Quarterly report (Q4) 2009

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


• 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


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


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


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)


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


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”


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


THEBESTDEAL

TELE2 ALWAYS PROVIDES


AGENDA





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


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


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


“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


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


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


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


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


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


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


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


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


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


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%


Other Group EBITDA margin


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


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


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


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


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


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%


Other Group EBIT margin


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%


Other Capex/sales

In 2010: Tele2 forecast a CAPEX level in the range of SEK 4,600 – 4,800 million


AGENDA





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


Q&A


Appendix A


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


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.


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


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



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.


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


TELE2 RUSSIA MOBILE


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%



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



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.


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



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%



Appendix B


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


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


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”


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


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


THE BEST DEAL

Investor Relations

Quarterly report (Q4) 2009