Presentation Tele2s Quarterly report 2008 (Q2)

1. SECOND QUARTER 2009
22 July 2009

2. AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2 2009-07-22 Second quarter 2009

3. HIGHLIGHTS Q2
• Record result with all regions performing
• Nordic
– Good EBITDA contribution
• Russia
– Strong operational momentum
– Tomsk launched with good initial market traction
• Central Europe
– Focus on maintaining our customer base and profitability
• Western Europe
– All countries delivering healthy EBITDA contribution
– Strong performance in The Netherlands and Austria
3 2009-07-22 Second quarter 2009

4. MOBILE HIGHLIGHTS Q2
• Sweden
– Good customer intake driven by mobile internet
service
• Russia
– Strong EBITDA margin
– Strong net intake
• The Baltic Region
– Create a platform for future growth
4 2009-07-22 Second quarter 2009

5. MARKET TRENDS
• Develop distribution strategies
• Stimulate customer activity
• Introduce diversified pre-paid services
5 2009-07-22 Second quarter 2009

6. CORPORATE SEGMENT
• Sweden
– New contract wins in price sensitive market
• The Netherlands
– Gold standard for the group
• Austria
– New strategy is paying off
6 2009-07-22 Second quarter 2009

7. HOW DO WE CREATE THE BEST DEAL
• Price leadership through best in
class cost control
BEST DEAL
• Rewarded quality network
• Standardized product portfolio
7 2009-07-22 Second quarter 2009

8. ECONOMIC DEVELOPMENT
• The effects of the global recession can still be
observed in some parts of Tele2’s operations
• The Company has acted and can see positive
effects on OpEx and CapEx
– The contingency plan will continue
8 2009-07-22 Second quarter 2009

9. AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
9 2009-07-22 Second quarter 2009

10. Q2 2009 GROUP RESULTS
SEK million Q2 09 Q2 08 Change %
Continuing operations, Net Sales 10,130 9,832 3%
EBITDA 2,450 2,101 17%
- EBITDA margin (%) 24,2% 21,4%
Depreciation and joint venture -944 -934
- Depreciation of net sales (%) 9,2% 8,7%
One-off items -59 -737
EBIT 1,447 430
Normalized EBIT 1,506 1,167
- Normalized EBIT margin (%) 14,9% 11,9%
Financial items 17 -102
Taxes -324 -167
Net result, continuing operations 1,140 161
Net result, discontinued operations 12 -220
Net result 1,152 -59
10 2009-07-22 Second quarter 2009

11. H1 2009 GROUP RESULTS
SEK million H1 09 H1 08 Change %
Continuing operations, Net Sales 20,250 19,359 5%
EBITDA 4,677 3,761 24%
- EBITDA margin (%) 23,1% 19,4%
Depreciation and joint venture -1,838 -1,864
- Depreciation of net sales (%) 8,9% 8,9%
One-off items -63 -654
EBIT 2,776 1,243
Normalized EBIT 2,839 1,897
- Normalized EBIT margin (%) 14,0% 9,8%
Financial items -575 -130
Taxes -597 -251
Net result, continuing operations 1,604 862
Net result, discontinued operations 196 -171
Net result 1,800 691
11 2009-07-22 Second quarter 2009

12. FINANCIAL ITEMS Q2
SEK million Q2 09 Q2 08 Change
External
Net interest expenses -99 -94 -5
Exchange rate differences, external 92 14 78
Other financial items -11 -47 36
-18 -127 109
Exchange rate differences, intragroup 35 25 10
Financial items 17 -102 129
12 2009-07-22 Second quarter 2009

13. FINANCIAL ITEMS H1
SEK million H1 09 H1 08 Change
External
Net interest expenses -238 -182 -56
Exchange rate differences, external -74 116 -190
Other financial items -31 -55 24
-343 -121 -222
Exchange rate differences, intragroup -232 -9 -223
Financial items -575 -130 -445
13 2009-07-22 Second quarter 2009

14. “OUR” CURRENCIES
YTD Average Fixing rate
Currency 09 vs. 08 June 09 vs Dec 08
EUR + 16 % -
RUB -4% -5%
”BALTICS” + 15 % -
USD + 33 % +1%
14 2009-07-22 Second quarter 2009

15. NET ASSETS IN FOREIGN CURRENCIES
30
2,1 2,3
20 6,2 6,7 Other
Baltics
5,4 5,6 Russia
10 EUR
11,8 11,5
0
Year-end 2008 Q2 2009
Total 25.5 bSEK Total 26.1 bSEK
15 2009-07-22 Second quarter 2009

16. CASH FLOW FOR Q2 2009
SEK million Q2 09 Q2 08
OPERATING ACTIVITIES
Taxes paid -124 153
Cash flow from operations, other 2,060 2,086
Changes in working capital 63 -381
CASH FLOW FROM OPERATING ACTIVITIES 1,999 1,858
INVESTING ACTIVITIES
CAPEX -1,078 -1,446
Cash Flow after CAPEX 921 412
Acquisition and sale of shares and participations, net -36 -168
885 244
16 2009-07-22 Second quarter 2009

17. CASH FLOW FOR H1 2009
SEK million H1 09 H1 08
OPERATING ACTIVITIES
Taxes paid -580 -167
Cash flow from operations, other 3,952 3,831
Changes in working capital 458 -299
CASH FLOW FROM OPERATING ACTIVITIES 3,830 3,365
INVESTING ACTIVITIES
CAPEX -2,227 -2,445
Cash Flow after CAPEX 1,603 920
Acquisition and sale of shares and participations,net -133 -634
1,470 286
17 2009-07-22 Second quarter 2009

18. NEW DEFINITION OF A PRE-PAID CUSTOMER
OUR GOAL
Definition alignment; apply the same definition to all
our countries
NEW DEFINITION
”An active pre-paid customer is a customer that has a
refillable active account; and has either refilled or done
an active transaction during the last 90 days”
18 2009-07-22 Second quarter 2009

19. CUSTOMER DEFINITION – NEW RULE
Relative Absolute
impact impact
Country Old definition (%) (in thousands)
Sweden 6 months from last refill or usage -5,8 -200
Norway 6 months from last refill or usage -0,4 -2
Russia 3 months from last refill 11,3 1,261
Estonia 7 months from last refill -6,6 -32
Lithuania 10 months from last refill -9,5 -181
Latvia Average of 4 months from last refill -1,1 -12
Croatia Average of 12 months from last refill -29,4 -227
France 12 months from last refill -3,2 -14
Netherlands 12 months from last refill -8,6 -40
Total 2,7 553
19 2009-07-22 Second quarter 2009

20. GROUP FINANCIAL PROFILE
25 000 3,5
Net debt incl. JV
3
20 000
2,5 Net debt
15 000 2
10 000 1,5 Net debt/ EBITDA
1 incl. JV 2008
5 000 Net debt/ EBITDA
0,5
2008
0 0
07
07
08
08
09
2
4
2
4
2
Q
Q
Q
Q
Q
• Net debt amounted to SEK 5,441 million in Q2 2009
– 0.6 times FY 2008 EBITDA
– 0.9 times FY 2008 EBITDA including guarantees to JV
20 2009-07-22 Second quarter 2009

21. NET INTAKE PER SEGMENT
1000
800
600
400 Fixed telephony
200 Fixed broadband
0 Mobile
-200 Q1 Q2 Q3 Q4 Q1 Q2
08 08 08 08 09 09
-400
-600
• Russia is the growth driver in net intake adding 478,000 new customers
• Mobile customer base increasing by 524,000 new users
21 2009-07-22 Second quarter 2009

22. GROUP Q2 2009 MOBILE
25 000
20 000
15 000 Mobile Internet 0.2 million
Pre paid voice 16.7 million
10 000 Post paid voice 3.8 million
5 000
0
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
• Total number of mobile customers 20.7 million Q2 2009
– New pre-paid definition adding 553 000 customers in the reporting
22 2009-07-22 Second quarter 2009

23. MoU AND ARPU DEVELOPMENT
SWEDEN RUSSIA
225 240 70 220
220 235 215
60
215 230 210
210 50 205
225
205 40 200
220
200 195
215 30
195 190
190 210 185
20
185 205 180
180 200 10
175
175 195 0 170
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
ARPU MoU ARPU MoU
• Relatively strong development despite challenging economical times
– Swedish ARPU being driven down by an increasing customer base in Mobile Internet
23 2009-07-22 Second quarter 2009

24. GROUP Q2 2009 NET SALES
12 000
10 000
8 000 Other
Fixed telephony
6 000
Fixed broadband
4 000 Mobile
2 000
0
Q1 Q2 Q3 Q4 Q1 Q2
08 08 08 08 09 09
• Mobile net sales SEK 6,457 million, up 5 percent
24 2009-07-22 Second quarter 2009

25. GROUP Q2 2009 EBITDA
3 000 30,00%
Other
2 500 25,00%
2 000 Fixed telephony
20,00%
1 500 Fixed broadband
15,00%
1 000
10,00% Mobile
500
0 5,00% Group EBITDA
Q1 Q2 Q3 Q4 Q1 Q2 margin
-500 0,00%
08 08 08 08 09 09
• Group EBITDA margin 24 percent
– Lithuania delivering new record EBITDA margin of 39 percent
– Further improved performance in the Dutch and Austrian fixed broadband operations
25 2009-07-22 Second quarter 2009

26. MOBILE Q2 2009 EBITDA
2 000 30,00%
1 800
1 600 25,00%
1 400 20,00% Mobile
1 200
1 000 15,00%
800 Mobile EBITDA
600 10,00% margin
400 5,00%
200
0 0,00%
Q1 Q2 Q3 Q4 Q1 Q2
08 08 08 08 09 09
• Mobile EBITDA margin 27 percent
– Russia EBITDA margin 40 percent in mature regions and 35 percent in all regions
26 2009-07-22 Second quarter 2009

27. FIXED BROADBAND Q2 2009 EBITDA
300 20,00%
15,00%
200
10,00%
100 Fixed broadband
5,00%
0,00% Fixed broadband
0
EBITDA margin
Q1 Q2 Q3 Q4 Q1 Q2 -5,00%
-100 08 08 08 08 09 09
-10,00%
-200 -15,00%
• Fixed broadband EBITDA margin 14 percent
– Excellent performance in Tele2 Netherlands driven by continued success in the B2B and
consumer segment
– The Austrian operations benefiting from the restructuring process
27 2009-07-22 Second quarter 2009

28. FIXED TELEPHONY Q2 2009 EBITDA
500 30,00%
400 25,00%
20,00% Fixed Telephony
300
15,00%
200 Fixed telephony
10,00% EBITDA margin
100 5,00%
0 0,00%
Q1 Q2 Q3 Q4 Q1 Q2
08 08 08 08 09 09
• Fixed telephony EBITDA margin 27 percent
– Focus on maintaining relative performance
28 2009-07-22 Second quarter 2009

29. GROUP Q2 2009 EBIT
2 000 16,00%
Other
14,00%
1 500
12,00% Fixed telephony
1 000
10,00%
Fixed broadband
500 8,00%
6,00% Mobile
0
Q1 Q2 Q3 Q4 Q1 Q2 4,00%
-500 08 08 08 08 09 09 Group EBIT
2,00%
margin
-1 000 0,00%
• Group EBIT margin 15 percent excluding one-off items
• Improved operational performance in mobile lifting EBIT performance
29 2009-07-22 Second quarter 2009

30. GROUP Q2 2009 CAPEX
1600 16,00%
1400 14,00%
1200 12,00% Other
1000 10,00% Fixed telephony
800 8,00% Fixed broadband
600 6,00% Mobile
400 4,00% Capex/sales
200 2,00%
0 0,00%
Q1 Q2 Q3 Q4 Q1 Q2
08 08 08 08 09 09
• Group Capex SEK 1,085 million or 11 percent of net sales
– FY 2009 expectation in the range of SEK 4,700-4,900 million, affected by FX movement
• Expansion in Russia the main driver
– FY 2009 expectation in the range of SEK 1,300-1,500 million related to roll-out of new
licenses
30 2009-07-22 Second quarter 2009

31. AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
31 2009-07-22 Second quarter 2009

32. CONCLUDING REMARKS
• Record result with strong performance in all markets
• Top priorities 2H 2009
– Tele2 will continue to focus on cost discipline in all parts of the
organization
– Roll-out of new regions in Russia
• Launch of up to six new regions during Q3 2009
– Develop our mobile operations
• Compose a product portfolio that goes in line with the needs of our
customers
– Tele2 will work harder in the corporate segment, both in the Nordic
and Western European regions
32 2009-07-22 Second quarter 2009

33. Q&A
33 2009-07-22 Second quarter 2009

34. Appendix
34 2009-07-22 Second quarter 2009

35. GENERAL MARKET TRENDS IN MOBILE
• Strong customer intake
• MoU growth is offsetting price competition
• Pricing environment for basic voice fairly stable
• Good interest in Mobile Internet services
35 2009-07-22 Second quarter 2009

36. TELE2 SWEDEN MOBILE
3 400 140
3 350
120
• Flat revenue development
3 300 • Good customer intake
100
3 250 – Driven by Mobile Internet and
3 200 80
Mobile subscriber
post-paid voice
3 150 60
Net intake • 33,000 new Mobile Internet
3 100 users
40
3 050 – Total base 218,000
20
3 000 • MoU continue to grow, both
2 950 0 voice and VAS
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
• New partnership regarding
2 000 40,00%
future LTE network deployment
35,00%
1 950 • EBITDA 32 percent
30,00%
– More traffic carried over the 3G
1 900
25,00% network/SUNAB JV
Mobile net sales
1 850 20,00% EBIT marg. – Higher intake of post-paid
EBITDA marg. customers leading to increased
15,00%
1 800 marketing costs
10,00%
1 750
• Capex
5,00%
– Benefiting from the JV
1 700 0,00% structure
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
36 2009-07-22 Second quarter 2009

37. TELE2 SWEDEN MOBILE (contd)
4 000
3 500
3 000
2 500 Mobile Internet 0.2 million
2 000 Pre paid voice 1.7 million
1 500 Post paid voice 1.3 million
1 000
500
0
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
• Total number of mobile customers 3.2 million Q2 2009
– New pre-paid definition affecting the reported number of the customer base with -200 000
37 2009-07-22 Second quarter 2009

38. TELE2 NORWAY MOBILE
465 25
460 20 • Tele2 staying the price leader
455
15 despite tough market
450
10
conditions
Mobile subscriber
445
Net intake
440
5 • Customer intake 2,000 in Q2
435
0 2009
430 -5
• Improvement EBITDA
425 -10 development:
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
660 12,00%
– Efforts to bring costs down
together with;
650 10,00%
640 8,00% – a continued focus on improving
630 6,00%
the quality of the overall
Mobile net sales customer stock
620 4,00%
EBITDA marg.
610 2,00% • Network Norway JV affecting
600 0,00% EBIT by SEK 16 million
590 -2,00%
580 -4,00%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
38 2009-07-22 Second quarter 2009

39. TELE2 RUSSIA MOBILE
14 000 700
12 000 600 • Revenue growth 14 percent in
10 000 500
SEK
8 000 400 • More than 12 million customers
Mobile subscriber
6 000 300
Net intake – Net intake in the quarter
478,000
4 000 200
2 000 100
• Stable ARPU development
despite economic weakness
0 0
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
• Roll-out of new GSM licenses
2 500 37,00%
will accelerate in 2H 2009
36,00%
2 000
35,00%
• Improved network quality and
34,00%
data usage through the
1 500
33,00%
Mobile net sales introduction of EDGE
EBITDA marg.
1 000
32,00%
technology
31,00%
500
30,00%
0 29,00%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
39 2009-07-22 Second quarter 2009

40. TELE2 BALTIC MOBILE
3 600 60
3 550
40
• Challenging economic
3 500
3 450
environment
20
3 400 – Lithuania and Estonia relatively
3 350
0
Mobile subscriber stable development
3 300 Net intake
3 250 – Fierce price competition in
-20
3 200 Latvia
3 150 -40
3 100
• Robust EBITDA development
3 050 -60 despite current economic
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
climate
1200 38,00%
– Lithuania 39 percent EBITDA
1000 36,00% margin
800 34,00% • Price leadership creating
Latvia net sales
600 32,00%
Lithuania net sales opportunities
Estonia net sales
EBITDA marg. – Focus on higher ARPU
400 30,00%
segments and enterprise
200 28,00% customers
0 26,00%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
40 2009-07-22 Second quarter 2009

41. TELE2 CROATIA MOBILE
900 80
800 70 • The Croatian operations
700
60 developing according to plan
600
50
500
40
Mobile subscriber • Good EBITDA improvement in
Net intake
400
30
the quarter
300
20
200
10
• Opex affected by higher
100
marketing spending and
0 0
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
acquisition costs
350 0,00%
300 -10,00%
250 -20,00%
200 -30,00%
Mobile net sales
EBITDA marg.
150 -40,00%
100 -50,00%
50 -60,00%
0 -70,00%
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
41 2009-07-22 Second quarter 2009

42. 42 2009-07-22 Second quarter 2009