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Capital Markets Day 2011
Market Area NordicThomas Ekman
Sep 20112 Capital Markets Day 2011
Market Area Overview
Strong cash flow generation in Q2 2011: - EBITDA SEK 916 million- CAPEX SEK 123 million
Represents 38% of total net sales Q2 2011:
Sweden: 35% Norway: 3%
Current Focus:Sweden: Building on mobile growth
and 4G roll-out coupled with household/corporate fiber strategy
Norway: Integrate Network Norway
Sep 20113 Capital Markets Day 2011
Sweden
Sep 20114 Capital Markets Day 2011
Operational Performance
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
100200300400500600700800900
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
200
400
600
800
1000
-5%0%5%10%15%20%25%30%35%40%
EBITDA Mobile EBITDA Fixed TelephonyEBITDA Fixed Broadband EBITDA(%) MobileEBITDA(%) Fixed Broadband EBITDA(%) Fixed Telephony
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
500
1000
1500
2000
2500
3000
3500
Mobile Fixed Telephony Fixed Broadband
75%
12%
13%
Mobile
Fixed Telephony
Fixed Broadband
Total Revenue Q2 11
EBITDA-CAPEX
SEK MillionRevenue
SEK MillionEBITDASEK Million
Sep 20115 Capital Markets Day 2011
Potential Uplift in Smartphone Migration
0
50
100
150
200
250
300
1103 1104 1105 1106 11070%
20%
40%
60%
80%
100%
Smartphone Feature phone Smartphone Feature phone
Smartphone Install Base (Postpaid)SEK
Average ASPU
Sep 20116 Capital Markets Day 2011
Smartphone Price Range
Last year Today0%
20%
40%
60%
80%
100%
Low End Smartphones Entering the Market
Low endMid rangeHigh end
Sep 20117 Capital Markets Day 2011
Shift in Mobile Broadband Market
Handset Tablets Modem Router Fiber
Individual Household
Sep 20118 Capital Markets Day 2011
Handset Data Drives Profitability
Handset data drives profitability on mobile data Strong handset data potential 4G Mobile Broadband is a substitute to xDSL
H1 2010 vs H1 2009 H2 2010 vs H2 2009 H1 2011 vs H1 20100%
20%
40%
60%
80%
100%
120%
140%
160%
Mobile Data Revenue IncreaseGrowth
Handset data Mobile broadband data (3G)
Sep 20119 Capital Markets Day 2011
The 4G Roll-Out Continues
99%* 4G
coverage
End of 20122011
*Percentage of the population
In Q2 2011, 4G roll-out was completed in 14 cities
4G mobile broadband is already launched
4G handsets and home router coming late 2011
Sep 201110 Capital Markets Day 2011
Increased Fiber Focus
298 SEK
Core network
Fiber footprint
Tele2 Sweden core network
Sep 201111 Capital Markets Day 2011
Cost Benefits of Mobile Networks in JVs
JV's Capex & Opex
Tele2 share of JV's Capex
& Opex
Tele2 saving
If Tele2 wouldbuild ownnetwork
Capex & Opex
100%40%
50%
90%
Q1 09Q2 09
Q3 09Q4 09
Q1 10Q2 10
Q3 10Q4 10
Q1 11Q2 11
0%
10%
20%
30%
40%
50%
EBITDA %
EBITDA own in-frastruc-ture %
2012 2013 20140
50
100
150
200
250
300
350
EBIT Saving
Mobile EBIT SavingNet4Mobility
Mobile EBITDA (Sweden)
JV CAPEX & OPEX Saving
SEK Million
Sep 201112 Capital Markets Day 2011
EBITDA Development
Even more cost-efficient operations break the trend
2006 2007 2008 2009 2010 2011-1H0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
0
500
1000
1500
2000
2500
3000
3500
EBITDA% (left) EBITDA (right)
SEK MillionTele2 Mobile EBITDA
Sep 201113 Capital Markets Day 2011
Norway
Sep 201114 Capital Markets Day 2011
Operational Performance
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
200
400
600
800
1000
Mobile Fixed Telephony
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
10
20
30
40
50
60
70
80
0%
5%
10%
15%
20%
25%
EBITDA Mobile EBITDA Fixed Telephony
EBITDA(%) Mobile EBITDA(%) Fixed Telephony
Q1 10 Q2 10 Q3 10 Q4 10 Q1 11 Q2 110
20
40
60
80
100
88%
12%
Mobile
Fixed Telephony
SEK Million
SEK Million SEK Million
Total Revenue Q2 11
EBITDA-CAPEX
Revenue
EBITDA
Sep 201115 Capital Markets Day 2011
Norwegian Market Consolidation
Market backdrop
Aggressive price competition over the last couple of years pressuring revenue growth and margins
Fragmented market with two dominant operators Declining MTR revenues Increasing focus on scale, service offering and customer satisfaction
Strategic rationale
Realize synergy and scale possibilities Create a clear #3 mobile operator in Norway Consolidation resulting in market-repair / rationalisation
50%50%
Sep 201116 Capital Markets Day 2011
Market Shares
53.4 %
20.2 %
5.5 %
6.3 %
7.8 % 2.8 %3.9 %
Mobile Market Shares Based on Revenue
Telenor
NetCom (Telia Sonera)
Chess (Telia Sonera)
Network Norway (with OneCall and Lebara)
Tele2
Ventelo
Others
Det norske markedet for elektroniske kommunikasjonstjenster 2010”, Post- og teletilsynet, 20 May 2011.
Nationwide coverage by 1H 2013 Long term market share of 25% Long term alignment with Tele2
Group targets
Sep 201117 Capital Markets Day 2011
Conclusion
• Smartphones are driving revenues and margin
• Increased fiber focus• Shift in %-EBITDA trend• Norwegian market consolidation
Sep 201118 Capital Markets Day 2011