Dutch LTE license 20121214

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Dutch LTE license 20121214

  1. 1. Dutch LTE licenseMats Granryd, President and CEO of Tele2 ABGünther Vogelpoel, Market Area Director Western Europe andCEO of Tele2 NetherlandsDecember 14, 2012
  2. 2. Tele2 Group Net sales SEK 32,451 million EBITDA SEK 8,288 million CapEx SEK 3,858 million2 Dutch LTE license 2012 * Group figures; YTD Q3 2012
  3. 3. Mobile access is the future Services Access Devices3 Dutch LTE license 2012
  4. 4. “Tele2 is driven by its relentless focus on developing mobile services on its own infrastructure”4 Dutch LTE license 2012
  5. 5. History of mobile excellence Revenue distribution Group revenue breakdown (SEK ’000) 60,000 15,000 Fixed Other 50,000 12,500 Sweden telephony 40,000 10,000 Fixed broadband Norway 30,000 7,500 20,000 5,000 10,000 2,500Netherlands Russia Mobile 0 0 Revenue per geography Revenue per product area Total revenue Mobile revenue EBITDA (rhs) Tele2 will continue to be a growth company, focusing on mobile business and a good mix of mature and high growth markets 5 Dutch LTE license 2012
  6. 6. Net sales EBITDA CapEx Tele2 Netherlands 12% 14% 8% • Tele2 has done successful business in the Netherlands for 15 years • Tele2 has more than ten years of mobile experience as full MVNO • More than one million customers6 Dutch LTE license 2012 * Figures represent contribution to group; YTD Q3 2012
  7. 7. Stable financial performance Revenue (EUR) EBITDA (EUR) 60,000 18,000 16,000 50,000 14,000 40,000 12,000 Wholesale 10,000 Wholesale 30,000 Business 8,000 Business 20,000 Consumer 6,000 Consumer 4,000 10,000 2,000 - - Apr-12 Jun-12 Aug-12 Oct-12 Apr-12 Jun-12 Aug-12 Oct-12 Cashflow (cum.) (EUR) 120,000 100,000 80,000 60,000 40,000 Tele2 NL 20,000 - Mar-12 Jun-12 Sep-127 Dutch LTE license 2012
  8. 8. Dutch Mobile Market
  9. 9. Dutch mobile oligopoly Dutch Mobile Market Share 2005-2012 60% 50% 40% KPN 30% Vodafone T-Mobile 20% 10% 0% 2005 2006 2007 2008 2009 2010 2011 2012 Result of seven years without a challenger9 Dutch LTE license 2012
  10. 10. Leading in fixed, lagging in mobile Source: Analysys Mason10 Dutch LTE license 2012
  11. 11. No incentive to move from fixed to mobile Max download speed (Mobile internet) 90 80 70 60 50 Mb/Sec 40 30 20 10 0 KPN NL T-Mobile NL Vodafone NL Denmark Norway Finland Germany Sweden Max 28.8/14.4 Mb/s only available in limited areas of the Netherlands, average is 7.2 Mb/s or worse11 Dutch LTE license 2012
  12. 12. High prices & low adoption leave opportunity for Tele2 Current providers don’t stimulate innovation12 Dutch LTE license 2012
  13. 13. A cluttered market, but competition is limited KPN Vodafone T-Mobile 50+ MVNOs, but brands of 3 MNOs hold 93% of total market share13 Dutch LTE license 2012
  14. 14. Data will drive market value growth 8 Data: CAGR +4.2% 7 Market: CAGR +0.7% 6 5 4 Data Voice 3 Voice: CAGR -2.9% 2 1 0 2011 2029 2011 (TelecomPaper): 2029 (Market forecast): • Market size: 6.1 billion EUR • Market size: 6.9 billion EUR • Penetration: 125% • Penetration: 184% • SIMs: 20.9 million • SIMs: 31.8 million • Blended ARPU: 24.2 EUR • Blended ARPU: 18.1 EUR • Share of voice revenues: 64% • Share of voice revenues: 34% Sources: Analysys Mason, Northstream, Telecompaper, March 201214 Dutch LTE license 2012 * Excluding M2M market
  15. 15. Dutch License Auction2012
  16. 16. New situation brings back competition Today’s outcome determines Dutch playing-field until 2030 Dutch Mobile spectrum Situation until 31 December 2012 Reserved for new entrant Free 800 MHz 2x5 Mhz 2x20 MHz Vodafone KPN T-Mobile 900 MHz 2x12.5 MHz 2x12.5 MHz 2x10 MHz Vodafone T-Mobile KPN Free 1.8 GHz 2x5Mhz 2x30 MHz 2x20 MHz 2x15 MHz Free 1.9GHZ 14.7 MHz unpaired Vodafone T-Mobile KPN Free 2.1GHz 2x15 Mhz 1x5 MHz 2x20 MHz 1x10 MHz 2x15 MHz 1x10 MHz 2x10 MHz Vodafone T-Mobile KPN Ziggo4 Tele2 Free 2.6GHZ 2x10 MHz 2x5 MHz 2x10 MHz 2x20 MHz 2x20 MHz 55 MHz unpaired Situation after Auction (starting January 1st 2013 / 2014) Tele2 Vodafone KPN 800 MHz 2x10 Mhz 2x10 MHz 2x10 MHz Vodafone KPN T-Mobile 900 MHz 2x10 MHz 2x10 MHz 2x15 MHz Vodafone T-Mobile KPN 1.8 GHz 2x20Mhz 2x30 MHz 2x20 MHz T-Mobile 1.9GHZ 14.7 MHz unpaired Vodafone T-Mobile KPN 2.1GHz 2x20 Mhz 1x5 MHz 2x20 MHz 1x10 MHz 2x20 MHz 1x10 MHz Vodafone T-Mobile KPN Ziggo4 Tele2 T-Mobile KPN 2.6GHZ 2x10 MHz 2x5 MHz 2x10 MHz 2x20 MHz 2x20 MHz 25 MHz unpaired 25 MHz Unpaired16 Dutch LTE license 2012
  17. 17. Dutch regulatory requirements Technology neutral • All frequencies are technology neutral Minimum roll out requirement for 10 MHz license in 800 MHz band • 2 year = 2% of geography coverage (616 km2) • 5 year = 40% of geography coverage (14,942 km2 ) • Free choice in geographical roll out License duration & effective date • License duration: 17 years, valid until 2030 in sync with 2.6 GHz licenses • Licenses may not be sold to other MNOs during the first five years of the license period • 800 MHz: available January 2013 for all licenses, since this is new spectrum Access to existing sites • 11,000 existing sites of which increasing number independent because MNOs sell off sites • MNO have obligation for site sharing in towers and cooperation at roof top sites No need for new site locations (Stratix consulting 2011) • Government research shows that restructuring current sites with multiband equipment enables all operators to roll out nationwide network without need of new locations17 Dutch LTE license 2012
  18. 18. Why is Tele2 Netherlandspursuing an MNO status
  19. 19. Dutch market needs a challenger The newcomer reservation created a unique opportunity for Tele2 Natural next step for Tele2 Netherlands The Dutch mobile market is underdeveloped and overpriced A new network operator will bring back competition 4G technique will offer new experience to Dutch consumers Tele2 Netherlands has a growing mobile customer base Opportunity fits within Tele2 Group strategy19 Dutch LTE license 2012
  20. 20. MNO building blocks Greenfield Tele2 NL 1. Frequency license   • 2x10 MHz 800 + 2x20 MHz 2.6 2. Base stations   3. Mobile switches  Network 4. Backhaul   • Nationwide fiber optic 5. Radio nodes   • 55 radio nodes 1. Brand awareness   • 15 years presence, 47% b.a.Commercial 2. Customer base   • Over 1 million customers 3. Ordering + Billing systems   4. Distribution  20 Dutch LTE license 2012
  21. 21. Fixed backbone already in place Specification of Tele2 Fiber optic network 1. Total length 5,213 KM 2. Nationwide coverage 3. Connected to 55 Radio Nodes 4. 80% of existing antenna sites within reach of Tele2’s radio nodes 5. 40% of existing antenna sites within reach of Tele2’s fiber optic access lines Maximize synergy with existing infrastructure21 Dutch LTE license 2012
  22. 22. Scenarios for a mobile network Roll out obligation for 2x10 MHz in 800 MHz band • 40% of geographical coverage = 1.000 base stations Nationwide network • 100% geographical coverage = +/- 4.000 base stations = Tele2’s current Fiber optic Network22 Dutch LTE license 2012
  23. 23. 4G possibilities Great opportunities for incremental growth • LTE build on own fiber optic infrastructure, no legacy and successful efficient organization. Optimal spectrum mix • With 2x10 MHz 800 and 2x20 MHz 2,600 Tele2 has acquired the optimal spectrum mix for capacity, coverage and speeds up to 100 Mb/s Become a full service MNO • We will be a full service Voice and Data provider, given the accelerated implementation of VoLTE in the US and Europe and support of VoLTE on handsets, we will be able to carry voice over LTE. Where required, we can fallback for Voice on our 2G/3G MVNO host Clear opportunity for newcomer • Market price levels clearly leave room for a newcomer, offering next generation services, based on a lowest possible cost level23 Dutch LTE license 2012
  24. 24. Summary Opportunity fits with group strategy Additional leverage on existing operations Utilize Tele2’s experience in network roll out Differentiate with full focus on 4G24 Dutch LTE license 2012
  25. 25. 25 Dutch LTE license 2012

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