Tele2 - Third quarter 2011

THIRD QUARTER 2011Tele2 AB19 October 2011

Agenda • About Q3 2011 • Financial Review • Concluding remarks2

Tele2 Group Q3 highlights Q3 Financials Q3 Operational • In the third quarter, group net • Tele2’s customer base sales (curr. adj.) grew by 6 amounted to 33.5 million percent customers • All time high EBITDA (curr. • Russian subscriber base adj.) amounted to SEK 2 893 reached 20.4 million mn, corresponding to an customers and subscriber increase of 8 percent base in Kazakhstan surpassed 1 million customers • EBITDA margin (curr. adj.) amounted to 28 percent • Tele2 acquired Network Norway3

Market Area Russia: Overview Population Appr. 140 million Tele2 Russia 43 regions of Russian Federation 20.4 million subscribers Mobile operator #4 in Russia in terms of subscribers and revenue Represents 30% of total net sales Q3 2011 Focus Continue strong growth in customer intake, maximizing the 2G opportunity Ensure that newcomer and challenger regions reach the same operational trends as defender regions Evaluate possibilities to expand carefully its operations through new licenses as well as by complementary acquisitions4

Q3 Highlights Tele2 Russia Region’s position Market share EBITDA Moscow Defender (10 regions) Leader in the region ≥ 35% (avg. 46%) (avg. 47%) Challenger (17 regions) ≥ 20% < 35% (avg. 31%) (avg. 31%) Newcomer (16 regions) < 20% ≥0 (avg. 17%)EBITDA and NET SALES and CUSTOMER BASE andEBITDA MARGIN YoY NET SALES GROWTH CUSTOMER INTAKE SEK Million SEK Million Thousands of customers1400 50% 3 200 50% 22 000 1 400 40%1200 45% 3 000 20 000 1 150 30%1000 40% 2 800 18 000 900 20% 2 600 16 000 650800 35% 10% 2 400 0% 14 000 400600 30% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 EBITDA (left) Net sales (left) Customer base (left) 5 EBITDA margin (right) YoY net sales Customer net growth (right) intake (right)

Understanding Russia’s mobile market MOBILE SUBSCRIBERS AND PENETRATION SUBSCRIBER MARKET SHARE Million Percent Percentage of total number of subscribers 250 180% 35% 30% 200 160% 25% 150 140% 20% 15% 100 120% 10% 5% 50 100% 06 07 08 09 10 11F 12F 13F 14F 15F 0% Q2 10 Q3 10 Q4 10 Q1 11 Q2 11 Subscribers Penetration NET ADDITIONS ARPU DEVELOPMENT TELE2 RUSSIA 100% RUR/month 230 80% 60% 223 40% 215 20% 208 0% -20% 200 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311 -40%6 Tele2 MegaFon Vimpelcom MTS

Tele2 Russia: Regulatory update With regards to regulation of use of frequencies in Russia, the following should be highlighted: • The Regulator in principle admits that Technology Neutrality can be applied to 900/1800 MHz spectrum. However, to avoid GSM service quality deterioration if the LTE is launched alongside GSM frequencies, this topic has to be examined further. The study shall be finished by March 2012. • The Regulator has also announced that it is possible for seven operators to run LTE services in Russia starting from 2015 onwards, and that the new LTE license tenders will be run by the end of Q1 2012.7

Market Area Nordic: Overview Population 14.4 million Tele2 Sweden and Tele2 Norway Home market and test bed for new services Represents 38% of total net sales Q3 2011 Sweden 31%; Norway 7% Focus Sweden: Building on mobile growth and 4G roll-out coupled with household/ corporate fiber strategy Norway: Integration of recently acquired Network Norway8

Q3 Highlights Tele2 Sweden • Net sales grew by 3% amounting to SEK 3,222 mln and EBITDA amounted to SEK 861 mln • Rationalisation within the Swedish organisation with savings target of SEK 100 mn in personnel cost annually SEK 45 mln one-off costEBITDA and NET SALES and CUSTOMER BASE andEBITDA MARGIN YoY NET SALES GROWTH CUSTOMER INTAKE SEK Million SEK Million Thousands of customers1000 40% 3500 20% 4800 120 800 30% 3000 15% 4750 80 600 20% 2500 10% 4700 40 400 10% 2000 5% 4650 0 200 0% 1500 0% 4600 -40 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Mobile Fixed broadband Fixed telephony Other Customer base (left) 9 EBITDA margin (right) YoY net sales Customer net growth (right) intake (right)

Mobile operational performance MOBILE REVENUE DISTRIBUTION MOBILE REVENUE TELE2 SWEDEN and MOBILE EBITDA MARGIN TELE2 SWEDEN SEK Million 2500 36% 16% 2400 34% Mobile voice Mobile data 2300 32% 2200 30% 84% 2100 28% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Revenue (left) EBITDA margin (right) We believe mobile revenue will continue to grow driven by a strong customer demand for data10

Smartphone market development SMARTPHONE MARKET SHARE* 100% 75% Sales of top ten mobile phones 50% Tele2 Sweden (Sept 2011) 25% 1. iPhone 4 16 Black 0% 1103 1104 1105 1106 1107 1108 1109 2. Samsung Galaxy S2 Regular phone Smartphone 3. Huawei Sonic 4. SE Cedar SMARTPHONE PRICE RANGE 5. Samsung Galaxy Gio 100% 6. ZTE Blade 75% 7. Samsung Galaxy Ace 50% 8. SE Xperia Ray 9. iPhone 4 32GB 25% 10. HTC Sensation 0% Last year Today High end Mid range Low end *Postpaid residential, quantity of handsets11

Benefits of mobile networks in JVs MOBILE EBIT SAVING NET4MOBILITY SEK Million • Significant benefits can be 350 obtained from network sharing 280 • Net4Mobility rolling out state of 210 the art 4G network with 140 improved 2G capabilities through EDGE 70 0 2012 2013 2014 We are building Sweden’s best 2G/4G network expecting to cover 99% of population by end 201212

Q3 Highlights Tele2 Norway • The Tele2 Norway / Network Norway / Mobile Norway integration continues at full speed • New management team appointed on the 5th of October • Revenue is SEK 705 mln and EBITDA is SEK -19 mln, the latter a consequence of reduced MTR 50% 50%13

Market shares on Norweigan market 2.8 % MOBILE REVENUE MARKET SHARES 3.9 % 7.8 % Telenor 6.3 % NetCom (Telia Sonera) Chess (Telia Sonera) 5.5 % Network Norway (with 53.4 % OneCall and Lebara) Tele2 20.2 % Ventelo Others Det norske markedet for elektroniske kommunikasjonstjenster 2010”, Post- og teletilsynet, 20 May 2011. Long term market share of 25% and alignment with Tele2 Group targets14

Market Area Western Europe: Overview Population 106 million Leading the group in business to business services and consumer fixed broadband Represents 20% of total net sales Q3 2011 Netherlands 14%; Germany 3%; Austria 3% Focus Netherlands Grow in mobile and SME Austria Continue growth in B2B Germany Grow FVM product15

Q3 Highlights Tele2 Netherlands • Tele2 Netherlands reached EBITDA of 35% on broadband • Re-organisation in Q2 becomes visible in bottom line result • On-going evaluation of possibilities for Tele2 Netherlands to become MNO EBITDA and NET SALES and CUSTOMER BASE and EBITDA MARGIN YoY NET SALES GROWTH CUSTOMER INTAKE SEK Million SEK Million Thousands of customers500 35% 1600 20% 1200 0375 33% 1200 10% 1100 -10250 31% 800 0% 1000 -20125 29% 400 -10% 900 -30 0 27% 0 -20% 800 -40 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Mobile Fixed broadband Fixed telephony Other Customer base (left) 16 EBITDA margin (right) YoY net sales growth (right) Customer net intake (right)

Evaluating a move from MVNO to MNO RATIONALE AUCTION CONDITIONS Customers increasingly Auction planned for Q2 2012 demand mobility 2x10 MHz reserved in the valuable Strong Group 800 MHz band for new entrants experience in mobile data networks Auction start price per 2x5MHz 800 license is EUR 35 mln The opportunity in NL is unique and now. The Roll out obligation for low upcoming auction will frequencies will be stricter than for set the scene till 2030 high frequencies17

Q3 Highlights Tele2 Germany and Tele2 Austria • Both markets are strong cash flow contributors to the Group • Tele2 Germany: Fixed via Mobile product has taken off; 14,000 customers migrated from existing customers base • Tele2 Austria: Strong sales performance and improved profitability within B2B TELE2 GERMANY TELE2 AUSTRIA EBITDA MARGIN EBITDA MARGIN 35% 35% 30% 30% 25% 25% 20% 20% 15% 15% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 1118

Market Area Central Europe and Eurasia: Overview Population 28 million Represents 13% of total net sales Q3 2011 Estonia 2%; Latvia 3%; Lithuania 3%; Croatia 4%; Kazakhstan 1% Focus Stability and improvements in Baltics Growth in revenue, profits and market share in Croatia Establish Tele2 in all regions and continue to grow rapidly in Kazakhstan19

Q3 Highlights Tele2 Lithuania • Tele2 Lithuania had a positive net intake of 22,000 customers • EBITDA margin amounted to 37% (37%) EBITDA and NET SALES and EBITDA-CAPEX EBITDA MARGIN YoY NET SALES GROWTH SEK Million SEK Million SEK Million140 45% 350 0% 150120 40% 325 -8% 100100 35% 300 -15% 50 80 30% 275 -23% 0 60 25% 250 -30% -50 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 EBITDA (left) Net sales(left) EBITDA CAPEX 20 EBITDA margin Net sales YoY EBITDA-CAPEX (right) growth (right)

Q3 Highlights Tele2 Latvia • Tele2 Latvia had a positive net intake of 13,000 customers • Tele2 reached an EBITDA margin of 34% (32%) EBITDA and NET SALES and EBITDA-CAPEX EBITDA MARGIN YoY NET SALES GROWTH SEK Million SEK Million SEK Million120 40% 330 0% 120100 35% 310 -8% 80 80 30% 290 -15% 40 60 25% 270 -23% 0 40 20% 250 -30% -40 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 EBITDA (left) Net sales(left) EBITDA CAPEX 21 EBITDA margin Net sales YoY EBITDA-CAPEX (right) growth (right)

Q3 Highlights Tele2 Estonia • Substantial efforts to increase efficiency show results • Tele2 Estonia reached an EBITDA margin of 31% (24%)EBITDA and NET SALES and EBITDA-CAPEXEBITDA MARGIN YoY NET SALES GROWTHSEK Million SEK Million SEK Million80 35% 235 0% 9070 30% 225 -5% 6060 25% 215 -10% 3050 20% 205 -15% 040 15% 195 -20% -30 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 EBITDA (left) Net sales(left) EBITDA CAPEX 22 EBITDA margin Net sales YoY EBITDA-CAPEX (right) growth (right)

Q3 Highlights Tele2 Croatia • Positive free cash flow of SEK 86 mln • Solid net intake of 45,000 customers • EBITDA margin amounted to 11% (4%)EBITDA and NET SALES and EBITDA-CAPEXEBITDA MARGIN YoY NET SALES GROWTH*SEK Million SEK Million SEK Million60 12% 450 14% 8045 9% 400 7% 4030 6% 350 0% 015 3% 300 -7% -40 0 0% 250 -14% -80 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 EBITDA (left) Net sales(left) * YoY net sales EBITDA CAPEX 23 EBITDA margin Net sales YoY growth positive in EBITDA-CAPEX (right) growth (right) local currency

Tele2 Croatia forward looking statement The following assumptions should be taken into account when estimating the Croatian mobile operations in 2011: • Tele2 expects Croatia to reach an EBITDA margin of 20 percent by Q3 2013 (earlier free cash flow break-even by 2H 2011)24

Q3 Highlights Tele2 Kazakhstan • Commercial launch of Tele2 brand completed in 8 regions • Solid net intake of 459,000 customers • Total number of customers surpassed 1.1 million NET SALES CUSTOMER BASE and ARPU and CUSTOMER INTAKE MINUTES OF USE SEK Million Thousands of customers SEK Min120 1200 60050 90 90 900 40040 80 60 600 20030 70 30 300 0 20 60 0 0 10 -200 50 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 01 11 02 11 03 11 04 11 05 11 06 11 07 11 08 11 09 11 Net sales Customer base (left) ARPU (left) 25 Customer intake Minutes of use (right) (right)

All regions launched by year-end Pavlodar launched on Petropavl 1st of October Kokshetau Pavlodar Kostanay Astana Oral Aktobe Semey Karagandy Oskemen Atyrau Almaty Kyzyl-Orda Aktau Taraz Shymkent26

Tele2 Kazakhstan forward looking statement The following assumptions should be taken into account when estimating the operational performance of the total operations in Kazakhstan: • Tele2 expects the subscriber base to reach 2.3-2.5 million by year-end 2012 • Tele2 expects an EBITDA contribution in 2011 of appr. SEK -400 (earlier -500) million • Tele2 expects capex to be appr. SEK 1,000 million (earlier in the range of SEK 1,200-1,400 million) by year-end 2011 • Tele2 expects to reach EBITDA break-even by 2H 2013 • Tele2 expects to reach a long-term mobile customer market share of 30 percent27

Agenda • About Q3 2011 • Financial Review • Concluding remarks28 2010-10-20

Q3 2011 Group results SEK million Q3 11 Q3 10 Change % Net Sales 10 340 9 989 +3.5% EBITDA 2 893 2 751 +5.2% - EBITDA margin (%) 27.9% 27.5% Depreciation and Joint Ventures -923 -885 - Depreciation of Net sales (%) 9% 9% One-off items -20 17 EBIT 1 950 1 892 +3.1% Normalized EBIT 1 970 1 875 - Normalized EBIT margin (%) 19% 19% Financial items -263 -16 One-off item of SEK 1,049 mln Taxes -428 608 affecting Q310 Net profit/loss 1 259 2 484 Net result, discontinued operations 1 29 Net result total operations 1 260 2 51329 2010-10-20

Currency movements (vs. SEK) YoY difference in YTD Ave FX rates, 2011 vs. 2010 EUR -6.6% RUB -8.3% End of Q3 spot rate vs. 31/12-2010 EUR +3.0% RUB -4.3% EUR/EUR pegged and RUB currencies approximately 2/3 of sales and EBITDA30 2010-10-20

Currency-adjusted sales and EBITDA (excl. one-off) CURRENCY-ADJUSTED SALES, TOTAL +6% CURRENCY-ADJUSTED EBITDA, TOTAL +8 % SEK Million SEK Million 12 000 3 500 10 000 3 000 +10% -1% 2 500 8 000 +9% -1% 2 000 6 000 +20% +29% 1 500 4 000 1 000 2 000 +1% -6% 500 0 0 Q3 10 Q3 11 Q3 10 Q3 11 MA Western Europe MA Central Europe and Eurasia MA Russia MA Nordic31 2010-10-20

Taxes Taxes in income YTD Q3 11 Q3 10 statement Normal -1 196 -428 -441 One-Off - - 1 049 Total -1 196 -428 608 Taxes in cash flow Q3 11 Q3 10 Normal -785 -235 -152 Deferred tax assets amounted to SEK 3.2 (3.3) billion32 2010-10-20

Cash flow for Q3 2011 SEK million Q3 11 Q3 10 OPERATING ACTIVITIES Cash flow from operations, before paid tax 2833 2733 Cash flow from operations, paid taxes -235 -152 Changes in working capital 77 39 Cash flow from operating activities 2675 2 620 INVESTING ACTIVITIES CAPEX -1 073 -923 Cash flow after CAPEX 1 602 1 69733 2010-10-20

Group financial profile PROFORMA NET DEBT INCL. JV / EBITDA 12’M ROLLING Ratio SEK Billion 20.0 2.00 Upper limit 17.5 1.75 15.0 1.50 Lower limit 12.5 1.25 10.0 1.00 7.5 0.75 5.0 0.50 2.5 0.25 0.0 0.00 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Pro Forma Net Debt #REF! Pro Forma Net Debt / EBITDA 12M ROLLING Ordinary dividend Extraordinary dividend34 2010-10-20

Debt profile September 2011 RCF (SEK) 7.8 bn RCF (EUR) 1.3 bn Kazakhstan debt 2.0 bn Rubel bond 2.7 bn Off balance sheet 0.3 bn Gross debt position SEK 14.1 bn Net debt amounts to 11.2 bn35 2010-10-20

Bal. sheet consideration / Fin. leverage When available, invest in value accretive M&A or C M&A / New growth new business opportunities meeting Tele2’s A opportunities strict financial hurdles S H G E Shareholder Enhance shareholder value by distributing N recurring cash to shareholders E remuneration R A T I O Retain financial buffer N Cash / Buffer Prudent assessment based on (a) status of operations, (b) future strategic opportunities, (c) competitive landscape and (d) general macroeconomic status36 2010-10-20

Net debt and dividend targets Shareholder remuneration “Tele2 will seek to pay a progressive ordinary dividend of no less than 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 groups 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 liabilities.”37 2010-10-20

Mobile Fixed broadband Fixed telephony Other Group financials GROUP EBITDA and GROUP NET SALES GROUP EBITDA MARGIN SEK Million SEK Million 3500 30% 12000 3000 28% 10000 2500 26% 8000 2000 24% 6000 1500 22% 4000 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Group EBITDA margin GROUP CAPEX ROCE SEK Million Percent 1600 26% 1200 24% 800 22% 400 20% 0 18% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Q3 10 Q4 10 Q1 11 Q2 11 Q3 1138 2010-10-20

Group mobile EBITDA GROUP MOBILE EBITDA SEK Million Percent 3 000 35.0% 2 250 32.5% 1 500 30.0% 750 27.5% 0 25.0% Q3 10 Q4 10 Q1 11 Q2 11 Q3 11 Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO) Mobile EBITDA margin on own infrastructure Total mobile EBITDA margin39 2010-10-20

Sweden mobile revenue explained SWEDEN MOBILE REVENUE WATERFALL SEK Million 103 (+4.7%) 2368 -32 79 (+3.6%) 2218 2186 Revenue Q3 2010 Non recurring Adjusted external Underlying mobile Mobile equipment Revenue Q3 2011 revenue40 2010-10-20

Sweden mobile EBITDA explained SWEDEN MOBILE EBITDA WATERFALL N4M -13 SEK Million Challenge Sweden -34 26 (+3.5%) -5 (-0.7%) -47 (-6.2%) 748 722 EBITDA Q3 2010 GM2 (incl SUNAB) Other N4M EBITDA Q3 201141 2010-10-20

Agenda • About Q3 2011 • Financial Review • Concluding remarks42 2010-10-20

Concluding remarks • We experience yet another record quarter in the third quarter of 2011. • We and our industry have shown good resilience towards current financial turmoil. • We constantly chase unnecessary costs in order to stay on our toes. • We are part of a growth industry, where data is forecasted to grow. • We offer the best of both worlds.43 2010-10-20

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45 2010-10-20

Tele2 - Third quarter 2011

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Tele2 - Third quarter 2011 Presentation Transcript