CMD2011 - Lars Nilsson - The best of both worlds in numbers

Capital Markets Day 2011

The Best of Both Worlds – In the NumbersLars Nilsson

2 Sep 2011 Capital Markets Day 2011

In the Rear View Mirror

In Riga (2007) A more focused (mobile)

company Introduction of financial

hurdles and operational goals Increased transparency

In Stockholm (2009) House in order ROCE and EBITDA Debt Financial targets Priorities


Improved Financial ResultsSEK billion 2007 2008 2009 2010 1H 2011

Net Sales 39.1 38.3 39.4 40.2 19.6

EBITDA 6.7 8.2 9.4 10.3 5.2

- EBITDA margin (%) 17.1% 21.4% 23.8% 26.0% 26.4%

Normalized EBIT 1.7 2.9 5.7 7.1 3.4

- Normalized EBIT Margin (%) 4.5% 7.6% 14.5% 17.6% 17.3%

CAPEX* 4.1 4.5 4.4 3.7 2.4

Cash Flow after CapEx -0.8 3.3 4.8 6.0 2.1

Cash flow after investing activities 11.0 5.2 8.2 4.4 1.8

Total remuneration per share (SEK) 7.9 6.0 5.9 27.0

- where of ordinary dividend per share 3.2 3.5 3.9 6.0

Yield (%) 6.1% 8.8% 5.3% 19.3%


ROCE has Increased 12 Percentage Points Since Q3 2007

Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q22007 2007 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011

0%

5%

10%

15%

20%

25%


Balance SheetSEK Billion June 30, 2011

Intangible assets 13.5

Deferred tax assets 3.2

Other fixed assets 16.8

Fixed assets 33.5

Net non-interest-bearing assets / liabilities -1.5

32

Equity / interest-bearing debt 32


Net Debt and Dividend Targets

Shareholder remuneration

Tele2 will seek to pay a progressive ordinary dividend of no less than 50 percent of net income excluding one-off itemsExtraordinary dividends and the authority to purchase Tele2’s own shares will be recommended or sought when the anticipated total return to shareholders is deemed to be greater than the achievable returns from the deployment of the capital within the group's operating segments or the acquisition of assets within Tele2’s economic requirements.

Balance sheet

Tele2 has a target net debt to EBITDA ratio of between 1.25 and 1.75 times over the medium termThe company’s longer term financial leverage should be in line with the industry and the markets in which it operates and reflect the status of its operations, future strategic opportunities and contingent.


Balance Sheet Consideration / Financial Leverage

When available, invest in value accretive M&A or new business opportunities meeting Tele2’s

strict financial hurdles

Enhance shareholder value by distributing recurring cash to

shareholders

Retain financial buffer

Shareholder remuneration

Cash / Buffer

M&A / New growth opportunities

Cas

h g

ener

atio

n


(a) status of operations

(b) future strategic opportunities

(c) competitive landscape

(d) general macroeconomic status

We are content with our current financial and operational performance

Prudent Balance Sheet Assessment


Financial Profile

Q2 10 Q3 10 Q4 10 Q1 11 Q2 110.0

2,500.0

5,000.0

7,500.0

10,000.0

12,500.0

15,000.0

17,500.0

20,000.0

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

Pro forma net debt / EBITDA 12M rollingSEK Billion / RATIO

Pro Forma Net Debt Dividend

Extra dividend Pro Forma Net Debt / EBITDA 12'M ROLLING

Upper limit

Lower limit


Current Debt Profile and Funding Strategy

Diversify Funding Sources Rouble bond (first issue RUB 13bn)

• We will revisit the market during the autumn

Swedish commercial paper / bond program

Euro bond8.8 bn0.9 bn

2.9 bn

2.4 bn

Gross debt position SEK 15.0 bnNet debt amounts to SEK 12.9 bn

RCF (SEK) Kazakhstan debt

Rubel bond Off balance sheet

Target is to diversify sources and tenors


New Group Targets

Best Deal position

Targeting a long term mobile EBITDA margin on owninfrastructure of at least 35 percent

All operations should have the ambition to reach ROCE of at least 24 (earlier 20) percent

The capability to reach a Top 2 position, in terms of customer market share, in an individual country or region


The EBITDA Target Will Be Met

Russia Sweden Norway Croatia Latvia Lithunia Estonia Kazakhstan0%

5%

10%

15%

20%

25%

30%

35%

40%EBITDA Target

Neg.


Our Priorities

Cost control – Best in class• Benchmarking process• Continuous improvement

program. This year’s savings target of 360 MSEK will be met

• Shared service center Quality focus

• Increased quality focus to reduce cost and enhance the customer experience

Tele2 has improved its cost position and decreased the gap to the best in class


Conclusion

Improved financial performance

Raising the bar on group target


Investor Relations

CMD2011 - Lars Nilsson - The best of both worlds in numbers