HARRI
KOPONEN
President &
CEO



              11
FROM REALIGNMENT TO
  TRANSFORMATION



                      22
WHAT DO CUSTOMERS WANT?
                                                    CUSTOMERS
   MOBILITY                 FAST AND...
EFFECTS ON THE TELECOM INDUSTRY?

VOICE BECOMES             DATA BECOMES                  EVERYTHING
    MOBILE           ...
TRANSFORMATION PHASE

COMPOSING
A PRODUCT PORTFOLIO THAT
GOES IN LINE WITH
FUTURE
CUSTOMER NEEDS
                         ...
CORE SERVICE




               66
OUR CORE SERVICES ARE
PRICE LEADING
AND QUALITIATIVE
MOBILE
COMMUNICATION
WITH INCREASED FOCUS ON

B2B SEGMENT
           ...
Q3 2008




          88
TELE2 IN BRIEF

24 million customers
in 11 countries

Mobile operations in 9
countries

Fixed broadband operations in
6 co...
RUSSIAN OPERATIONS




  Existing Business

  New Licenses




                      1010
EBITDA



 2500

 2000                        Fixed broadband
                             Fixed telephony
 1500
         ...
0
                     500
                           1000
                                  1500
                        ...
Q3 2008 SUMMARY



 SEK million                                             Q3-08              Q3-07         Growth %


 N...
SUMMARY


 MOBILE: Focus even more on growth in mobile,
 mobile internet and corporate services

 FIXED BROADBAND: Continu...
LARS
NILSSON
CFO




          1515
PROFIT & LOSS

 (All figures in MSEK)                 Q3-08    Q3-07
 Continuing operations, Net Sales       9,833   10,06...
CASH FLOW FOR Q3

 (All figures in MSEK)                            Q3-08    Q3-07
 CF from continuing operations, excl ta...
CASH FLOW FOR 9M

 (All figures in MSEK)                            9M-08     9M-07
 CF from continuing operations, excl t...
NET DEBT TO EBITDA
 NET DEBT SEK 5.2 BILLION




  3

 2,5

  2

 1,5

  1

 0,5

  0
       Q1 07   Q2 07   Q3 07   Q4 07...
FUNDING Q3 2008


 (All figures in BSEK)                           Amount     Maturity

 Tele2 external loans             ...
FINANCIAL COMMENTS


 FINANCIAL VIEW: Short term the company needs to take
 into consideration the uncertainties in the fi...
FINANCIAL COMMENTS: RUSSIA


 FINANCIAL IMPACT OF THE 17 NEW LICENSES

 2008: The operational expenditures are estimated t...
FINANCIAL COMMENTS: RUSSIA


 FINANCIAL IMPACT OF THE 17 NEW LICENSES

 Up to 12 regions out of 17 will have been launched...
NET INTAKE BY SEGMENT
 NET CUSTOMER INTAKE DRIVEN BY MOBILE
 (Approx. 700 thousand)


 1200
 1000
  800
  600             ...
NET SALES BY SEGMENT
 MOBILE +12% YEAR ON YEAR




 10 000
 9 000
 8 000
  7 000
 6 000                                   ...
EBITDA BY SEGMENT
 EBITDA MARGIN 22.8%
 Mobile 27.8%
 Fixed Telephony 27.7%

 2 300

 1 800
                              ...
EBIT BY SEGMENT
 NORMALIZED EBIT MARGIN 14.2%
 Mobile 23.8%
 Fixed Telephony 22.9%

 2 000

  1 500
                      ...
CAPEX BY SEGMENT
 CAPEX TO SALES RATIO 9.5%




 1400

 1200

 1000

  800                                                ...
FINANCIAL SUMMARY

 STRUCTURE: Move from realignment to
 transformation. Long term net debt/EBITDA target
 in line with in...
QUESTIONS?




             3030
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Quarterly report (Q3) 2008

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Quarterly report (Q3) 2008

  1. 1. HARRI KOPONEN President & CEO 11
  2. 2. FROM REALIGNMENT TO TRANSFORMATION 22
  3. 3. WHAT DO CUSTOMERS WANT? CUSTOMERS MOBILITY FAST AND ONLY PAY EVERYWHERE INSTANT SERVICE FOR VALUE! Connected and Quick response… Customers can get available anywhere Customers do not accept music, movies, TV, Coverage and quality to wait telephony, etc for is key… Time is money / free online… Customers and our Impatient Complicated price services must be Keep it simple – if its plans is a waste of equally mobile complicated it’s a waste our customers time of time Always ask yourself if If we can't provide the we add value to our service/product directly customers customers will choose another brand 33
  4. 4. EFFECTS ON THE TELECOM INDUSTRY? VOICE BECOMES DATA BECOMES EVERYTHING MOBILE MOBILE BECOMES IP Customers will “cut Data will follow voice Photons replace the cord”, moving Customers want “access electrons from fixed to mobile anywhere” Traffic is IP-based Austria and Finland is “Quality” = simplicity, is Internet services is IP good examples of essential where most minutes Even voice is going already are mobile New devices & simple IP price plans drive Unified IP networks demand carry voice, internet, TV 44
  5. 5. TRANSFORMATION PHASE COMPOSING A PRODUCT PORTFOLIO THAT GOES IN LINE WITH FUTURE CUSTOMER NEEDS 55
  6. 6. CORE SERVICE 66
  7. 7. OUR CORE SERVICES ARE PRICE LEADING AND QUALITIATIVE MOBILE COMMUNICATION WITH INCREASED FOCUS ON B2B SEGMENT 77
  8. 8. Q3 2008 88
  9. 9. TELE2 IN BRIEF 24 million customers in 11 countries Mobile operations in 9 countries Fixed broadband operations in 6 countries Fixed telephony operations in 8 countries 99
  10. 10. RUSSIAN OPERATIONS Existing Business New Licenses 1010
  11. 11. EBITDA 2500 2000 Fixed broadband Fixed telephony 1500 Mobile 1000 500 0 Q3 2008 Q3 2007 -500 1111
  12. 12. 0 500 1000 1500 2000 2500 Q3 1999 Q1 2000 Q3 2000 Q1 2001 Q3 2001 Q1 2002 Q3 2002 Q1 2003 Q3 2003 Q1 2004 Q3 2004 EBITDA DEVELOPMENT Q1 2005 Q3 2005 Q1 2006 Q3 2006 Q1 2007 Q3 2007 Q1 2008 Q3 2008 1212
  13. 13. Q3 2008 SUMMARY SEK million Q3-08 Q3-07 Growth % Net Sales 9,891 9,509 4% EBITDA 2,248 1,750 28% EBIT1) 1,394 863 62% 1) Excluding one-off items of SEK -950 (-1,319) million related to impairment loss in Germany 1313
  14. 14. SUMMARY MOBILE: Focus even more on growth in mobile, mobile internet and corporate services FIXED BROADBAND: Continue to improve profitability FIXED TELEPHONY: Maximize cash flow of a mature asset 1414
  15. 15. LARS NILSSON CFO 1515
  16. 16. PROFIT & LOSS (All figures in MSEK) Q3-08 Q3-07 Continuing operations, Net Sales 9,833 10,060 EBITDA 2,246 1,747 - EBITDA margin (%) 22.8% 17.4% Depreciation and joint venture -852 -884 - Depreciation of net sales (%) -8.7% -8.8% One-off items -971 -306 EBIT 423 557 Normalized EBIT 1,394 863 - Normalized EBIT margin (%) 14.2% 8.6% Financial items -290 -182 Taxes 27 -563 Net result, continuing operations 160 -188 Net result, discontinued operations 688 -1,045 Net result 848 -1,233 1616
  17. 17. CASH FLOW FOR Q3 (All figures in MSEK) Q3-08 Q3-07 CF from continuing operations, excl taxes paid 2,315 1,208 Taxes paid -90 -489 Change in WC 279 615 Cash flow from operating activities 2,594 1,823 CAPEX -930 -1,188 - CAPEX as percentage of revenue (%) 9.5% 11.8% Other investing activities 2,137 5,122 Cash Flow after investing activities 3,801 5,757 1717
  18. 18. CASH FLOW FOR 9M (All figures in MSEK) 9M-08 9M-07 CF from continuing operations, excl taxes paid 5,979 3,149 Taxes paid -257 -1,381 Change in WC -20 229 Cash flow from operating activities 5,959 3,378 CAPEX -3,375 -3,854 - CAPEX as percentage of revenue (%) 11.6% 11.1% Other investing activities 1,817 5,259 Cash Flow after investing activities 4,401 4,783 1818
  19. 19. NET DEBT TO EBITDA NET DEBT SEK 5.2 BILLION 3 2,5 2 1,5 1 0,5 0 Q1 07 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 1919
  20. 20. FUNDING Q3 2008 (All figures in BSEK) Amount Maturity Tele2 external loans 6.2 - Revolving bank facility 4.4 Nov 2009 - Private placements 1.5 2011-2013 - CP 0.3 Mar/Apr 2009 - Total undrawn credit facilities 19.2 Nov 2009 Long term financing strategy - Increase diversification of funding sources 2020
  21. 21. FINANCIAL COMMENTS FINANCIAL VIEW: Short term the company needs to take into consideration the uncertainties in the financial markets and act accordingly. Hence, Tele2 will not utilize the current share buy-back mandate. The company will instead maintain a strong financial position. TAX: Corporate tax rate of 15 percent excluding one-off items. Cash flow affected by SEK 500 million CAPEX: In the level of SEK 4,500-4,800 including payment of SEK 549 million for 4G spectrum in Sweden 2121
  22. 22. FINANCIAL COMMENTS: RUSSIA FINANCIAL IMPACT OF THE 17 NEW LICENSES 2008: The operational expenditures are estimated to SEK 40-60 million and the capital expenditures are estimated to SEK 100-300 million 2009: The operational expenditures are estimated to SEK 300-500 million and capital expenditures are estimated to SEK 900–1,100 million 2222
  23. 23. FINANCIAL COMMENTS: RUSSIA FINANCIAL IMPACT OF THE 17 NEW LICENSES Up to 12 regions out of 17 will have been launched as 2009 New operations should be able to reach an EBITDA break- even three years after commercial launch date The longer term market share in the 17 new regions should not deviate significantly from the historic market share of Tele2 Russia 2323
  24. 24. NET INTAKE BY SEGMENT NET CUSTOMER INTAKE DRIVEN BY MOBILE (Approx. 700 thousand) 1200 1000 800 600 Fixed broadband Fixed telephony 400 Mobile 200 0 -200 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -400 -600 2424
  25. 25. NET SALES BY SEGMENT MOBILE +12% YEAR ON YEAR 10 000 9 000 8 000 7 000 6 000 Fixed broadband 5 000 Fixed telephony 4 000 Mobile 3 000 2 000 1 000 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 2525
  26. 26. EBITDA BY SEGMENT EBITDA MARGIN 22.8% Mobile 27.8% Fixed Telephony 27.7% 2 300 1 800 Fixed broadband 1 300 Fixed telephony Mobile 800 300 -200 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -700 2626
  27. 27. EBIT BY SEGMENT NORMALIZED EBIT MARGIN 14.2% Mobile 23.8% Fixed Telephony 22.9% 2 000 1 500 Fixed broadband 1 000 Fixed telephony Mobile 500 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 -500 -1 000 2727
  28. 28. CAPEX BY SEGMENT CAPEX TO SALES RATIO 9.5% 1400 1200 1000 800 Fixed broadband Fixed telephony 600 Mobile 400 200 0 Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 2828
  29. 29. FINANCIAL SUMMARY STRUCTURE: Move from realignment to transformation. Long term net debt/EBITDA target in line with industry and the markets in which Tele2 operates and the status of its operations and future strategic opportunities. FINANCIAL POSITION: Tele2 will not in the near future utilize the current share buy-back mandate. The company will instead maintain a strong financial position. 2929
  30. 30. QUESTIONS? 3030

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