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SECOND
QUARTER
2016
July 21, 2016
Tele2AB
Delivering on our long term strategy
Winning
People &
Culture
Value
Champion
Step-Change
Productivity
Focused
Technology
C...
Group highlights – Q2 2016
3
Q2 2016
% Change
Reported
LFL is constant currencies and pro forma for Altel
% Change
LFL
Mob...
Sweden – Financials
Net sales
(SEK million)
Mobile end-user service
revenue (SEK million)
Q2 Highlights
EBITDA and EBITDA ...
Sweden – Improving trends
Consumer postpaid end-user
services revenue
Share of sales with bundle
>0.5GB
– Consumer postpai...
Baltics – Financials
Q2 Highlights
6
Net sales
(SEK million)
EBITDA and EBITDA margin
(SEK million)
Mobile end-user servic...
Baltics – Data monetization continues
7
ASPU development Share of 4G capable
smartphones in base
Q2 Highlights
4G populati...
Netherlands – Financials
Q2 Highlights
– Net sales up primarily due to increasing mobile momentum, offset by declines in f...
Netherlands – Continuing momentum
Spontaneous brand awareness
& brand consideration (Memo2)
Share of total new postpaid
(G...
– Net sales growth driven by increase in customer base offset by lower handset sales
– Continued double digit growth in mo...
Kazakhstan – Strong performance
Customer base, LFL
(thousands)
Main bundle offer development
(Tele2 brand)
Q2 Highlights
1...
Challenger program on track
Simplify
% of products harmonized
on shared platforms
Discipline
% of spend strategically
sour...
Financial Overview
3 324
3 350
-8
7
4
23
-17
Q2 15 Sweden Baltics NL KZ RoW Oth Q2 16
Mobile end-user service revenue
Tele2 Group
(SEK millio...
1 393
1 087
-62
18
-263
35 15
-49
Q2 15 Sweden Baltics NL KZ RoW Oth Q2 16
EBITDA
Tele2 Group
(SEK million)
15
1 393
1 599...
CAPEX
Tele2 Group
(SEK million)
16
1 134
932
1 223
1 154
820
17,2%
13,7%
17,6% 17,9%
12,3%
300
500
700
900
1 100
1 300
Q2 ...
Free cash flow
Total operations
Tele2 Group
(SEK million)
Development
(SEK million)
Free cash flow = Cash flow from operat...
Debt position and financial leverage
Economic net debt to EBITDA 12 m rolling
18
10.3 9.8 9.9 9.4
11,7
0,00
0,25
0,50
0,75...
Where we play – Our portfolio
19 * Defined as EBITDA – Capex
Country Focus Cash Flow*Market
Sweden Data monetization Stron...
Financial guidance 2016
* Based on LFL which is constant currencies and pro forma for Altel20
Net sales
(SEK billion)
EBIT...
Summary
Key priorities moving forward
 Sustain momentum in Sweden
 Continue to monetize 4G investments
 Successfully integrate ...
Tele2’s Way2Win
The Tele2 Way
We are challengers, fast-movers and will always offer our customers what they need for less
...
THE
END
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Tele2 Q2 2016 presentation

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Tele2 Q2 2016 presentation

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Tele2 Q2 2016 presentation

  1. 1. SECOND QUARTER 2016 July 21, 2016 Tele2AB
  2. 2. Delivering on our long term strategy Winning People & Culture Value Champion Step-Change Productivity Focused Technology Choices • Tele2 Sweden awarded best 4G coverage amongst all Nordic operators • Swedish 4G geographic coverage reaches 87% • Netherlands and Baltics 4G LTE population coverage now above 97% • Sweden Consumer Postpaid and B2B Large both up mid single digits • Netherlands customer intake up significantly • TDC Sweden acquisition announced • Kazakhstan JV synergy plan progressing well • Baltic region margin expands to 32.5% • Challenger program on track for SEK1bn per annum benefits 2 • Dutch marketing team awarded for best advertising and best campaign • New LT members appointed - Guillaume van Gaver (EVP International), Richard Peers (Chief People and Change Officer)
  3. 3. Group highlights – Q2 2016 3 Q2 2016 % Change Reported LFL is constant currencies and pro forma for Altel % Change LFL Mobile end-user service revenue (SEK billion) 3.35 +1% +2% EBITDA (SEK billion) 1.09 -22% -21% Net sales (SEK billion) 6.67 +1% +1%
  4. 4. Sweden – Financials Net sales (SEK million) Mobile end-user service revenue (SEK million) Q2 Highlights EBITDA and EBITDA margin (SEK million) 1 829 1 889 1 841 1 797 1 821 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 200 400 600 800 1 000 1 200 1 400 1 600 1 800 2 000 908 1 014 946 894 846 29% 33% 29% 29% 28% 0% 10% 20% 30% 40% 50% 60% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 200 400 600 800 1 000 1 2003 101 3 100 3 299 3 053 3018 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 500 1 000 1 500 2 000 2 500 3 000 3 500 0%-3% -7% 4 – Net sales declined mainly due to lower fixed telephony and lower operator revenues – Mobile end-user service revenue up 1.5%, excluding non-recurring items, driven by growth in consumer and B2B large enterprise – EBITDA impacted by investment into sales & marketing activities and non-recurring items of SEK 51 million
  5. 5. Sweden – Improving trends Consumer postpaid end-user services revenue Share of sales with bundle >0.5GB – Consumer postpaid mobile end-user service revenue up 5% mainly driven by Comviq market share development – Tele2 increasingly taking share of premium value buckets – Significant improvement in geographic 4G coverage, currently at 87% and on track towards 90% target – Sweden awarded best 4G coverage among Nordic operators by OpenSignal Q2 Highlights Geographic coverage 2G/4G Q2 15 Q2 16 71% 73% 84% Q4 15 Q1 16 Q2 16 +5% 5 81% 87% Q2 15 Q2 16
  6. 6. Baltics – Financials Q2 Highlights 6 Net sales (SEK million) EBITDA and EBITDA margin (SEK million) Mobile end-user service revenue (SEK million) 470 488 476 468 477 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 100 200 300 400 500 600 238 263 257 246 256 31% 32% 32% 32% 33% 0% 10% 20% 30% 40% 50% 60% Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 50 100 150 200 250 300 767 832 815 770 787 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 100 200 300 400 500 600 700 800 900 – Net sales driven by continued demand for data services and increased equipment sales – Mobile end-user service revenue hampered by new roaming regulation, underlying is up 4% – Strong EBITDA improvement as data monetization flows through to the bottom line +1%+3% +8%
  7. 7. Baltics – Data monetization continues 7 ASPU development Share of 4G capable smartphones in base Q2 Highlights 4G population coverage – Strong data monetization driven by prepaid to postpaid transition and data centric pricing – Data consumption stimulated by an increasing rate of 4G handset penetration – 4G population coverage now at a solid 97% 58% 97% Q2 15 Q2 16Q2 15 Q2 16 13% 28% Q2 15 Q2 16 +3%
  8. 8. Netherlands – Financials Q2 Highlights – Net sales up primarily due to increasing mobile momentum, offset by declines in fixed – Mobile end-user service revenue driven by significant net intake (57k) as a result of our competitive MNO launch propositions – EBITDA development in line with expectations as a result of investments related to mobile launch and decline in fixed 8 Net sales (SEK million) EBITDA (SEK million) Mobile end-user service revenue (SEK million) 332 364 403 322 336 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 50 100 150 200 250 300 350 400 450 147 122 35 -31 -116 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 -120 -70 -20 30 80 130 180 1 390 1 440 1 512 1 441 1 452 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 200 400 600 800 1 000 1 200 1 400 1 600 +1%+4% -179%
  9. 9. Netherlands – Continuing momentum Spontaneous brand awareness & brand consideration (Memo2) Share of total new postpaid (GfK) Data usage on own network Q2 Highlights – ”Fun Rebel Campaign” awarded best advertising campaign of the year by SAN Excellence – Brand Awareness and Consideration remain at high levels driving mobile net intake to its highest levels since 2013 – Continuing to take a strong market share of new postpaid contracts – Good progress in data on-loading driven by continued network rollout now at 97% outdoor and 81% indoor coverage 9 27% 67% Pre-launch Jun 16 4G 34% 41%41% 47% Pre-launch Jun 16 Awareness Consideration 12% 21% 22% Pre-launch Oct 15 Q1 16 Q2 16
  10. 10. – Net sales growth driven by increase in customer base offset by lower handset sales – Continued double digit growth in mobile end-user service revenue with a solid net intake of 104k customers – EBITDA developing positively from improved operating leverage and higher pricing Kazakhstan – Financials 10 Q2 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) 332 352 370 383 396 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 50 100 150 200 250 300 350 400 450 -14 25 -35 13 44 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 -35 -25 -15 -5 5 15 25 35 45 493 574 651 503 531 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0 100 200 300 400 500 600 700 +19%+8%
  11. 11. Kazakhstan – Strong performance Customer base, LFL (thousands) Main bundle offer development (Tele2 brand) Q2 Highlights 11 4G Competitive advantage LFL is pro forma for Altel – 4G competitive advantage continues to be a key driver of data consumption – Solid customer base increase due to strong price leadership positions of both Tele2 and Altel – Tele2 implemented new price propositions in the market as of May – JV integration plan progressing well 5 477 6 402 Q2 15 Q2 16 Existing subscribers New subscribers 990 1290 KZT KZT+30% +17% 77%
  12. 12. Challenger program on track 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% Key progress areas in the quarter  Strategic sourcing progressed in several new areas, including handset procurement, network services and support agreements  275 FTEs transferred from Netherlands to Shared Operations  100 FTEs outsourced to Indian partner  Product simplification initiative progressing with 700 products closed year-to-date 12
  13. 13. Financial Overview
  14. 14. 3 324 3 350 -8 7 4 23 -17 Q2 15 Sweden Baltics NL KZ RoW Oth Q2 16 Mobile end-user service revenue Tele2 Group (SEK million) 14 3 324 3 422 3 282 3 168 3 350 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 +1% Development per market (SEK million) 17
  15. 15. 1 393 1 087 -62 18 -263 35 15 -49 Q2 15 Sweden Baltics NL KZ RoW Oth Q2 16 EBITDA Tele2 Group (SEK million) 15 1 393 1 599 1 337 1 226 1 087 21,1% 23,5% 19,3% 19,0% 16,3% 600 800 1000 1200 1400 1600 1800 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% 70,00% 80,00% 90,00% EBITDA margin -22% Development per market (SEK million)
  16. 16. CAPEX Tele2 Group (SEK million) 16 1 134 932 1 223 1 154 820 17,2% 13,7% 17,6% 17,9% 12,3% 300 500 700 900 1 100 1 300 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 0,00% 10,00% 20,00% 30,00% 40,00% 50,00% 60,00% CAPEX / Net sales -28% Development per market (SEK million) 1 134 820 -106 0 -103 -30 -52 -23 Q2 15 Sweden Baltics NL KZ RoW Oth Q2 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 paid17 -268 169 -291 -154 139 -400 -300 -200 -100 0 100 200 300 400 500 600 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 139 -268 -306 17 -32 587 158 -17 Q2 15 EBITDA Interest etc Taxes Working capital CAPEX One-off items Q2 16 +152%
  18. 18. Debt position and financial leverage Economic net debt to EBITDA 12 m rolling 18 10.3 9.8 9.9 9.4 11,7 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 Jun 2015 Sep 2015 Dec 2015 Mar 2016 Jun 2016 Economic net debt Economic net debt to EBITDA Economic net debt is defined as net debt excluding liabilities from Kazakhtelecom and liabilities guaranteed by Kazakhtelecom 2,26 LeverageSEK billion
  19. 19. Where we play – Our portfolio 19 * Defined as EBITDA – Capex Country Focus Cash Flow*Market Sweden Data monetization Strong Baltics Data monetization Strong Established Kazakhstan Integration Funded by JV partner Netherlands Customer growth Negative Investment
  20. 20. Financial guidance 2016 * Based on LFL which is constant currencies and pro forma for Altel20 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*
  21. 21. Summary
  22. 22. Key priorities moving forward  Sustain momentum in Sweden  Continue to monetize 4G investments  Successfully integrate Altel in Kazakhstan  Execute on Challenger Program  Prepare for closing of TDC 22 Winning People & Culture Value Champion Step-Change Productivity Focused Technology Choices
  23. 23. 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 IoT Responsible Challenger 25
  24. 24. THE END

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