Download - Quarterly report (Q1) 2009
FIRST QUARTER 200922 April 2009
2009-04-222 First quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Operating review of Mobile Harri Koponen
Concluding remarks Harri Koponen
2009-04-223 First quarter 2009
• Robust first quarter with good sales growth and solid EBITDA• Nordic
– New partnership in Sweden to build a joint LTE network– Swedish mobile operations benefiting from SUNAB JV with stable EBIT contribution– EBITDA contribution from Swedish fixed telephony and broadband expanding in the
quarter– Good EBITDA development in Norway
• Russia– Roll-out of new regions accelerated during the quarter– EBITDA margin in old regions of 36 percent
• Central Europe– Stable EBITDA contribution in the Baltic region
• Lithuania delivered a record high margin of 37 percent– Good operational momentum in Croatia during Q1 2009, adding in total 62,000 new
customers• Western Europe
– The Dutch operation increased its EBITDA by 88 percent in the first quarter• Driven by fixed broadband development
– The restructuring of the Austrian business delivered first positive EBIT result
HIGHLIGHTS Q1
2009-04-224 First quarter 2009
• Macro economic conditions are still deteriorating
• The effects of the global recession can be observed in some parts of Tele2’s operations
• The company has acted – Contingency plans in place to prevent an impact of the economic
slowdown – Measures include scrutinizing both operational and capital expenditures– Aim to keep cash generation intact
• The current economic environment gives rise to investment opportunities
ECONOMIC IMPACT
2009-04-225 First quarter 2009
• Robust financial performance in Q1 2009– Revenue of SEK 10,120 million, up 6 percent– EBITDA of SEK 2,227 million, up 34 percent– Cash flow after Capex SEK 682 (508) million
• Low financial gearing with net debt to EBITDA 0.7 times*)
• Progressive view on dividend– Proposed total dividend SEK 5
• New credit facility of SEK 12,000 million– A solid financial position that is a good foundation to build upon in 2009
FINANCIAL HIGHLIGHTS Q1 2009
*) Including obligations to JV
2009-04-226 First quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Operating review of Mobile Harri Koponen
Concluding remarks Harri Koponen
2009-04-227 First quarter 2009
Q1 2009 GROUP RESULTS
750648Net result49184Net result, discontinued operations
701464Net result, continuing operations-84-273Taxes-28-592Financial items
7,7%13,2%- Normalized EBIT margin (%)7301,333Normalized EBIT
8131,329EBIT83
9,1%
-930
17,4%
1,6609,527Q1 08
-4One-off items8,7%- Depreciation of net sales (%)-894Depreciation and joint venture
22,0%- EBITDA margin (%)34%2,227EBITDA
6%10,120Continuing operations, Net SalesChange %Q1 09SEK million
2009-04-228 First quarter 2009
FINANCIAL ITEMS
-28
–86
–34
102–88
Q1 08
-592
–20-325
–267
–166–139
Q1 09
-564
–12-331
–233
-268–51
Diff
Financial items
Other financial items
Exchange rate differences, intragroup
Exchange rate differences, external
ExternalNet interest expenses
SEK million
Stronger USD + 7 %
2009-04-229 First quarter 2009
INTRAGROUP FX
• Total intragroup FX affecting Q1 389 million SEK, partly reported in Income statement and partly in Comprehensive income
-389-122
-267Q1 09
-60173
-233Diff
-329-295Other comprehensive income
-34Exchange rate differences, intragroup
Q1 08SEK million
Weaker RUB – 7 %
2009-04-2210 First quarter 2009
“OUR” CURRENCIES
+ 34 %
+ 16 %- 5 %
+ 16 %vs. Q1 2008
+ 7 %USD
-”BALTICS”
- 7 %RUB
-EUR
vs. 31 dec 2008Currency
• USD private placement 220 MUSD
2009-04-2211 First quarter 2009
48% 47%
22% 21%
22% 24%
8% 8%
0%
20%
40%
60%
80%
100%
Year-end 2008 Q1 2009
OtherBalticsRussiaEUR
NET ASSETS IN FOREIGN CURRENCIES
Total 25.4 bSEK Total 25.4 bSEK
2009-04-2212 First quarter 2009
TAXES
• Reported tax for Q1 2009 amounted to SEK -273 million whereof -186 was related to the S.E.C tax dispute. Tax payment affecting cash-flow amounted to SEK 456 million
• In 2009 Tele2 forecasts a corporate tax rate of approximately 20% excluding one-off items
• The tax payment will affect 2009 cash flow by approximately 800 million
• Tax dispute– In Q1 2009, Tele2 announced that the company was not allowed to deduct a
capital loss of SEK 13.9 billion, which was associated with the liquidation of S.E.C. S.A. in 2001
– Tele2 will appeal the decision made by the County Administrative Court– Tele2 is of the opinion that the dispute will be settled in Tele2’s favor and has
only provisioned for a limited part
2009-04-2213 First quarter 2009
CASH FLOW FOR Q1 2009
508-398-68156198
682-59-38362947
Cash Flow after CAPEXAcquisition of shares and participationsSale of shares and participationsChanges of long-term receivablesCASH FLOW AFTER INVESTING ACTIVITIES
-999-1,149CAPEX
1,50782
-3201,745
Q1 08
INVESTING ACTIVITIES
1,831CASH FLOW FROM OPERATING ACTIVITIES395Changes in working capital
-4561,892
OPERATING ACTIVITIESTaxes paid Cash flow from operations, other
Q1 09SEK million
2009-04-2214 First quarter 2009
DIVIDEND PROPOSAL
• Tele2’s intention over the medium term is to pay a progressive ordinary dividend to its shareholders
• The board of Tele2 AB has decided to recommend an increase of the ordinary dividend by 11 percent to SEK 3.50 (3.15) per share
• The board has also decided to recommend a special dividend of SEK 1.50 (4.70) per share at the AGM
2009-04-2215 First quarter 2009
BALANCE SHEET Q1 2009
48,35146,261EQUITY AND LIABILITIES
5,7315,633LONG-TERM LIABILITIES
27,17328,746SHAREHOLDERS' EQUITY
15,44711,882SHORT-TERM LIABILITIES
48,35115,485
32,866
Q1 08
Equity and liabilities
46,261ASSETS11,815CURRENT ASSETS
34,446FIXED ASSETS
AssetsQ1 09SEK million
2009-04-2216 First quarter 2009
02 0004 0006 0008 000
10 00012 00014 00016 00018 00020 000
Q1 07
Q3 07Q1 0
8Q3 08Q1 0
9
0
0,5
1
1,5
2
2,5
3Net debt incl. JV
Net debt
Net debt/EBITDA incl. JVNet debt/EBITDA
• Net debt amounted to SEK 4,433 (4,935) million in Q1 2009– 0.5 times FY 2008 EBITDA– 0.7 times FY 2008 EBITDA including guarantees to JV
GROUP FINANCIAL PROFILE
2009-04-2217 First quarter 2009
NET INTAKE PER SEGMENT
-600
-400
-200
0
200
400
600
800
1000
Q407
Q108
Q208
Q308
Q408
Q109
Fixed broadbandFixed telephonyMobile
• Tele2 has experienced a general slowdown in customer activity affecting overall intake
• Mobile customer base increasing by 239,000 new users
2009-04-2218 First quarter 2009
GROUP Q1 2009 MOBILE
• Total number of mobile customers 19.6 million Q1 2009
0
5 000
10 000
15 000
20 000
25 000
Q2 08 Q3 08 Q4 08 Q1 09
Mobile InternetPre paid voicePost paid voice
0.2 million15.7 million3.7 million
2009-04-2219 First quarter 2009
GROUP Q1 2009 NET SALES
0
2 000
4 000
6 000
8 000
10 000
12 000
Q407
Q108
Q208
Q308
Q408
Q109
OtherFixed broadbandFixed telephonyMobile
• Mobile net sales SEK 6 175 million, up 9 percent– Favorable currency movement contributed by approximately SEK 500 million in quarter
• Fixed Broadband net sales SEK 1 807 million, up 24 percent– Main driver fixed broadband in Tele2 Netherlands
2009-04-2220 First quarter 2009
GROUP Q1 2009 EBITDA
-500
0
500
1 000
1 500
2 000
2 500
Q407
Q108
Q208
Q308
Q408
Q109 0,00%
5,00%
10,00%
15,00%
20,00%
25,00%Other
Fixed broadband
Fixed telephony
Mobile
Group EBITDAmargin
• Group EBITDA margin 22 percent– Lithuania delivering new record EBITDA margin of 37 percent – Improved performance in the Dutch and Austrian fixed broadband operations – Launch costs in Russia together with increased marketing and 3G traffic expenses weighted
on the mobile performance
2009-04-2221 First quarter 2009
MOBILE Q1 2009 EBITDA
0200400600800
1 0001 2001 4001 6001 8002 000
Q407
Q108
Q208
Q308
Q408
Q109
0,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
Mobile
Mobile EBITDAmargin
• Mobile EBITDA margin 23 percent– Launch costs in Russia affecting the quarter. FY 2009 expecting opex of SEK 500-700million
related to the roll-out of the 17 new licenses– Swedish mobile operations affected by higher marketing costs due better post-paid intake
and a larger part of the total traffic being carried on the 3G network– Stable performance in the Baltic region
2009-04-2222 First quarter 2009
FIXED BROADBAND Q1 2009 EBITDA
-250-200-150-100
-500
50100150200250300
Q407
Q108
Q208
Q308
Q408
Q109
-15,00%
-10,00%
-5,00%
0,00%
5,00%
10,00%
15,00%
Fixed broadband
Fixed broadbandEBITDA margin
• Fixed broadband EBITDA margin 13 percent– Excellent performance in Tele2 Netherlands driven by continued success in the B2B and
consumer segment – The Austrian operations benefiting from the restructuring process
2009-04-2223 First quarter 2009
FIXED TELEPHONY Q1 2009 EBITDA
050
100150200250300350400450500
Q407
Q108
Q208
Q308
Q408
Q109
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
2009-04-2224 First quarter 2009
GROUP Q1 2009 EBIT
-1000
-500
0
500
1000
1500
2000
Q407
Q108
Q208
Q308
Q408
Q109
0,00%
2,00%
4,00%
6,00%
8,00%
10,00%
12,00%
14,00%
16,00%Other
Fixed broadband
Fixed telephony
Mobile
Group EBITmargin
• Group EBIT margin 13% percent excluding one-off item• Improved operational performance in fixed broadband and fixed telephony lifting EBIT
performance– Benefits with SUNAB giving stable EBIT contribution from Sweden mobile
2009-04-2225 First quarter 2009
GROUP Q1 2009 CAPEX
0200400600800
1000120014001600
Q407
Q108
Q208
Q308
Q408
Q109
0,00%2,00%4,00%6,00%8,00%10,00%12,00%14,00%16,00%
OtherFixed broadbandFixed telephonyMobileCapex/sales
• Group Capex SEK 1,168 million or 12 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
2009-04-2226 First quarter 2009
FINANCIAL SUMMARY
• Overall solid operational performance
• EBIT positive in all markets except for Croatia
• All segments showing strong results
• Robust liquidity profile after refinancing and strong cash flow
However, the effects of the global recession can be observed in some parts of Tele2’s operations
2009-04-2227 First quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Operating review of Mobile Harri Koponen
Concluding remarks Harri Koponen
2009-04-2228 First quarter 2009
GENERAL MARKET TRENDS IN MOBILE
• Customer intake affected by current macro environment – More price sensitive and interested in SIM only offers
• No clear trend in MoU– Some markets showing slowdown in usage
• Pricing environment for basic voice fairly stable
• Good interest in mobile Internet services
• Operators having better pricing power
2009-04-2229 First quarter 2009
TELE2 SWEDEN MOBILE• Revenue growth of 3 percent• Slowing customer activity in
voice services– Lower pre-paid intake due to
higher churn– Better post-paid intake and
prolonged interest in SIM-only offers
• 15.000 new mobile Internet users
– Total base 185,000• 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
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 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
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 090,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
Mobile net salesEBIT marg.EBITDA marg.
2009-04-2230 First quarter 2009
TELE2 SWEDEN MOBILE (contd)
• Total number of mobile customers 3.4 Q1 2009
0
500
1 000
1 500
2 000
2 500
3 000
3 500
4 000
Q2 08 Q3 08 Q4 08 Q1 09
Mobile InternetPre paid voicePost paid voice
0.2 million1.9 million1.3 million
2009-04-2231 First quarter 2009
TELE2 NORWAY MOBILE
425
430
435
440
445
450
455
460
465
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 09-10
-5
0
5
10
15
20
25
Mobile subscriberNet intake
560
580
600
620
640
660
680
700
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 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
• Underlying customer intake 7,000 in Q1 2009
– 11,000 customers cancelled due to inactivity
• ARPU positively impacted by a “cleaner” customer base
• EBITDA contribution despite lower termination rate from February
• Network Norway JV affecting EBIT by SEK -16 million
2009-04-2232 First quarter 2009
TELE2 RUSSIA MOBILE
0
2 000
4 000
6 000
8 000
10 000
12 000
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 090
100
200
300
400
500
600
700
Mobile subscriberNet intake
0
500
1 000
1 500
2 000
2 500
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 0928,00%
29,00%
30,00%
31,00%
32,00%
33,00%
34,00%
35,00%
36,00%
37,00%
Mobile net salesEBITDA marg.
• Revenue growth in local currency 20 percent
– Overall result affected negatively by FX movements
• More than 10.6 million customers
– Net intake in the quarter lower than internal expectation
• Stable ARPU development despite economic weakness
• Roll-out of new GSM licenses accelerated in the quarter
– Opex costs from new regions affecting total EBITDA in Q1 2009
• Improved network quality and data usage through the introduction of EDGE technology
2009-04-2233 First quarter 2009
TELE2 BALTIC MOBILE
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 09-60
-40
-20
0
20
40
60
Mobile subscriberNet intake
0
200
400
600
800
1000
1200
1400
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 090,00%
5,00%
10,00%
15,00%
20,00%
25,00%
30,00%
35,00%
40,00%
Latvia net salesLithuania net salesEstonia net salesEBITDA marg.
• Challenging economic environment
– Lithuania more stable than Estonia/Latvia
– Price competition in Latvia fierce
• Robust EBITDA development despite current economic climate
– Lithuania 37 percent EBITDA margin
• Price leadership creating opportunities
– Focus on higher ARPU segments and enterprise customers
2009-04-2234 First quarter 2009
TELE2 CROATIA MOBILE
0
100
200
300
400
500
600
700
800
900
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 090
10
20
30
40
50
60
70
80
Mobile subscriberNet intake
0
50
100
150
200
250
300
350
Q4 07 Q1 08 Q2 08 Q3 08 Q4 08 Q1 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 customer intake in the quarter
– Improved marketing strategy leading to improved customer perception
• Opex affected by higher marketing spending and acquisition costs
2009-04-2235 First quarter 2009
REGULATION
Mobile regulation
• Europe has been the foundation for many mobile operators
• Predictable regulatory agenda important to prolong this trend
• Frequency re-farming is a sign of proactive thinking of the national regulators in Sweden
– Hopefully a data point that will become a trend throughout Europe
2009-04-2236 First quarter 2009
AGENDA
CEO review Harri Koponen
Financial review Lars Nilsson
Operating review of Mobile Harri Koponen
Concluding remarks Harri Koponen
2009-04-2237 First quarter 2009
CONCLUDING REMARKS
• The quarter showed good revenue development together with solid EBITDA contribution
• The company has acted on economic slowdown
• Solid financial position a good foundation to build upon in 2009
• Top priorities in 2009 – Tele2 will continue to focus on cost discipline in all parts of the organization
• Tele2 should use its cost advantage to carefully move its position forward– Roll-out of new regions in Russia – 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 In both the Nordic and Western
European regions
2009-04-2238 First quarter 2009
Q&A