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Presentation Market Area Noric from Tele2s Capital Markets Day 2009
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NORDIC
MARKET AREA NORDIC
Thomas Ekman
Head of Sales & Marketing Residential, Sweden
INTRODUCTIONMarket Area Nordic
� Represents 36 percent of total revenue Q2 2009
� Strong cash flow generation – EBITDA SEK 764 million and CapexSEK 110 million in Q2 2009
Short- to medium-term focus & activities:
� Sweden Back to growth
� Norway Build-out own infrastructure
SWEDENBack to growth
TWO BRANDS
OPERATIONAL PERFORMANCE
REVENUE
0
1 500
3 000
4 500
2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2
SEK million
EBITDA
0
500
1 000
2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2
SEK million
� Mobile� Solid development despite negative
effects due to MTR cuts
� Broadband� Realignment to new infrastructure
� Fixed� Capitalize on customer stock
EBITDA - CAPEX*
0
300
600
900
2008Q1 2008Q2 2008Q3 2008Q4 2009Q1 2009Q2
SEK million
*Purged from LTE licence investments (Q208)
Mobile69%
Fixed &
Broadband
31%
MOBILE SERVICES
� Net sales Q209: 1 969 MSEK
� EBITDA Q209: 620 MSEK
� EBITDA margin Q209: 31 percent
� Operating Cash-Flow Q209: 570 MSEK
0
500
1 000
1 500
2 000
2 500
Q1 Q2 Q3 Q4 Q1 Q2
2008 2008 2008 2008 2009 2009
0%
5%
10%
15%
20%
25%
30%
35%
40%Net sales EBITDA EBITDA margin
SEK million
TOTAL REVENUE
PREPAID
PREPAID� Prepaid shows stable revenue, strong EBITDA and increasing market share
� In 2006, prepaid accounted for >50 percent of Tele2 Sweden’s mobile revenue
Today it accounts for approx. 30 percent and half of the EBITDA contribution
� Focus
� Maintain strong margins
� Keep the big cities and grow in top 20 cities
� Further strengthen price position
Telia
44,6%
Telenor
8,0%
Other
2,6%
Comviq
(Tele2)
44,8%
Source: PTS H2 2008
Source: PTS
0
100
200
300
400
500
600
700
800
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
0%
10%
20%
30%
40%
50%
60%
Revenue EBITDA EBITDA %SEK million
POSTPAID
POSTPAID RESIDENTIAL� Postpaid share of voice revenue and EBITDA are increasing. Postpaid has a
lower margin than prepaid, and thereby affects the overall mobile margin
� High-end terminals attract high ARPU customers
3
10,9%
Tele2
21,7%Telia
40,9%
Other
4,2%
Telenor
22,4%
Source: PTS H2 2008
219206
267
302
339
0
50
100
150
200
250
300
350
0 SEK 50 SEK 100 SEK 150 SEK 200 SEK
ARPU per customer with terminal
installment plan
SEK/month
0
100
200
300
400
500
600
700
800
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
Q42008
Q12009
Q22009
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%Revenue EBITDA EBITDA margin
POSTPAID RESIDENTIAL� Focus:
� Secure long-term revenue growth and increased cash flow contribution
� Strengthen price position: provide the Best Deal
SEK million
POSTPAID BUSINESS� Fastest growing carrier on Swedish Business market for two
consecutive years
� Decreasing MoU due to economic downturn affecting corporate customers
� Focus :
� Concentrate sales activities on high ARPU segments, such as the virtual switchboard market
� Continue to improve our quality perception
3
2,6%Tele2
18,8%
Telenor
21,0%
Telia
52,8%
Other
4,8%
Source: PTS H2 2008
SEK million
0
50
100
150
200
250
300
350
400
450
Q1
2007
Q2
2007
Q3
2007
Q4
2007
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Revenue EBITDA EBITDA margin
MOBILE INTERNET
Mobile Internet Prepaid Mobile Internet Postpaid
”Snabbaste Turbo-3G nätet”
Aftonbladet, 8/7-2009Expressen, 8/7-2009
”Test av bästa mobila bredbandet”
MOBILE INTERNET� 48 000 new customers H109 adding up to a 218 000 customer base
� Mobile Internet GM1 is approx. 50. Grow customer base to gain positive EBITDA
� ARPU has increased by approx. 12 percent Q209 vs Q208, despite fierce competition
� Launch of Mobile Internet prepaid in May 09. Intake has been strong and we are the
market leader
� Focus
� Grow Mobile Internet prepaid and postpaid
� Increase Mobile Internet profitability
3
21,2%
Telenor
16,8%
Telia
38,9%
Tele2
19,7%
Other
3,5%
Source: PTS H2 2008
-100
-80
-60
-40
-20
0
20
40
60
80
100
Q1
2008
Q2
2008
Q3
2008
Q4
2008
Q1
2009
Q2
2009
-250%
-200%
-150%
-100%
-50%
0%
50%
100%
150%
200%
250%
Revenue EBITDA EBITDA-margin
PRICE POSITION
� Further strengthen our price position by keeping
using Frank
� The customer price perception is today heavily
connected to both tariffs and the deal on the
mobile phone
� We will provide the best deal!
� Comviq is sold in more than 19 000 outlets throughout Sweden
� We will further develop strong prepaid distribution with Mobile Internet prepaid (ICA, Claes Olsson mm)
� We will keep developing our multi-channel sales strategy in order to spread the risks
DISTRIBUTION STRATEGY
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
Q&A
SUMMARY
� Clear price position, deliver expected quality and strong brand – providing the best deal
� Distribution, multi-channel sales strategy to increase sales and ARPU levels
� Comviq holds the number one position in the prepaid market
� Tele2 Sweden will continue to invest in high-value postpaid customers to secure a long-term high cash flow