THIRD QUARTER 2010
October 20 2010
2010-10-202 Third quarter 2010
AGENDA
About Q3 2010
Financial review
Guidance and Concluding remarks
2010-10-203 Third quarter 2010
• Group– Total customer base amounting to more than 30 million
customers. Net customer intake for the group of almost 1.3 million
– Net sales grew by 2 percent. Currency-adjusted net sales grew by 6 percent, driven by mobile sales
– EBITDA grew by 13 percent. Currency-adjusted EBITDA grew by 17 percent. EBITDA margin amounted to 28 (25) percent
• Nordic
• Russia
• Central Europe & Eurasia
• Western Europe
HIGHLIGHTS Q3
2010-10-204 Third quarter 2010
HIGHLIGHTS TELE2 SWEDEN
0%
2%
4%
6%
8%
10%
12%
1700
1800
1900
2000
2100
2200
2300
Q2 09
Q3 09
Q4 09
Q1 10
Q2 10
Q3 10
Mobile net sales
Mobile YoY net sales growth
(SE
K M
illio
n)
• Increased mobile revenue growth to 10
percent
• Adding 103,000 mobile customers
• Mobile EBITDA margin 34 (34) percent
20%
25%
30%
35%
40%
-40
-20
0
20
40
60
80
100
120
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(th
ou
sa
nd
s)
Postpaid Prepaid EBITDA-margins
2010-10-205 Third quarter 2010
1 iPhone4
2Sony Ericsson X10 Mini
Pro
3 iPhone 3GS
4 Samsung Galaxy S
5 HTC Desire
6 Sony Ericsson X10 Mini
7 HTC Wildfire
8 Sony Ericsson X10
9 Sony Ericsson Elm
10 Nokia 6700 Slide
SHIFT TOWARDS SMART PHONES
• Smartphones demanded by mass market
– Shift driven by increased variety of smartphones combined with an increased awareness of the possibilities of a mobile internet access
Regular
phone
customers
:Smartphone
customers
Data usage per
month (Mb)1 : 40
MoU* 1 : 1.4
ASPU** 1 : 1.7
Proportion based scale where regular phone usage is base
* Out-going minutes
** ARPU Excluding operator revenue and installments
Top 10 phone sales (Aug-
Sep)
2010-10-206 Third quarter 2010
HIGHLIGHTS TELE2 RUSSIA
• Third and fourth new regions
now EBITDA break-even
• 1,170,000 (1,100,000) new
customers in Q3 2010
New regions
-150
50
250
450
650
850
1050
1250
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
(In
th
ou
sa
nd
s)
Net Intake - New regions
Net Intake - Old regions
31%
32%
33%
34%
35%
36%
37%
-200
0
200
400
600
800
1000
Q2
09
Q3
09
Q4
09
Q1
10
Q2
10
Q3
10
(SE
K m
illio
n)
EBITDA - New regions EBITDA - Old regions
EBITDA - Total margin
Tomsk
Orel
Kaliningrad
Tula
2010-10-207 Third quarter 2010
HIGHLIGHTS TELE2 BALTIC REGION
-92-82-72-62-52-42-32-22-12-28
1828384858
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Net intakeEstonia Lithuania Latvia
-200
-100
0
100
200
300
400
500
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illion)
EBITDA CAPEX EBITDA - CAPEX
• Stabilizing economy leading to better
operational environment
• Strong net intake, adding 55,000
(28,000) customers in the region
(th
ou
san
ds)
(SE
K m
illio
n)
2010-10-208 Third quarter 2010
-70
-60
-50
-40
-30
-20
-10
0
10
20
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
EBITDA
• Next goal is to deliver positive free cash flow within a year
• 81,000 (70,000) new customers added in Q3 10
SE
K M
illio
n
-18
-8
2
12
22
32
42
52
62
72
82
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
Net intake
HIGHLIGHTS TELE2 CROATIA
2010-10-209 Third quarter 2010
HIGHLIGHTS TELE2 KAZAKHSTAN
• Customer stock of 218 000 in Q3 2010. 18,000 new customers added in September
-20
-10
0
10
20
April Maj Jun Jul Aug Sep
Net intake 2010
• Preparing for re-launch under Tele2 brand 1H 2011
2010-10-2010 Third quarter 2010
• Netherlands
- BBned acquisition completed
HIGHLIGHTS TELE2 WESTERN EUROPE
• Germany
- Record high EBITDA margin in
fixed telephony of 46 percent
• Austria
- Continued good progress in
restructuring program leading to
sequential improvement of
EBITDA contribution
0
100
200
300
400
500
600
700
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Netherlands Austria Germany
0
100
200
300
400
500
600
700
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Netherlands Austria Germany
EBITDA contribution
2010-10-2011 Third quarter 2010
AGENDA
About Q3 2010
Financial review
Guidance and Concluding remarks
2010-10-2012 Third quarter 2010
Q3 2010 GROUP RESULTS
SEK million Q3 10 Q3 09 Change %
Net Sales 9,998 9,829 2%
EBITDA 2,751 2,441 13%
- EBITDA margin (%) 28% 25%
Depreciation and joint venture -876 -924
- Depreciation of Net sales (%) 9% 9%
One-off items 17 116
EBIT 1,892 1,633
Normalized EBIT 1875 1517
- Normalized EBIT margin (%) 19% 15%
Financial items -16 199
Taxes 608 401
Net result, continuing operations 2,484 2,233
Net result, discontinued operations 29 -478
Net result 2,513 1,755
2010-10-2013 Third quarter 2010
TAXES
• SEC tax dispute: Oral hearing will take place in the end of November,
thereafter the outcome will be announced in 1-2 months
• The total value of the SEC tax dispute is SEK 4,6 billion
Taxes in income statement YTD Sep 10 Q3 2010 Q2 2010 Q1 2010
Normal -1,128 -441 -348 -339
One-Off 976 1049 -73 -
Total -152 608 -421 -339
Taxes in cash flow YTD Sep 10 Q3 2010 Q2 2010 Q1 2010
Normal -580 -152 -195 -233
2010-10-2014 Third quarter 2010
CURRENCY MOVEMENTS (VS SEK)
YTD Avarage 2010 vs 2009 Q3 2010 Q2 2010 Q1 2010
EUR -10% -10% -9%
RUB 0,5% +/- 0 -2%
Fix rate vs 31/12-2009 Q3 2010 Q2 2010 Q1 2010
EUR -12% -8% -6%
RUB -7,5% 3% 1%
• EUR/RUB pegged currencies approximately:
– 38% of sales and
– 33% of EBITDA
2010-10-2015 Third quarter 2010
CASH FLOW FOR Q3 2010
SEK million Q3 10 Q3 09
OPERATING ACTIVITIES
Cash flow from operations, less paid taxes
Taxes paid
2,733
-152
2,499
-98
Changes in working capital 39 186
CASH FLOW FROM OPERATING ACTIVITIES 2,620 2,587
INVESTING ACTIVITIES
CAPEX -923 -1,065
Cash Flow after CAPEX
Acquisition and sale of shares and participations, net
1,697
-96
1,601
1,522
-208
1,314
2010-10-2016 Third quarter 2010
GROUP FINANCIAL PROFILE
00,20,40,60,811,21,41,6
0
2
4
6
8
10
12
14
Q3 0
7
Q4 0
7
Q1 0
8
Q2 0
8
Q3 0
8
Q4 0
8
Q1 0
9
Q2 0
9
Q3 0
9
Q4 0
9
Q1 1
0
Q2 1
0
Q3 1
0
BS
EK
Net debt Net debt incl. JV
Net debt/ EBITDA 2009 Net debt incl. JV/ EBITDA 2009
2010-10-2017 Third quarter 2010
ROCE
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%
20,0%
21,0%
22,0%
23,0%
24,0%
25,0%
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2007 2008 2009 2010
2010-10-2018 Third quarter 2010
GROUP EBITDA
20%
22%
24%
26%
28%
30%
-500
0
500
1 000
1 500
2 000
2 500
3 000
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile Fixed broadband Fixed telephony Other Group EBITDA margin
2010-10-2019 Third quarter 2010
GROUP MOBILE EBITDA
20%
22%
24%
26%
28%
30%
32%
34%
0
500
1 000
1 500
2 000
2 500
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO)
Mobile EBITDA margin on own infratsructure Total mobile EBITDA margin
2010-10-2020 Third quarter 2010
MoU AND ARPU DEVELOPMENT
180
200
220
240
30
40
50
60
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
SE
K
Russia
ARPU MoU
180
200
220
240
260
160
180
200
220
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
SE
K
Sweden
ARPU MoU
• Robust ARPU development
– Swedish and Russian ARPU grew more than 8 percent in one quarter
2010-10-2021 Third quarter 2010
AGENDA
About Q3 2010
Financial review
Guidance and Concluding remarks
2010-10-2022 Third quarter 2010
TELE2 GOING FORWARD
• Best Deal position
• Targeting a long-term
mobile EBITDA margin on own
infrastructure of at least 35 percent
• All operations should have the ambition of reaching ROCE of at least 20 percent
• The capability to reach a top 2 position, in terms of customer market share, in an individual country or region
2010-10-2023 Third quarter 2010
GROUP OUTLOOK (CHANGED)
• Tele2 forecasts a corporate tax rate of approximately 22 percent
excluding one-off items in 2010. The tax payment will affect cash flow
by approximately SEK 800 million in 2010
• The oral hearing of the SEC tax dispute is expected to be conducted
the 26 of November and a verdict will be announced 1-2 month(s) later
• Tele2 forecasts that CAPEX level in 2010 will not exceed SEK 4,000
million
• Earlier SEK 4,200-4,400 million
2010-10-2024 Third quarter 2010
SWEDEN OUTLOOK (UNCHANGED)
• Tele2 will continue to target the postpaid segment, which in the longer
term will lead to:
– Increased ARPU
– Lower churn
• In the short term, this strategy will lead to higher total acquisition costs
resulting in:
– An EBITDA margin in the range of 33-35 percent depending on customer
intake in 2010
2010-10-2025 Third quarter 2010
RUSSIA OUTLOOK (CHANGED)
• Subscriber base should be able to reach 19-20 million by YE 2011
• Maintain ARPU growth at 5 percent by 2011
• EBITDA 2010-2011
– Old regions’ EBITDA margin should stabilize at 45 percent
– Most New regions’ EBITDA will break-even by 18 months (2 years) from
launch
– Russia’s total EBITDA margin should develop in the range of 34-37 (27-
32) percent
• Capex 2010-2011
– Accumulated Capex in Russia should be in the range of SEK 3,500-4,000
million
– Earlier SEK 4,500-5,000 million
– Selected acquisitions – when available and under right conditions
2010-10-2026 Third quarter 2010
KAZAKHSTAN OUTLOOK (UNCHANGED)
• Subscriber base should aim to reach 400,000-450,000 by YE 2010
• Blended ARPU should be in the range of SEK 40-45
• EBITDA should approximately be:
- SEK -250 million in 2010
- SEK -400 to -450 million in 2011
• Accumulated Capex should be in the range of SEK 1,400-1,600 million
by YE 2011
• Operations in Kazakhstan should be able to reach breakeven within 2
years from the commercial re-launch, which is planned in 1H 2011
2010-10-2027 Third quarter 2010
CROATIA OUTLOOK (NEW)
• Tele2 Croatia will reach free cash flow break-even by 2H 2011
2010-10-2028 Third quarter 2010
CONCLUDING REMARKS
Nordic
• Accelerated mobile revenue growth
Russia
• Record high customer intake and EBITDA
Central Europe and Eurasia
• Improving economy leading to stable cash flow contribution
Western Europe
• Solid operational performance
2010 an investment year
• Russia
• Kazakhstan
• Sweden
- 4G
- Spring Mobil
• Norway
- 3G
• Netherlands
- BBned
2010-10-2029 Third quarter 2010
Q&A
2010-10-2030 Third quarter 2010
Appendix A
2010-10-2031 Third quarter 2010
TELE2 SWEDEN MOBILE
0
20
40
60
80
100
120
2 800
2 900
3 000
3 100
3 200
3 300
3 400
3 500
3 600
3 700
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In th
ousands)
(In th
ousands)
Mobile subscribers Net intake
2010-10-2032 Third quarter 2010
TELE2 SWEDEN MOBILE (contd)
20%
24%
28%
32%
36%
40%
1 600
1 700
1 800
1 900
2 000
2 100
2 200
2 300
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile Net sales EBITDA marg. EBIT marg.
2010-10-2033 Third quarter 2010
TELE2 NORWAY MOBILE
-6
-4
-2
0
2
4
6
8
10
12
360
380
400
420
440
460
480
500
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In
th
ou
sa
nd
s)
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-10-2034 Third quarter 2010
TELE2 NORWAY MOBILE (contd)
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
450
500
550
600
650
700
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile net sales EBITDA marg.
2010-10-2035 Third quarter 2010
0
200
400
600
800
1 000
1 200
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In
th
ou
sa
nd
s)
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
TELE2 RUSSIA MOBILE
2010-10-2036 Third quarter 2010
TELE2 RUSSIA MOBILE (contd)
30%
31%
32%
33%
34%
35%
36%
37%
38%
0
400
800
1 200
1 600
2 000
2 400
2 800
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile net sales EBITDA marg.
2010-10-2037 Third quarter 2010
TELE2 BALTIC MOBILE
-100
-80
-60
-40
-20
0
20
40
60
80
0
400
800
1200
1600
2000
2400
2800
3200
3600
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-10-2038 Third quarter 2010
TELE2 BALTIC MOBILE (contd)
25%
30%
35%
40%
0
200
400
600
800
1000
1200
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Estonia Net sales Lithuania Net sales Latvia Net sales EBITDA marg.
2010-10-2039 Third quarter 2010
TELE2 CROATIA MOBILE
-40
-20
0
20
40
60
80
100
250
350
450
550
650
750
850
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In
th
ou
sa
nd
s)
(In
th
ou
sa
nd
s)
Mobile subscribers Net intake
2010-10-2040 Third quarter 2010
TELE2 CROATIA MOBILE (contd)
-20%
-15%
-10%
-5%
0%
5%
0
50
100
150
200
250
300
350
400
450
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illion
)
Mobile Net sales EBITDA marg.
2010-10-2041 Third quarter 2010
Appendix B
2010-10-2042 Third quarter 2010
NET DEBT AND DIVIDEND TARGETS
• Shareholder remuneration
– “Tele2’s intention is to pay a progressive ordinary dividend to its
shareholders over the medium term”
• 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”
2010-10-2043 Third quarter 2010
Appendix C
2010-10-2044 Third quarter 2010
FINANCIAL ITEMS Q3 2010
SEK million Q3 10 Q3 09 Change
External
Net interest expenses -89 -111 22
Exchange rate differences, external 56 138 -82
Other financial items
Exchange rate differences, intragroup
-40
-73
57
-10
17
182
-30
-90
-125
Financial items -16 199 -215
2010-10-2045 Third quarter 2010
400
800
1 200
1 600
2 000
2 400
2 800
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Cash flow after CAPEX Cash flow from operating activities
CASH FLOW DEVELOPMENT
2010-10-2046 Third quarter 2010
GROUP NET INTAKE PER SEGMENT
-300
-100
100
300
500
700
900
1 100
1 300
1 500
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In thousands)
Mobile Fixed broadband Fixed telephony
2010-10-2047 Third quarter 2010
GROUP CUSTOMER STOCK
0
5 000
10 000
15 000
20 000
25 000
30 000
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In thousa
nds)
Group Mobile Customer Stock
Mobile Internet Postpaid voice Prepaid voice
0
5 000
10 000
15 000
20 000
25 000
30 000
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(In thousands)
Group Customer Stock
Mobile Fixed Broadband Fixed Telephony
• Strong intake in the mobile segment
– Driven by Russia adding 1,170,000 new customers
2010-10-2048 Third quarter 2010
GROUP FIXED BROADBAND EBITDA
0%
5%
10%
15%
20%
25%
0
100
200
300
400
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Fixed broadband Fixed broadband EBITDA margin
2010-10-2049 Third quarter 2010
GROUP FIXED TELEPHONY EBITDA
25%
26%
27%
28%
29%
30%
31%
32%
33%
300
400
500
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Fixed telephony Fixed telephony EBITDA margin
2010-10-2050 Third quarter 2010
GROUP EBIT
0%
5%
10%
15%
20%
25%
-500
0
500
1 000
1 500
2 000
2 500
Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile Fixed broadband Fixed telephony Other Group EBIT margin
2010-10-2051 Third quarter 2010
GROUP CAPEX
0%
2%
4%
6%
8%
10%
12%
14%
0
200
400
600
800
1000
1200
1400
Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 Q2 10 Q3 10
(SE
K m
illio
n)
Mobile Fixed broadband Fixed telephony
Other Capex/sales
In 2010: Tele2 forecasts a CAPEX level in the range of SEK 4,600 – 4,800 million
2010-10-2052 Third quarter 2010