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Tele2 Q1 2017 Presentation

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Tele2 Q1 2017 Presentation

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Tele2 Q1 2017 Presentation

  1. 1. FIRST QUARTER 2017 April 24, 2017 Tele2AB
  2. 2. Group highlights – Q1 2017 2 Q1 2017 % Change Reported LFL is constant currencies and pro forma for Altel and TDC Sweden % Change LFL Mobile end-user service revenue 3.7 +19% +10% EBITDA 1.7 +41% +28% Net sales 7.9 +22% +3% SEK billion
  3. 3. Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Positively Fearless Brands Connecting Things our Customers Love Digital First Customer Experience Challenger Cost Structure Winning People & Culture Responsible Challenger IoT Cash Generators Investment Markets Baltic Sea Challenger 3
  4. 4. Delivering on our long term strategy 4 LFL is constant currencies and pro forma for Altel and TDC Sweden Operating cash flow is EBITDA – CAPEX, 12 m rolling Winning People & Culture Baltic Sea Challenger Challenger Cost Structure Investment Markets • Netherlands mobile end-user service revenue up 40% • Dutch data and voice on-loading at 87% and 40% respectively • Kazakhstan mobile end-user service revenue up 14% • Sweden mobile end-user service revenue up 5% and Baltics up 12% • Sweden EBITDA up 10% and Baltics up 16% • Operating cash flow grew by 16% in Sweden and Baltics • Kazakhstan JV delivering EBITDA margin of 19% • First TDC synergies materializing • Challenger program well on track for SEK 1 billion per annum benefits • TDC Sweden now co-located with Tele2 • Jon James appointed CEO of Tele2 Netherlands
  5. 5. Baltic Sea Challenger
  6. 6. – Net sales flat as strong mobile growth is offset by a decline in fixed business – Mobile end-user service revenue growth driven by prepaid to postpaid migration, larger data buckets and growth in large enterprise – Modest sales and marketing activities in the quarter, ahead of the launch of new Tele2 commercial proposition in Q2 – EBITDA growth driven by higher service revenues, lower expansion costs, benefits from Challenger Program as well as TDC synergies 3 053 3 018 3 095 4 029 3 9323 935 3 877 3 900 4 332 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Sweden – Financials Net sales, LFL (SEK million) Mobile end-user service revenue, LFL (SEK million) Q1 Highlights EBITDA and EBITDA margin, LFL (SEK million) 6 LFL is pro forma for TDC Sweden 894 846 1 068 993 927 1 191 1 045 1 091 25% 24% 31% 24% 28% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50% -800 -300 200 700 1 200 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0% +5% +10% 1 028 1 872 1 758 1 778 1 885 1 928 1 9221 831 1 865 1 969 1 959 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 TDC
  7. 7. Sweden Consumer – Momentum continues Consumer mobile end-user service revenue Share of postpaid sales with bundle >3GB Q1 Highlights Customer satisfaction (Tele2 Media & Insight) Q1 16 Q1 17 7 51% 69% Q1 16 Q1 17 +5% – Consumer mobile end-user service revenue up 5%, driven by 12% growth in consumer postpaid due to migration to higher ASPU products – Tele2 and Comviq customers increasingly taking larger data buckets – Strong trend in Comviq customer satisfaction, while Tele2 is stable – New Tele2 commercial propositions launched on April 21st 87% 86% 78% 84% Q1 16 Q1 17 Tele2 Comviq
  8. 8. Q1 16 Q1 17 Sweden B2B – Synergies materializing Integration synergiesB2B net sales, LFL (SEK million) Q1 Highlights B2B Large net sales, LFL (SEK million) 8 Q1 16 Q1 17 0 Q1 17 SEK 19 million – B2B sales stable in both Tele2 Business segment and former TDC Sweden – B2B Large net sales up due to 8% growth of mobile end-user service revenue, partly offset by lower fixed telephony – First TDC synergies materializing, mainly driven by migration of the MVNO traffic, which is to be finalized during Q2 +1% +3%
  9. 9. Baltics – Financials Q1 Highlights 9 Net sales (SEK million) EBITDA and EBITDA margin (SEK million) Mobile end-user service revenue (SEK million) 468 477 521 533 522 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 100 200 300 400 500 600 246 256 287 264 286 32% 33% 32% 28% 33% 0% 10% 20% 30% 40% 50% 60% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 50 100 150 200 250 300 350 770 787 884 935 859 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 100 200 300 400 500 600 700 800 900 1 000 +12% +16%+12% – Net sales growth driven by increase in both mobile end-user service revenue and equipment sales – Mobile end-user service revenue growth continues due to prepaid to postpaid migration, data monetization and growth in mobile broadband – Strong EBITDA performance driven by higher service revenue and Challenger Program benefits
  10. 10. Baltics – Data monetization continues 10 ASPU development Share of 4G capable smartphones in base Q1 Highlights MBB end-user service revenue – Strong ASPU growth driven by increasing postpaid share and migration to larger buckets – Continued strong increase in smartphone penetration, with room for further growth – Mobile broadband growth as a result of investments in previous quarters Q1 16 Q1 17 24% 39% Q1 16 Q1 17 Q1 16 Q1 17 +9% +52%
  11. 11. Investment Markets
  12. 12. Netherlands – Financials Q1 Highlights – Net sales up due to strong mobile momentum, partly offset by continued decline in fixed broadband and telephony – Mobile end-user service revenue increase driven by >20% increase in customer base and ASPU growth of >10% – EBITDA positively impacted by higher mobile service revenues, lower mobile expansion costs and reduction in NRA costs – Improved cash contribution from fixed broadband driven by a disciplined investment focus – Non-recurring item of SEK 95 million compared to SEK 73 million in Q1 2016 12 Net sales (SEK million) EBITDA (SEK million) Mobile end-user service revenue (SEK million) 322 336 419 438 451 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 50 100 150 200 250 300 350 400 450 500 -31 -116 -2 -23 151 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 -150 -100 -50 0 50 100 150 200 1 441 1 452 1 478 1 583 1 577 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 +9% 587%+40%
  13. 13. Netherlands – Momentum despite pressure Spontaneous brand awareness & brand consideration (Memo2) Share of total new postpaid (GfK) Usage on own network Q1 Highlights – Maintaining a decent market share of new postpaid contracts, despite increased price competition – Good progress in data on-loading driven by network rollout at 99.5% outdoor and 91% indoor population coverage – 403k active VoLTE customers following iPhone activation at the end of January – Mobile net intake of 16k, including a -24k one-time clean-up 13 34% 42%41% 52% Q1 16 Q1 17 Awareness Consideration 20% 17% Feb 16 Feb 17 0% 40% 57% 87% Mar 16 Mar 17 Voice Data
  14. 14. – Net sales up due to strong mobile momentum – Mobile end-user service revenue growth driven by increased customer base and higher ASPU – Positive EBITDA development driven by revenue growth, improved operating leverage and JV synergies Kazakhstan – Financials 14 Q1 Highlights LFL is constant currency and pro forma for Altel Net sales, LFL (SEK million) EBITDA and EBITDA margin, LFL (SEK million) Mobile end-user service revenue, LFL (SEK million) 433 449 474 488 495 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 100 200 300 400 500 600 569 600 639 734 649 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 0 100 200 300 400 500 600 700 800 +713%+14%+14% 15 50 89 97 122 3% 8% 14% 13% 19% -50% -40% -30% -20% -10% 0% 10% 20% Q1 16 Q2 16 Q3 16 Q4 16 Q1 17-30 20 70 120 170
  15. 15. 6 298 6 514 Q1 16 Q1 17 Kazakhstan – Continued strong performance ASPU development, LFL Integration Q1 Highlights 15 Customer base, LFL (thousands) LFL is pro forma for Altel – Customer base continues to grow year-on-year – Strong ASPU driven by continued focus on improving data monetization – ~630 base station sites merged as network integration continues throughout 2017 ~630 sites merged Q1 16 Q1 17 +3% +9%
  16. 16. Challenger program on track 16 Key progress areas since inception  Sales & marketing efficiency  Network & IT consolidation  Procurement scope increase  Customer service optimization  Administration efficiency  New revenue streams 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 actual 2018 targetBaseline 30% 40% 60% 40% 75% 80% 0% 5% 20% 12% 18% 25%
  17. 17. Financial Overview
  18. 18. 3 129 3 725 164 54 129 230 0 19 Q1 16 Sweden Baltics NL KZ RoW Oth Q1 17 Mobile end-user service revenue Tele2 Group (SEK million) 18 3 129 3 307 3 598 3 711 3 725 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 +19% Development per market (SEK million)
  19. 19. EBITDA Tele2 Group (SEK million) 19 Development per market (SEK million) 1 226 1 087 1 562 1 459 1 723 19,0% 16,3% 22,4% 17,8% 21,9% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 100 300 500 700 900 1100 1300 1500 1700 1900 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 EBITDA margin +41% 1 226 1 723 197 40 182 116 3 -41 500 700 900 1 100 1 300 1 500 1 700 1 900 Q1 16 Sweden Baltics NL KZ RoW Oth Q1 17
  20. 20. CAPEX Tele2 Group (SEK million) 20 Development per market (SEK million) 1 154 627 -79 -136 -288 50 -47 -27 0 200 400 600 800 1 000 1 200 1 400 Q1 16 Sweden Baltics NL KZ RoW Oth Q1 17 1 154 820 779 1 078 627 17,9% 12,3% 11,2% 13,1% 8,0% 0,0% 10,0% 20,0% 30,0% 40,0% 50,0% 60,0% 0 200 400 600 800 1000 1200 1400 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 CAPEX / Net sales -46%
  21. 21. Free cash flow Total operations Tele2 Group (SEK million) Development (SEK million) Free cash flow = Cash flow from operating activities and CAPEX paid21 -154 139 838 394 178 -500 -300 -100 100 300 500 700 900 Q3 15 Q2 16 Q1 16 Q4 16 Q1 17 Q1 16 Q3 16 -154 178 497 41 -39 260 -70 -300 -200 -100 0 100 200 300 400 500 600 Q1 16 EBITDA Interest etc Taxes Working capital CAPEX One-off items Q1 17 +216% -357
  22. 22. Operating cash flow 22 EBITDA less CAPEX 12 m rolling, SEK million 3 491 3 456 3 423 3 470 3 335 3 402 3 432 3 437 3 871 -1 178 -1 504 -1 625 -1 940 -2 223 -2 282 -2 196 -1 934 -1 344 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Baltic Sea Challenger & Rest of Group Investment Markets
  23. 23. Debt position and financial leverage Economic net debt to EBITDA 12 m rolling 23 Economic net debt excludes liabilities related to Kazakhstan 1,88 LeverageSEK billion 9,4 11,7 11,0 10,4 10,3 2,6 2,6 0,0 0,5 1,0 1,5 2,0 2,5 0,0 2,5 5,0 7,5 10,0 12,5 Mar 2016 Jun 2016 Sep 2016 Dec 2016 Mar 2017 Economic net debt Dividend, announced Economic net debt to EBITDA 1,75
  24. 24. Financial guidance 2017 - Reconfirmed * Based on LFL which is constant currencies and pro forma for Altel and TDC Sweden24 Net sales (SEK billion) EBITDA (SEK billion) 31 – 32 5.9 – 6.2 CAPEX (SEK billion) 3.8 – 4.1 Mobile end-user service revenue Mid-single digit % growth*
  25. 25. Summary
  26. 26. Key priorities moving forward 26  Become the customer champion of connectivity  Growth from continued data monetization, despite RLAH  Sustain momentum in Sweden and Baltics  Further leverage our challenger strategy in Netherlands and Kazakhstan  Execute on Challenger and synergy programs Positively Fearless Brands Connecting Things our Customers Love Digital First Customer Experience Challenger Cost Structure
  27. 27. Tele2’s Way2Win Our Purpose We fearlessly liberate people to live a more connected life Where We Play How We Win Positively Fearless Brands Connecting Things our Customers Love Digital First Customer Experience Challenger Cost Structure Winning People & Culture Responsible Challenger IoT Cash Generators Investment Markets Baltic Sea Challenger 27
  28. 28. THE END

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