

40% 75% 80%

0% 5% 20%

12% 18% 25%

Financial Overview

3 129

3 725

16454

129

230 0 19

Q1 16 Sweden Baltics NL KZ RoW Oth Q1 17

Mobile end-user service revenue

Tele2 Group(SEK million)

18

3 1293 307

3 598 3 711 3 725

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

+19%

Development per market(SEK million)

EBITDA


19

Development per market(SEK million)

1 2261 087

1 5621 459

1 723

19,0%16,3%

22,4%17,8%

21,9%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

100

300

500

700

900

1100

1300

1500

1700

1900

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

EBITDA margin

+41%

1 226

1 723

197 40

182116 3

-41

500

700

900

1 100

1 300

1 500

1 700

1 900


CAPEX


20

Development per market (SEK million)

1 154

627

-79-136

-288

50

-47 -27

0

200

400

600

800

1 000

1 200

1 400


1 154

820 779

1 078

627

17,9%12,3% 11,2% 13,1%

8,0%

0,0%

10,0%

20,0%

30,0%

40,0%

50,0%

60,0%

0

200

400

600

800

1000

1200

1400

Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

CAPEX / Net sales

-46%

Free cash flowTotal operations


Development (SEK million)

Free cash flow = Cash flow from operating activities and CAPEX paid21

-154

139

838

394

178

-500

-300

-100

100

300

500

700

900

Q3 15 Q2 16Q1 16

Q4 16 Q1 17Q1 16

Q3 16

-154

178

49741

-39 260

-70

-300

-200

-100

0

100

200

300

400

500

600

Q1 16 EBITDA Interest etc TaxesWorkingcapital CAPEX

One-offitems Q1 17

+216%

-357

Operating cash flow

22

EBITDA less CAPEX 12 m rolling, SEK million

3 491 3 456 3 423 3 470 3 335 3 402 3 432 3 437 3 871

-1 178 -1 504 -1 625 -1 940 -2 223 -2 282 -2 196 -1 934-1 344

Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17

Baltic Sea Challenger & Rest of Group Investment Markets

Debt position and financial leverageEconomic net debt to EBITDA 12 m rolling

23 Economic net debt excludes liabilities related to Kazakhstan

1,88

LeverageSEK billion

9,4

11,7 11,0 10,4 10,3

2,6 2,6

0,0

0,5

1,0

1,5

2,0

2,5

0,0

2,5

5,0

7,5

10,0

12,5

Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017

Economic net debt Dividend, announced Economic net debt to EBITDA

1,75

Financial guidance 2017 - Reconfirmed

* Based on LFL which is constant currencies and pro forma for Altel and TDC Sweden24

Net sales(SEK billion)

EBITDA(SEK billion)

31 – 32

5.9 – 6.2

CAPEX(SEK billion) 3.8 – 4.1

Mobile end-user service revenue

Mid-single digit % growth*

Summary

Key priorities moving forward

26

Become the customer champion of connectivity

Growth from continued data monetization, despite RLAH

Sustain momentum in Sweden and Baltics

Further leverage our challenger strategy in Netherlands

and Kazakhstan

Execute on Challenger and synergy programs


Connecting Things our

Customers Love


Experience

Challenger Cost

Structure

Tele2’s Way2Win

Our PurposeWe fearlessly liberate people to live a more connected life

Where We Play How We Win


Connecting Things our Customers

Love


Experience

Challenger Cost

Structure


Responsible Challenger

IoT Cash Generators

Investment Markets


27

THEEND

Tele2 Q1 2017 Presentation

Technology

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