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Presentation Tele2s Quarterly report 2008 (Q2)
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SECOND QUARTER 200922 July 2009
2009-07-222 Second quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2009-07-223 Second quarter 2009
• Record result with all regions performing• Nordic
– Good EBITDA contribution
• Russia– Strong operational momentum – Tomsk launched with good initial market traction
• Central Europe– Focus on maintaining our customer base and profitability
• Western Europe– All countries delivering healthy EBITDA contribution– Strong performance in The Netherlands and Austria
HIGHLIGHTS Q2
2009-07-224 Second quarter 2009
MOBILE HIGHLIGHTS Q2
• Sweden – Good customer intake driven by mobile internet
service• Russia
– Strong EBITDA margin – Strong net intake
• The Baltic Region– Create a platform for future growth
2009-07-225 Second quarter 2009
MARKET TRENDS
• Develop distribution strategies
• Stimulate customer activity
• Introduce diversified pre-paid services
2009-07-226 Second quarter 2009
CORPORATE SEGMENT• Sweden
– New contract wins in price sensitive market
• The Netherlands – Gold standard for the group
• Austria– New strategy is paying off
2009-07-227 Second quarter 2009
• Price leadership through best in class cost control
• Rewarded quality network
• Standardized product portfolio
HOW DO WE CREATE THE BEST DEALB
ES
T D
EA
L
2009-07-228 Second quarter 2009
ECONOMIC DEVELOPMENT• The effects of the global recession can still be
observed in some parts of Tele2’s operations
• The Company has acted and can see positive effects on OpEx and CapEx– The contingency plan will continue
2009-07-229 Second quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2009-07-2210 Second quarter 2009
Q2 2009 GROUP RESULTS
-591,152Net result-22012Net result, discontinued operations1611,140Net result, continuing operations
-167-324Taxes-10217Financial items
11,9%14,9%- Normalized EBIT margin (%)1,1671,506Normalized EBIT4301,447EBIT-737
8,7%
-934
21,4%
2,1019,832Q2 08
-59One-off items9,2%- Depreciation of net sales (%)-944Depreciation and joint venture
24,2%- EBITDA margin (%)17%2,450EBITDA
3%10,130Continuing operations, Net SalesChange %Q2 09SEK million
2009-07-2211 Second quarter 2009
H1 2009 GROUP RESULTS
6911,800Net result-171196Net result, discontinued operations8621,604Net result, continuing operations
-251-597Taxes-130-575Financial items
9,8%14,0%- Normalized EBIT margin (%)1,8972,839Normalized EBIT
1,2432,776EBIT-654
8,9%
-1,864
19,4%
3,76119,359H1 08
-63One-off items8,9%- Depreciation of net sales (%)
-1,838Depreciation and joint venture23,1%- EBITDA margin (%)
24%4,677EBITDA5%20,250Continuing operations, Net Sales
Change %H1 09SEK million
2009-07-2212 Second quarter 2009
FINANCIAL ITEMS Q2
-102
-47-127
25
14-94
Q2 08
17
-11-18
35
92-99
Q2 09
129
36109
10
78-5
Change
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
ExternalNet interest expenses
SEK million
2009-07-2213 Second quarter 2009
FINANCIAL ITEMS H1
-130
-55-121
-9
116-182
H1 08
-575
-31-343
-232
-74-238
H1 09
-445
24-222
-223
-190-56
Change
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
ExternalNet interest expenses
SEK million
2009-07-2214 Second quarter 2009
“OUR” CURRENCIES
+ 33 %+ 15 %
- 4 %+ 16 %
YTD Average09 vs. 08
+ 1 %USD-”BALTICS”
- 5 %RUB-EUR
Fixing rate June 09 vs Dec 08Currency
2009-07-2215 Second quarter 2009
11,8 11,5
5,4 5,6
6,2 6,72,1 2,3
0
10
20
30
Year-end 2008 Q2 2009
OtherBalticsRussiaEUR
NET ASSETS IN FOREIGN CURRENCIES
Total 25.5 bSEK Total 26.1 bSEK
2009-07-2216 Second quarter 2009
CASH FLOW FOR Q2 2009
412-168244
921-36885
Cash Flow after CAPEXAcquisition and sale of shares and participations, net
-1,446-1,078CAPEX
1,858-381
1532,086
Q2 08
INVESTING ACTIVITIES
1,999CASH FLOW FROM OPERATING ACTIVITIES63Changes in working capital
-1242,060
OPERATING ACTIVITIESTaxes paidCash flow from operations, other
Q2 09SEK million
2009-07-2217 Second quarter 2009
CASH FLOW FOR H1 2009
920-634286
1,603-133
1,470
Cash Flow after CAPEXAcquisition and sale of shares and participations,net
-2,445-2,227CAPEX
3,365-299
-1673,831
H1 08
INVESTING ACTIVITIES
3,830CASH FLOW FROM OPERATING ACTIVITIES458Changes in working capital
-5803,952
OPERATING ACTIVITIESTaxes paidCash flow from operations, other
H1 09SEK million
2009-07-2218 Second quarter 2009
NEW DEFINITION OF A PRE-PAID CUSTOMERN
EW
DE
FIN
ITIO
N
OU
R G
OA
L
Definition alignment; apply the same definition to all our countries
”An active pre-paid customer is a customer that has a
refillable active account; and has either refilled or done
an active transaction during the last 90 days”
2009-07-2219 Second quarter 2009
CUSTOMER DEFINITION – NEW RULE
-40-8,612 months from last refillNetherlands
-14-3,212 months from last refillFrance
5532,7Total
-227-29,4Average of 12 months from last refillCroatia
-12-1,1Average of 4 months from last refillLatvia
-181-9,510 months from last refillLithuania
-32
1,261
-2
-200
-6,6
11,3
-0,4
-5,8
Absolute impact
(in thousands)
7 months from last refill
3 months from last refill
6 months from last refill or usage
6 months from last refill or usage
Old definition
Estonia
Russia
Norway
Sweden
Relative impact
(%)Country
2009-07-2220 Second quarter 2009
0
5 000
10 000
15 000
20 000
25 000
Q2 07
Q4 07
Q2 08
Q4 08
Q2 09
00,511,522,533,5
Net debt incl. JV
Net debt
Net debt/ EBITDAincl. JV 2008Net debt/ EBITDA2008
• Net debt amounted to SEK 5,441 million in Q2 2009– 0.6 times FY 2008 EBITDA– 0.9 times FY 2008 EBITDA including guarantees to JV
GROUP FINANCIAL PROFILE
2009-07-2221 Second quarter 2009
NET INTAKE PER SEGMENT
-600
-400
-200
0
200
400
600
800
1000
Q108
Q208
Q308
Q408
Q109
Q209
Fixed telephonyFixed broadbandMobile
• Russia is the growth driver in net intake adding 478,000 new customers• Mobile customer base increasing by 524,000 new users
2009-07-2222 Second quarter 2009
GROUP Q2 2009 MOBILE
• Total number of mobile customers 20.7 million Q2 2009– New pre-paid definition adding 553 000 customers in the reporting
0
5 000
10 000
15 000
20 000
25 000
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Mobile InternetPre paid voicePost paid voice
0.2 million16.7 million
3.8 million
2009-07-2223 Second quarter 2009
MoU AND ARPU DEVELOPMENT
010203040506070
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09170175180185190195200205210215220
ARPU MoU
SWEDEN RUSSIA
175180185190195200205210215220225
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09195200205210215220225230235240
ARPU MoU
• Relatively strong development despite challenging economical times– Swedish ARPU being driven down by an increasing customer base in Mobile Internet
2009-07-2224 Second quarter 2009
GROUP Q2 2009 NET SALES
0
2 000
4 000
6 000
8 000
10 000
12 000
Q108
Q208
Q308
Q408
Q109
Q209
OtherFixed telephonyFixed broadbandMobile
• Mobile net sales SEK 6,457 million, up 5 percent
2009-07-2225 Second quarter 2009
GROUP Q2 2009 EBITDA
-500
0
500
1 000
1 500
2 000
2 500
3 000
Q108
Q208
Q308
Q408
Q109
Q209
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%Other
Fixed telephony
Fixed broadband
Mobile
Group EBITDAmargin
• Group EBITDA margin 24 percent– Lithuania delivering new record EBITDA margin of 39 percent – Further improved performance in the Dutch and Austrian fixed broadband operations
2009-07-2226 Second quarter 2009
MOBILE Q2 2009 EBITDA
0200400600800
1 0001 2001 4001 6001 8002 000
Q108
Q208
Q308
Q408
Q109
Q209
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
Mobile
Mobile EBITDAmargin
• Mobile EBITDA margin 27 percent– Russia EBITDA margin 40 percent in mature regions and 35 percent in all regions
2009-07-2227 Second quarter 2009
FIXED BROADBAND Q2 2009 EBITDA
-200
-100
0
100
200
300
Q108
Q208
Q308
Q408
Q109
Q209
-15,00%
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
20,00%
Fixed broadband
Fixed broadbandEBITDA margin
• Fixed broadband EBITDA margin 14 percent– Excellent performance in Tele2 Netherlands driven by continued success in the B2B and
consumer segment – The Austrian operations benefiting from the restructuring process
2009-07-2228 Second quarter 2009
FIXED TELEPHONY Q2 2009 EBITDA
0
100
200
300
400
500
Q108
Q208
Q308
Q408
Q109
Q209
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
Fixed Telephony
Fixed telephonyEBITDA margin
• Fixed telephony EBITDA margin 27 percent– Focus on maintaining relative performance
2009-07-2229 Second quarter 2009
GROUP Q2 2009 EBIT
-1 000
-500
0
500
1 000
1 500
2 000
Q108
Q208
Q308
Q408
Q109
Q209
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
14,00%
16,00%Other
Fixed telephony
Fixed broadband
Mobile
Group EBITmargin
• Group EBIT margin 15 percent excluding one-off items• Improved operational performance in mobile lifting EBIT performance
2009-07-2230 Second quarter 2009
GROUP Q2 2009 CAPEX
• Group Capex SEK 1,085 million or 11 percent of net sales– FY 2009 expectation in the range of SEK 4,700-4,900 million, affected by FX movement
• Expansion in Russia the main driver– FY 2009 expectation in the range of SEK 1,300-1,500 million related to roll-out of new
licenses
0200400600800
1000120014001600
Q108
Q208
Q308
Q408
Q109
Q209
0,00%2,00%4,00%6,00%8,00%10,00%12,00%14,00%16,00%
OtherFixed telephonyFixed broadbandMobileCapex/sales
2009-07-2231 Second quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Concluding remarks Harri Koponen
2009-07-2232 Second quarter 2009
CONCLUDING REMARKS
• Record result with strong performance in all markets
• Top priorities 2H 2009 – Tele2 will continue to focus on cost discipline in all parts of the
organization – Roll-out of new regions in Russia
• Launch of up to six new regions during Q3 2009– Develop our mobile operations
• Compose a product portfolio that goes in line with the needs of our customers
– Tele2 will work harder in the corporate segment, both in the Nordic and Western European regions
2009-07-2233 Second quarter 2009
Q&A
2009-07-2234 Second quarter 2009
Appendix
2009-07-2235 Second quarter 2009
GENERAL MARKET TRENDS IN MOBILE
• Strong customer intake
• MoU growth is offsetting price competition
• Pricing environment for basic voice fairly stable
• Good interest in Mobile Internet services
2009-07-2236 Second quarter 2009
TELE2 SWEDEN MOBILE
2 950
3 000
3 050
3 100
3 150
3 200
3 250
3 300
3 350
3 400
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 090
20
40
60
80
100
120
140
Mobile subscriberNet intake
1 700
1 750
1 800
1 850
1 900
1 950
2 000
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 090,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
Mobile net salesEBIT marg.EBITDA marg.
• Flat revenue development• Good customer intake
– Driven by Mobile Internet and post-paid voice
• 33,000 new Mobile Internet users
– Total base 218,000• MoU continue to grow, both
voice and VAS• New partnership regarding
future LTE network deployment • EBITDA 32 percent
– More traffic carried over the 3G network/SUNAB JV
– Higher intake of post-paid customers leading to increased marketing costs
• Capex– Benefiting from the JV
structure
2009-07-2237 Second quarter 2009
TELE2 SWEDEN MOBILE (contd)
• Total number of mobile customers 3.2 million Q2 2009– New pre-paid definition affecting the reported number of the customer base with -200 000
0500
1 0001 5002 0002 5003 0003 5004 000
Q2 08 Q3 08 Q4 08 Q1 09 Q2 09
Mobile InternetPre paid voicePost paid voice
0.2 million1.7 million1.3 million
2009-07-2238 Second quarter 2009
TELE2 NORWAY MOBILE
425
430
435
440
445
450
455
460
465
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09-10
-5
0
5
10
15
20
25
Mobile subscriberNet intake
580
590
600
610
620
630
640
650
660
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09-4,00%
-2,00%
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
Mobile net salesEBITDA marg.
• Tele2 staying the price leader despite tough market conditions
• Customer intake 2,000 in Q2 2009
• Improvement EBITDA development:
– Efforts to bring costs down together with;
– a continued focus on improving the quality of the overall customer stock
• Network Norway JV affecting EBIT by SEK 16 million
2009-07-2239 Second quarter 2009
TELE2 RUSSIA MOBILE
0
2 000
4 000
6 000
8 000
10 000
12 000
14 000
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 090
100
200
300
400
500
600
700
Mobile subscriberNet intake
0
500
1 000
1 500
2 000
2 500
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 0929,00%
30,00%
31,00%
32,00%
33,00%
34,00%
35,00%
36,00%
37,00%
Mobile net salesEBITDA marg.
• Revenue growth 14 percent in SEK
• More than 12 million customers– Net intake in the quarter
478,000
• Stable ARPU development despite economic weakness
• Roll-out of new GSM licenses will accelerate in 2H 2009
• Improved network quality and data usage through the introduction of EDGE technology
2009-07-2240 Second quarter 2009
TELE2 BALTIC MOBILE
3 050
3 100
3 150
3 200
3 250
3 300
3 350
3 400
3 450
3 500
3 550
3 600
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09-60
-40
-20
0
20
40
60
Mobile subscriberNet intake
0
200
400
600
800
1000
1200
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 0926,00%
28,00%
30,00%
32,00%
34,00%
36,00%
38,00%
Latvia net salesLithuania net salesEstonia net salesEBITDA marg.
• Challenging economic environment
– Lithuania and Estonia relatively stable development
– Fierce price competition in Latvia
• Robust EBITDA development despite current economic climate
– Lithuania 39 percent EBITDA margin
• Price leadership creating opportunities
– Focus on higher ARPU segments and enterprise customers
2009-07-2241 Second quarter 2009
TELE2 CROATIA MOBILE
0
100
200
300
400
500
600
700
800
900
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 090
10
20
30
40
50
60
70
80
Mobile subscriberNet intake
0
50
100
150
200
250
300
350
Q1 08 Q2 08 Q3 08 Q4 08 Q1 09 Q2 09-70,00%
-60,00%
-50,00%
-40,00%
-30,00%
-20,00%
-10,00%
0,00%
Mobile net salesEBITDA marg.
• The Croatian operations developing according to plan
• Good EBITDA improvement in the quarter
• Opex affected by higher marketing spending and acquisition costs
2009-07-2242 Second quarter 2009