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Q1 2016 presentation

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Q1 2016 presentation

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Q1 2016 presentation

  1. 1. FIRST QUARTER 2016 April 21st, 2016 Tele2AB
  2. 2. Delivering on our long term strategy Winning People & Culture Value Champion Step-Change Productivity Focused Technology Choices • 4G available across our footprint • 4G customer base significantly increased in Netherlands • VoLTE switched on • Mid-single digit mobile end-user service revenue growth • Sweden Consumer continues to grow • Strong performance in the Baltic region • Challenger program on track • Kazakhstan JV synergy plan progressing well • Virtualization and cloudification of Network & IT underway • 1000 new Altel employees embracing the Tele2 Way • Welcome Lars Nordmark, Group CFO 2
  3. 3. Group highlights – Q1 2016 Q1 2016 % Change Reported LFL is constant currencies and pro forma for Altel % Change LFL Mobile end-user service revenue (SEK billion) 3.17 -1% +4% EBITDA (SEK billion) 1.23 -14% -14% Net sales (SEK billion) 6.45 -1% +2% 3
  4. 4. Sweden – Financials Net sales (SEK million) Mobile end-user service revenue (SEK million) – Net sales declined mainly due to lower fixed revenues and lower handset sales – Mobile end-user service revenue continued to be impacted primarily by price pressure in B2B SME segment – EBITDA impacted by investment into sales and marketing activities Q1 Highlights EBITDA and EBITDA margin (SEK million) 1 809 1 829 1 889 1 841 1 797 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 976 908 1 014 946 894 31% 29% 33% 29% 29% 0% 10% 20% 30% 40% 50% 60% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 200 400 600 800 1,000 1,2003 130 3 101 3 100 3 299 3 053 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 500 1,000 1,500 2,000 2,500 3,000 3,500 -1%-2% -8% 4
  5. 5. Sweden – Continuing growth in Consumer Consumer postpaid end-user services revenue Share of Tele2 intake with bundle >0.5GB – Total Consumer grew 3% driven by strength in prepaid and successful execution of our dual brand strategy – Tele2 customer intake continues to develop in the higher value buckets – Geographic 2G/4G coverage now at 86%, on track towards 90% target – Customer satisfaction (CSAT) has increased to best-in-class levels, 85% Q1 Highlights Geographic coverage 2G/4G Q1 15 Q1 16 70% 72% 77% Jan Feb Mar +1.3% 77% 86% Q1 15 Q1 16 5
  6. 6. Baltics – Financials Q1 Highlights Net sales (SEK million) EBITDA and EBITDA margin (SEK million) Mobile end-user service revenue (SEK million) 444 470 488 476 468 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 100 200 300 400 500 600 231 238 263 257 246 32% 31% 32% 32% 32% 0% 10% 20% 30% 40% 50% 60% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 50 100 150 200 250 300 719 767 832 815 770 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 100 200 300 400 500 600 700 800 900 – Net sales and mobile end-user service revenue growth driven by continued positive data monetization – Revenue growth is filtering through to strong EBITDA development – Lithuania is particularly strong, mobile end-user service revenue up 8% and EBITDA up 14% +5%+7% +6% 6
  7. 7. Baltics – Strong performance ASPU development Share of 4G capable smartphones in base Q1 Highlights 4G population coverage – Strong data monetization driven by prepaid to postpaid transition, increasing penetration of 4G handsets, and data centric pricing – Population coverage continues to expand – Successfully acquired 900/1800 Mhz spectrum band license in Lithuania. 56% 95% Q1 15 Q1 16Q1 15 Q1 16 10% 25% Q1 15 Q1 16 +8% 7
  8. 8. Netherlands – Financials Q1 Highlights – Mobile end-user service revenue growth reflects improved intake building through the quarter – Momentum was stronger in March after the launch of the iPhone and new SIM-only propositions – EBITDA impacted as expected by costs associated with mobile growth and network rollout partly offset by property one-off (+SEK 73M) Net sales (SEK million) EBITDA (SEK million) Mobile end-user service revenue (SEK million) 305 332 364 403 322 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 50 100 150 200 250 300 350 400 450 141 147 122 35 -31 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 -35 -15 5 25 45 65 85 105 125 145 165 1 402 1 390 1 440 1 512 1 441 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 200 400 600 800 1,000 1,200 1,400 1,600 +6%+3% -122% 8
  9. 9. Netherlands – Gaining momentum Spontaneous brand awareness & Brand consideration (Memo2) Share of total postpaid new (GfK) Data usage on own network Q1 Highlights – Brand Awareness and Consideration are trending positively since launch – Significant increase in share of total postpaid new contracts – Good progress in data on-loading driven by strong network coverage of 97% outdoor and 78% indoor – At the end of the quarter the first customers started to use VoLTE, making Tele2 the first 4G-only operator in the world 27% 61% Pre-launch Mar 16 4G 34% 40%41% 52% Pre-launch Mar 16 Awareness Consideration 12% 25% Pre-launch Oct 15 Mar 16 9
  10. 10. – JV in place since Feb 29th, integration on track – Mobile end-user service revenue growth due to higher customer base – Net sales growth lower than service revenue due to lower handset sales – EBITDA impacted by business expansion costs and translation impacts on payables Kazakhstan – Financials Q1 Highlights LFL is constant currency and pro forma for Altel Net sales, LFL (SEK million) EBITDA, LFL (SEK million) Mobile end-user service revenue, LFL (SEK million) 284 324 342 359 371 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 50 100 150 200 250 300 350 400 14 -13 25 -34 12 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 -35 -25 -15 -5 5 15 25 35 386 480 557 632 487 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0 100 200 300 400 500 600 700 +31%+26% 10
  11. 11. Kazakhstan – JV integration progressing Customer base, LFL (thousands) Average Price/GB development Q1 Highlights 4G coverage Tele2 customers LFL is pro forma for Altel – National roaming agreement between Altel and Tele2 in place, 4G and greater coverage now available for the combined customer base – Customer base increase due to strong price leadership positions of both Tele2 and Altel – Pricing discipline going forward, new price plans for Altel in place since early April 4 737 6 298 Q1 15 Q1 16 77% Unlimited tariff plans New tariffs 75 168 KZT KZT 11
  12. 12. Challenger Program progressing Simplify % 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 target 2018 targetBaseline 30% 40% 60% 40% 75% 80% 0% 5% 20% 12% 18% 25% Progress in the quarter  Handset Optimization Program is delivering campaign benefits as well as working capital improvements  Virtualization and cloudification of network & IT announced  Germany restructuring flowing through  New organization model enabling more economies of scale  Good progress in Estonia and Croatia on product portfolio simplification 12
  13. 13. Financial Overview
  14. 14. 3 184 3 168 -12 24 17 -50 -8 Q1 15 Sweden Baltics NL KZ RoW Oth Q1 16 Mobile end-user service revenue Tele2 Group (SEK million) 3 184 3 324 3 422 3 282 3 168 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 -1% Development per market (SEK million) 13 14
  15. 15. 1 428 1 226 -82 15 -172 6 32 -1 Q1 15 Sweden Baltics NL KZ RoW Oth Q1 16 EBITDA Tele2 Group (SEK million) 1 428 1 393 1 599 1 337 1 226 21.9% 21.1% 23.5% 19.3% 19.0% 600 800 1000 1200 1400 1600 1800 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% EBITDA margin -14% Development per market (SEK million) 15
  16. 16. CAPEX Tele2 Group (SEK million) 938 1 134 932 1 223 1 154 14.4% 17.2% 13.7% 17.6% 17.9% 300 500 700 900 1,100 1,300 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% CAPEX / Net sales +23% Development per market (SEK million) 938 1 154 59 107 118 -40 0 -28 Q1 15 Sweden Baltics NL KZ RoW Oth Q1 16 16
  17. 17. Free cash flow Total operations Tele2 Group (SEK million) Development (SEK million) Free cash flow = Cash flow from operating activities and CAPEX paid -96 -268 169 -291 -154 -400 -300 -200 -100 0 100 200 300 400 500 600 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 -35 -96 -202 135 48 158 -137 -25 -154 Q1 15 EBITDA Interest etc Taxes Working capital CAPEX One-off items Discontinued Operations Q1 16 -60% 17
  18. 18. Debt position and financial leverage Economic net debt to EBITDA 12 m rolling 3.5 10.3 9.8 9.9 9.4 0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 0.0 2.5 5.0 7.5 10.0 12.5 Mar 2015 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Economic net debt Dividend, announced Economic net debt to EBITDA Economic net debt is defined as net debt excluding liabilities from Kazakhtelecom and liabilities guaranteed by Kazakhtelecom 1.70 LeverageSEK billion 18
  19. 19. Financial guidance 2016 Net sales (SEK billion) EBITDA (SEK billion) 26 – 27 4.6 – 5.0 CAPEX (SEK billion) 3.7 – 4.1 Mobile end-user service revenue Mid-single digit % growth 19
  20. 20. Summary
  21. 21. Key priorities moving forward  Regain momentum in Sweden  Commercialize and monetize 4G investments in Baltics/Croatia  Accelerate growth in Netherlands  Successful integration of Altel and pricing discipline  Execute on Challenger Program Winning People & Culture Value Champion Step-Change Productivity Focused Technology Choices 21
  22. 22. Tele2’s Way2Win The Tele2 Way We are challengers, fast-movers and will always offer our customers what they need for less We will be champions of customer value in everything we do How we win Focused Technology Choices Value Champion Step-Change Productivity Winning People & Culture Vision Mission Where we play Mobile access Our current footprint Residential and Business M2M & IoT Responsible Challenger 25
  23. 23. THE END

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