quarterly report (q4) 2009
DESCRIPTION
Quarterly report (Q4) 2009TRANSCRIPT
FOURTH QUARTER 2009
9 February 2010
2010-02-092 Fourth quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2010-02-093 Fourth quarter 2009
• Solid operational result • Nordic
– Nordic mobile is returning to revenue growth• Push in postpaid segment according to plan
• Russia– Roll-out better than plan– 1 149 000 new customers
• Central Europe – Focus on maintaining market share in the Baltic region and
cash flow contribution
• Western Europe– All countries delivering healthy EBITDA contribution– Strong performance in The Netherlands and Austria
HIGHLIGHTS Q4
2010-02-094 Fourth quarter 2009
MARKET AREA NORDICS
Mobile
• Positive revenue growth
• Solid customer intake in postpaid
• Secured No1 market share position in
prepaid mobile internet in Sweden
Market strategy
• Further develop and calibrate our increased focus on mobile postpaid
2010-02-095 Fourth quarter 2009
MARKET AREA RUSSIA
Mobile
• Record high EBITDA margin in mature
regions
• Record high net intake
– New regions adding 944 000 customers
Market strategy
• Making the roll-out an efficient machinery
• Continue unique distribution strategy
2010-02-096 Fourth quarter 2009
NET INTAKE RUSSIA
105 84 128
742944
449379
136
350
359
205
0
200
400
600
800
1 000
1 200
1 400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
New regions Old regions(In thousands)
2010-02-097 Fourth quarter 2009
CLEAR BUSINESS GOALS
THROUGH EVOLUTION
Customer acquisition
Retention
ARPU protection
Customer acquisition
ARPU developmentRetention
1,5 – 2 years 2,5 – 3 years >3 years
Pe
rce
ive
d p
rice
leade
rsh
ip/
Su
bscribe
r ba
se
ChallengerChallenger
DefenderDefender
NewcomerNewcomer
17 REGIONS
20 REGIONS
2010-02-098 Fourth quarter 2009
MARKET AREA WESTERN EUROPE
Corporate segment
• Important contract wins
Market strategy
• Investing for the future
• New mobile offering in the Netherlands
– Full portfolio of mobile services
• Combination package “Internet Home & Away”
2010-02-099 Fourth quarter 2009
MARKET AREA CENTRAL EUROPE
Mobile
• Defend market share and expand when
possible
• Mobile internet service launched in Lithuania
Market strategy
• Economic turmoil creates opportunities for a
price leader
2010-02-0910 Fourth quarter 2009
THEBESTDEAL
TELE2 ALWAYS PROVIDES
2010-02-0911 Fourth quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2010-02-0912 Fourth quarter 2009
Q4 2009 GROUP RESULTS
8941,049Net result
204184Net result, discontinued operations
690865Net result, continuing operations
104-247Taxes
-593-124Financial items
12,0%13,1%- Normalized EBIT margin (%)
1,1981,300Normalized EBIT
1,1791,236EBIT
-19
9.7%
-964
21.7%
2,162
9,986
Q4 08
-64One-off items
9.0%- Depreciation of net sales (%)
-888Depreciation and joint venture
22.1%- EBITDA margin (%)
1%2,188EBITDA
-1%9,889Continuing operations, Net Sales
Change %Q4 09SEK million
2010-02-0913 Fourth quarter 2009
2009 FULL YEAR GROUP RESULTS
2,4334,555Net result
718-46Net result, discontinued operations
1,7154,601Net result, continuing operations
-120-426Taxes
-1,013-500Financial items
11,7%14,1%- Normalized EBIT margin (%)
4,4905,538Normalized EBIT
2,8485,527EBIT
-1 642
9,6%
-3,679
21,3%
8,169
38,272
2008
-11One-off items
9,3%- Depreciation of net sales (%)
-3,647Depreciation and joint venture
23,4%- EBITDA margin (%)
12%9,185EBITDA
3%39,265Continuing operations, Net Sales
Change %2009SEK million
2010-02-0914 Fourth quarter 2009
TAXES
-324-324-Q2
-273-77-196Q1
418-444862Q3
-247-26720Q4
-1,112
Normal
686
One-Off
-426
ReportedTaxes in income statement (MSEK)
-124-124-Q2
-456-97-359Q1
-98-98-Q3
-205-153-52Q4
-472
Normal
-411
One-Off
-883
ReportedTaxes in cash flow statement (MSEK)
In 2010: Tele2 forecast a corporate tax rate of approximately 20 percent
excluding one-off items
2010-02-0915 Fourth quarter 2009
“OUR” CURRENCIES
16,2 %
- 8,9 %
10,6 %
YTD Average
09 vs. 08
- 7,0 %USD
- 9,4 %RUB
- 5,3 %EUR / EUR pegged
Fixing rate
Dec 09 vs Dec 08Currency
2010-02-0916 Fourth quarter 2009
12,19,6
5,96,2
6,27,2
1,1 1,0
0
10
20
30
Year-end 2008 Q4 2009
(SE
K b
illio
n)
EUR EUR pegged RUB Other
NET ASSETS IN FOREIGN CURRENCIES
Total 25.3 bSEK Total 24.0 bSEK
2010-02-0917 Fourth quarter 2009
CASH FLOW FOR Q4 2009
704
106
810
1,653
344
1,997
Cash Flow after CAPEX
Acquisition and sale of shares and participations, net
-1,233-1,048CAPEX
1 937
127
1,930
-120
Q4 08
INVESTING ACTIVITIES
2,701CASH FLOW FROM OPERATING ACTIVITIES
421Changes in working capital
2,485
-205
OPERATING ACTIVITIES
Cash flow from operations, other
Taxes paid
Q4 09SEK million
2010-02-0918 Fourth quarter 2009
CASH FLOW FOR FULL YEAR 2009
3,288
1,597
4,885
4,778
3
4,781
Cash Flow after CAPEX
Acquisition and sale of shares and participations, net
-4,608-4,340CAPEX
7,896
107
8 166
-377
2008
INVESTING ACTIVITIES
9,118CASH FLOW FROM OPERATING ACTIVITIES
1 131Changes in working capital
8,870
-883
OPERATING ACTIVITIES
Cash flow from operations, other
Taxes paid
2009SEK million
2010-02-0919 Fourth quarter 2009
400
800
1 200
1 600
2 000
2 400
2 800
Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
Cash flow after CAPEX Cash flow from operating activities
CASH FLOW DEVELOPMENT
2010-02-0920 Fourth quarter 2009
GROUP FINANCIAL PROFILE
0
5 000
10 000
15 000
20 000
25 000
Q2 07 Q3 07 Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0
0,5
1
1,5
2
2,5
Net debt Net debt incl. JV
Net debt/ EBITDA 2009 Net debt incl. JV/ EBITDA 2009
2010-02-0921 Fourth quarter 2009
6,0%
7,0%
8,0%
9,0%
10,0%
11,0%
12,0%
13,0%
14,0%
15,0%
16,0%
17,0%
18,0%
19,0%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2007 2008 2009
ROCE
2010-02-0922 Fourth quarter 2009
NET INTAKE PER SEGMENT
-400
-200
0
200
400
600
800
1 000
1 200
1 400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
th
ou
sa
nd
s)
Mobile Fixed broadband Fixed telephony
2010-02-0923 Fourth quarter 2009
GROUP CUSTOMER STOCK
Group Mobile Customer Stock
0
5 000
10 000
15 000
20 000
25 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Prepaid voice Postpaid voice Mobile InternetGroup Customer Stock
0
5 000
10 000
15 000
20 000
25 000
30 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
Mobile Fixed Broadband Fixed Telephony
• Strong intake in the Mobile segment
– Driven by Russia adding 1 149 000 new customers
2010-02-0924 Fourth quarter 2009
GROUP Q4 2009 NET SALES
0
2 000
4 000
6 000
8 000
10 000
12 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
Mobile Fixed broadband Fixed telephony Other
2010-02-0925 Fourth quarter 2009
GROUP Q4 2009 EBITDA
-500
0
500
1 000
1 500
2 000
2 500
3 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
19%
20%
21%
22%
23%
24%
25%
Mobile Fixed broadband Fixed telephony
Other Group EBITDA margin
2010-02-0926 Fourth quarter 2009
MOBILE Q4 2009 EBITDA
1 300
1 350
1 400
1 450
1 500
1 550
1 600
1 650
1 700
1 750
1 800
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0%
5%
10%
15%
20%
25%
30%
Mobile Mobile EBITDA margin
2010-02-0927 Fourth quarter 2009
SWEDISH MOBILE MARGIN
28%
30%
32%
34%
36%
38%
Q3 2008 Q4 2008 Q1 2009 Q2 2009 Q3 2009 Q4 2009
Today, cost upfront If we had matched the cost for hardware with instalments from customers
Temporary negatively affected by increased costs for hardware related to post-
paid customers
2010-02-0928 Fourth quarter 2009
MoU AND ARPU DEVELOPMENT
Russia
30
40
50
60
70
Q1 08Q2 08Q3 08Q4 08Q1 09Q2 09Q3 09Q4 09
SE
K
180
200
220
240
ARPU MoU
Sweden
180
200
220
240
Q1
08
Q2
08
Q3
08
Q4
08
Q2
09
Q3
09
Q4
09
SE
K
180
200
220
240
ARPU MoU
• Relatively strong development despite challenging economical times– Swedish ARPU being driven down by an increasing customer base in Mobile Internet and
softness in corporate customer MoU
2010-02-0929 Fourth quarter 2009
FIXED BROADBAND Q4 2009 EBITDA
0
100
200
300
400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0%
5%
10%
15%
20%
25%
Fixed broadband Fixed broadband EBITDA margin
2010-02-0930 Fourth quarter 2009
FIXED TELEPHONY Q4 2009 EBITDA
0
100
200
300
400
500
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
25%
25%
26%
26%
27%
27%
28%
28%
29%
29%
30%
Fixed Telephony Fixed telephony EBITDA margin
2010-02-0931 Fourth quarter 2009
GROUP Q4 2009 EBIT
-1 000
-500
0
500
1 000
1 500
2 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0%
2%
4%
6%
8%
10%
12%
14%
16%
Mobile Fixed broadband Fixed telephony
Other Group EBIT margin
2010-02-0932 Fourth quarter 2009
GROUP Q4 2009 CAPEX
0
200
400
600
800
1000
1200
1400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illi
on
)
0%
2%
4%
6%
8%
10%
12%
14%
Mobile Fixed broadband Fixed telephony
Other Capex/sales
In 2010: Tele2 forecast a CAPEX level in the range of SEK 4,600 – 4,800 million
2010-02-0933 Fourth quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2010-02-0934 Fourth quarter 2009
CONCLUDING REMARKS
Top priorities 2010
• Investment year
• Targeting a long term mobile EBITDA margin on own infrastructure at least 35 percent
• Best Deal
– Expected quality
– Perceived price leader
2010-02-0935 Fourth quarter 2009
Q&A
2010-02-0936 Fourth quarter 2009
Appendix A
2010-02-0937 Fourth quarter 2009
TELE2 SWEDEN MOBILE
2 800
2 900
3 000
3 100
3 200
3 300
3 400
3 500
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
th
ou
sa
nd
s)
0
20
40
60
80
100
120
140
Mobile subscriber Net intake
2010-02-0938 Fourth quarter 2009
TELE2 SWEDEN MOBILE (contd)
1 600
1 650
1 700
1 750
1 800
1 850
1 900
1 950
2 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0%
5%
10%
15%
20%
25%
30%
35%
40%
Mobile net sales EBITDA marg. EBIT marg.
2010-02-0939 Fourth quarter 2009
TELE2 SWEDEN MOBILE (contd)
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
th
ou
sa
nd
s)
Postpaid voice Prepaid voice Mobile Internet
2010-02-0940 Fourth quarter 2009
TELE2 NORWAY MOBILE
360
380
400
420
440
460
480
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
tho
usa
nd
s)
-10
-5
0
5
10
15
20
25
Mobile subscriber Net intake
2010-02-0941 Fourth quarter 2009
TELE2 NORWAY MOBILE (contd)
450
500
550
600
650
700
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
0%
2%
4%
6%
8%
10%
12%
Mobile net sales EBITDA marg.
2010-02-0942 Fourth quarter 2009
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
16 000
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
tho
usa
nd
s)
0
200
400
600
800
1 000
1 200
1 400
Mobile subscriber Net intake
TELE2 RUSSIA MOBILE
2010-02-0943 Fourth quarter 2009
TELE2 RUSSIA MOBILE (contd)
0
500
1 000
1 500
2 000
2 500
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
28%
29%
30%
31%
32%
33%
34%
35%
36%
37%
Mobile net sales EBITDA marg.
2010-02-0944 Fourth quarter 2009
TELE2 BALTIC MOBILE
2 000
2 200
2 400
2 600
2 800
3 000
3 200
3 400
3 600
3 800
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
th
ou
sa
nd
s)
-100
-80
-60
-40
-20
0
20
40
60
80
Mobile subscriber Net intake
2010-02-0945 Fourth quarter 2009
TELE2 BALTIC MOBILE (contd)
0
200
400
600
800
1000
1200
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
25%
30%
35%
40%
Estonia net sales Lithuania net sales Latvia net sales EBITDA marg.
2010-02-0946 Fourth quarter 2009
TELE2 CROATIA MOBILE
250
350
450
550
650
750
850
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(In
th
ou
sa
nd
s)
-40
-20
0
20
40
60
80
100
Mobile subscriber Net intake
2010-02-0947 Fourth quarter 2009
TELE2 CROATIA MOBILE (contd)
100
150
200
250
300
350
400
Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09
(SE
K m
illio
n)
-45%
-40%
-35%
-30%
-25%
-20%
-15%
-10%
-5%
0%
Mobile net sales EBITDA marg.
2010-02-0948 Fourth quarter 2009
Appendix B
2010-02-0949 Fourth quarter 2009
SWEDEN OUTLOOK
• Tele2 will continue to target higher market share in the postpaid segment, which in the longer term will lead to:
– Higher customer intake
– Improved ARPU
– Lower churn
Resulting in
– Higher customer lifetime value
• In the short term, this strategy will lead to higher total acquisition costs
Resulting in
– EBITDA margin towards 30 percent in 2010
2010-02-0950 Fourth quarter 2009
RUSSIA OUTLOOK
• Subscriber base should be able to reach18-19 million by YE 2011
• Maintain ARPU growth at 5% by 2011
• EBITDA 2010-2011
– Old regions’ EBITDA margin should evolve in the range of 40-45 percent
– New regions’ EBITDA margin should break even 2 years from launch
– EBITDA contribution from new regions should be in the range of SEK -700
to -900 million
– Russia’s total EBITDA margin should develop in the range of 25-30
percent
• Capex 2010-2011
– Accumulated Capex in Russia should be in the range of SEK 4.5-5.0
billion
• Selected acquisitions – when available and under right conditions
2010-02-0951 Fourth quarter 2009
NET DEBT AND DIVIDEND TARGETS
• Shareholder remuneration
– “Tele2’s intention over the medium term is to pay a progressively
increasing ordinary dividend”
• Long-term financial leverage
– “Tele2’s longer-term financial leverage, defined as the
net debt /EBITDA ratio, should be in line with the industry and the
markets in which it operates”
• Short-term consideration
– “The company needs to take the uncertainties in the financial
markets into consideration and act accordingly”
2010-02-0952 Fourth quarter 2009
FINANCIAL ITEMS Q4
-593
8
-329
-264
-251
-86
Q4 08
-124
-24
-94
-30
-61
-9
Q4 09
469
-32
235
234
190
77
Change
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
External
Net interest expenses
SEK million
2010-02-0953 Fourth quarter 2009
FINANCIAL ITEMS 2009
-1,013
-63
-807
-206
-344
-400
2008
-500
-65
-420
-80
3
-358
2009
513
-2
387
126
347
42
Change
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
External
Net interest expenses
SEK million
2010-02-0954 Fourth quarter 2009
THE BEST DEAL