TELE2 CAPITAL MARKETS DAY
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Tele2 Capital Markets Day
Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Today’s Presenters
Kjell Johnsen Samuel Skott
President and CEO, Tele2 Group EVP, Chief Commercial Officer
Karin Svensson Yogesh Malik
EVP, People and Change EVP, CTIO
Mikael Larsson Stefan Trampus
Group CFO EVP, Tele2 B2B
SMARTEST TELCO IN THE WORLD Enabling a society of unlimited possibilities
Our medium
term ambition LEADING TELCO
In the Nordic & Baltic region
3-year horizon
Superior Best industry High employee Lead in
customer experience shareholder return engagement sustainability
Our growth strategy Reignite growth Recognized leader Continued growth
in Sweden Consumer in Sweden B2B & IoT in the Baltics
• Distinctly positioned leading brands • To be the trusted digitalization & • Lead in customer satisfaction and brand
communication partner reputation
• Win the household through FMC and
excellent customer experience • Multi-segment approach with value • Develop next-generation household offerings
• Accelerate digitalization of customer journeys creation focus
• Strengthen our position in B2B
• Lead through FMC, future proof
business models & technologies
Our strategic enablers Unique people and culture Reliable connectivity Next generation operations
• Walk the talk leadership that aligns • Network modernization through 5G and • Execute on the Business Transformation Program
and engages 10G • Ensure end-to-end process harmonization
• Evolve Tele2:s culture to maintain • Distinct partner to commercial business units • Execution powered by data driven insight
competitive advantage • Customer focused network operations • Continuous optimization to achieve efficiency
• Attract and retain performance driven • Architecture enabling Leading Digital Telco
people with future proof
competencies
• Diverse and inclusive workplace to be
proud of
Our Culture The Tele2 Way
A Model for Superior Shareholder Remuneration
Low single digit growth in EUSR
Mid single digit growth in underlying EBITDAaL
Capex excl spectrum and leases of SEK 2.8-3.3bn
Strong Operating Cash Flow
Even stronger Equity Free Cash Flow
Superior Shareholder Remuneration
Leading Brands Capturing Value From Full Market
Dual Brand Strategy to Drive Both Price and Volume Covering the Whole Consumer Market
Willingness to pay premium
Techies
Explorers
Collecting for convenience
Sceptics
Collectors
Do-gooders
Status
seekers
FOMOs
Price
hunters
Clear Focus on Each Segment in Sweden B2B
SME Large Public
Ambition Ambition Ambition
Take back market share by offering Improve Large private segment Maintain and defend our Public Segment
simplified packages and bundling's based profitability by increasing higher margin asset by carefully choosing our new bets
on customer needs sale, grow through as-a-service & Mobile and continue delivering reliable solutions
bundling’s for a sustainable society
Key drivers Key drivers Key drivers
• Turn around trend in Fixed • EBITDA turnaround • Stabilizing Mobile ASPU
• Simplified Mobile portfolio • Bundling opportunities • Grow engagement
• FMC & Mobile bundling • IoT enablement • Professional services/advisory
EUSR
Trend
Margin
Profile
High Medium Medium-Low
High Exposure to One of the Most Attractive Telco Markets in Europe
Market structure – Three player markets Keeping or growing market share
Tele2 mobile service revenue market share
EE 45%
LV 40%
LT 35%
30%
Rational FMC 25%
– Only more-for-more FMC playbook
20%
– Tele2’s mobile-centric bundle of mobile telephony & mobile
broadband is a competitive alternative to fixed broadband in
all markets
– Mobile broadband has grown faster than fixed internet in the Estonia Latvia Lithuania
past 3-5 years
Source: Analysys Mason Mobile Service revenue market share
Strong Track Record of Growth, Set to Continue
EUSR Development Organic Mobile ASPU Growth
15%
1,800 EUSR (MSEK) 10%
5%
1,600 Lithuania
0%
Latvia
-5%
1,400 Estonia
-10%
1,200 -15%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020 2020
1,000 Lithuania
Latvia
800 Estonia
Mobile RGUs (of Which Postpaid)
600 2,000 100%
90%
400 1,500
80% Lithuania
1,000
200 Latvia
70%
500 Estonia
60%
0
2014 2015 2016 2017 2018 2019 2020 0 50%
1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 3Q20 4Q20Key Strategic Initiatives
Consolidate brands in Sweden Continue growth in the Baltics and
Tele2 to be the leading premium brand prepare for FMC
Continue the Comviq success story Consolidate and decommission IT
Balanced growth through volume and value systems over next 6 quarters
Invest for growth in broadband Deliver at least SEK 1bn savings
Turn around Sweden B2B
Trend shift 2021 and stabilize 2022Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Three key drivers of B2C growth
Next phase of convergence with two leading brands covering the full market
Value led connectivity strategy supported by continued volume growth
Stable TV & Play development through continued modernizationNEXT PHASE OF CONVERGENCE
FMC 1.0: All About Building Loyalty in Overlapping Base
… to maintain value & product
Successful FMC uptake in Building further loyalty in
hold of existing Fixed & Mobile
overlapping base base
customers
FMC uptake at 80% of the Positive churn reduction effects The FMC base >x2 the product hold
overlapping customer base on core connectivity categories and ASPU vs non-FMC
in FMC 1.0 More-for-more program key lock-in tool for FMC base, not discount driven
FMC Annual churn rate per product Average product hold
(‘000 & % of B2C base) (Non-FMC vs FMC) (Non-FMC vs FMC)
Penetration 15 Mobile Fixed Broadband
285
-27%
219 11% -15%
9% 2,7
1,3
1%
26
0
2018 2019 Q1 2021 Non-FMC FMC Non-FMC FMC Non-FMC FMC
Note: “B2C Base” refers to the total number of individual customers who subscribe to at least one service from the Tele2 GroupNext Phase of FMC: A Truly Convergent Customer Experience
A truly convergent customer experience Tapping into a much larger cross- & upsell
covering the full household needs opportunity
Sizing the potential for FMC growth in the consumer business
Across brands; Thousand, Households (HHs)
Unified Customer
Experience Driven
By Digital 1st
.
Approach
1,400
Superior
Multi-Product
Connectivity
.
.
Personalized Value 2,985
And Quality of
Proposition
Service
1,300
Personalized connectivity
5G Accelerate development of
and digital services offers
Remote Phy digital journeys 285
based on data driven
Next generation BB & TV Transition to one IT stack
customer insights FMC HH relation No HH relation Total HH with
FMC cross- & up-sell FMC prospect FMC potentialOne Converged Premium Brand to Unlock FMC Potential
The new Tele2 Key milestone in journey of Unlimited possibilities
– Two of Sweden’s strongest brands combined, creating one Unlimited Internal Transformation Customer Experience
premium brand
– Enhanced and simplified customer experience with superior customer
interactions through one webpage, one customer service and one retail chain – Mobile, broadband and
– Merged brands, entertainment converged and
– One fully converged brand undergoing digital transformation
Channels and Customer April rebranded across touchpoints
Operations – One environment and invoice
for new and Mobile customers
– Accelerate cross- and upselling
– All customers migrated to – Fully consistent FMC customer
FMC IT stack Next experience and one invoice for
– Finalize building an IT Steps all
architecture enhancing the – New and improved purchase
digital customer experience flows for all products
– Brand portfolio optimization and
enhanced FMC experience for
– Migration of Boxer into Goal DTT customers
Tele2 – Real cross-sell flows with
personal offers, purchase flows
and MFM benefitsVALUE LED CONNECTIVITY
STRATEGYValue Creation Through More-For-More Pricing
Increasing demands Pricing cycle Increased ASPU
Customers request higher broadband Improvements and upgrades to justify higher prices Consequently, more customers are having
speeds and mobile data allowances better services paying higher prices
Tele2 Mobile postpaid net
intake & usage
2018 2019 2020 2021
2022 & Tele2 ASPU YoY development
onwards
22%
18 GB
Broadband and mobile core product ASPU for
15 GB DOCSIS 3.1 Surfgaranti Remote Phy & speed leadership individual customers
Broadband
12 GB
Speed upgrades Best-in-class smart wifi 5%
19% Series1
Broadband Series2
Mobile Postpaid
24% 42%
3.5%
2018 2019 2020 FMC offers Comhem Play+ FMC 2.0
>20 GB Average data usage
0-5 GB Family offering 5G & updated pricing models 2.0%
Mobile
Data allowance upgrades 1.2%
0%
Tele2 Broadband net intake 1.2%
33% 34% 48%
Front book pricing Back book pricing 2018 2019 2020
2018 2019 2020
200-1200 Mbit/s ≤150 Mbit/s
Source: Post- och Telestyrelsen, Note: ASPU excl. roaming, fees, add-ons as well as periodization of discounts across binding period. Broadband ASPU
excludes group agreement customersSupported By Continued Volume Growth
Cross-sell opportunity in Continue momentum in Continue momentum in
next phase of FMC Comviq postpaid growth Broadband growth
– Drive volume through accelerated cross- and upsell in – Maintain strong volume growth balanced with more- – Maintain growth after Com Hem is rebranded Tele2,
second phase of FMC for-more pricing with CX improvements, superior Wi-Fi and Remote
– Driven by Comviq’s strong market position and pre- Phy roll out
to-postpaid movements – Use Comviq Broadband to compete with value
players, utilizing strong brand and attractive offerings
Sizing the potential for FMC growth in the consumer business Comviq postpaid Broadband
Thousand, HHs RGUs; SEK RGUs; SEK
ASPU Customer base ASPU Customer base
1 400
+16,0%
+45,8%
2 985
1 300
285
FMC HH relation No HH relation Total HH with 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21
FMC cross- & FMC prospect FMC potential
up-sellMODERNIZING TV & PLAY
Strong and Stable Position in the TV Market
Market growth Is coming We have a strong position Sustain profitability despite
from SVOD, but Pay-TV is and capabilities EUSR decline
here to stay
– Stable household penetration of digital Pay-TV (DTV) – Large TV customer base for cross- and upselling – Variable cost model with limited downside to profit
– SVOD penetration driven by stacking – Stable customer base in core TV segment and cash flow
– Slow decline in DTT not accelerating – Large part of revenue decline coming from low-
margin Premium
Household penetration, DTV vs. SVOD DTV customer base DTV gross margins
Swedish households (market data) (Sweden B2C, Thousands) Sweden B2C
Digital Pay-TV SVOD Cable & Fiber DTT Total DTV Cable & Fiber DTT
60% 60% 1,086 1,066 1,048
58% 58% 1,032 1,007 992 965 CAGRs
54%
51% 432 411 387 368 345 328 308 -2.7%
40%
653 655 661 664 662 664 657 +0.1%
2017 2018 2019 2020 1Q18 3Q18 1Q19 3Q19 1Q20 3Q20 1Q21 2018 2019 2020
Source: Mediavision, Post- och Telestyrelsen. Note: HH penetration data refers to Q3 2017-2019 and Q4 2020. Gross margin excludes temporarily lower content cost during 2019.2020 Was an Eventful Year With Start of 2021 Showing Signs of
Stabilization
2020 was an eventful year But we also laid the
foundation for modernizing Stabilization is in sight
out TV business
– DTV ASPU year-on-year development trending towards
TV4 conflict late 2019
pre-COVID levels
Digitalization of TV
Launch of Q1 Covid-19
Comhem Play+ outbreak
and introduction of
new basic tier ASPU year-on-year growth
Sweden B2C
Premium sports Total DTV Cable & Fiber DTT
DTT license Q2 shut down
changes 3,4%
Secured OTT rights
needed to build the
New digital basic future of TV -1,7%
tier replaced Q3 -2,4%
-2,5% -2,6%
analogue TV
-4,0%
-4,4%
-5,4% -5,1%
-4,2%
Comhem Play+ -5,6%
New multiyear deal -7,7% -7,7%
Q4
signed with TV4
-10,2% -8,7%
1Q20 2Q20 3Q20 4Q20 1Q21Further Stabilization Achieved Through Continued
Modernization Based on Aggregation Business Model
Evolution of TV & Play Future TV & Play Experience
Next Gen TV Hub and App centric proposition combined in renewed viewing experience
TiVo
Cater to linear viewing habits
Next Gen
STB
TV Hub
Modernize STB based offer and – Renew viewing experience with more intuitive and personalized UI/UX and added functionalities
introduce streaming (Cloud PVR, top-level domain) both catering for Linear 1st and VOD centric users
– Continue development of TV & Play portfolio leveraging Comhem Play+ product in combination
with Linear streaming
– Introduce next generation of low-cost TV Hub catering for active migration from legacy set-top
Comhem Play+ box (STB) to improve customer experience and reduce churn
App centric streaming offer
– Evolve content partnership models to new alternatives incl. software development kit (SDK) deep
added on top
linkingThree Key Drivers of B2C Growth
Taking the next step in FMC journey by accelerating cross- and upsell, now with
our fully converged premium brand Tele2 and our simple, digital brand Comviq
Investing to meet increasing market demand for connectivity and continue to
generate value through our more-for-more strategy, supported by sustainable
volume growth
Stabilizing and modernizing our TV business by managing the installed base and
building a future proof TV & Play product portfolioAgenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Introducing a Deep Dive Into Tele2 B2B
Updated B2B Financial
Change
Strategy AmbitionStrategic Direction
Recognized leader in Sweden B2B & IoT
Utilization of Digitalization & Segmented Operational
Tele2 assets communication customer focus excellence
partner
Objective to achieve
long-term profitable growthStrong Capabilities and Assets
We have been able to retain strong capabilities and assets even if we have had challenges in recent years
Market position
Mobile #2 in Sweden
Portfolio
Fixed #2 in Sweden
H&A #1 in Sweden
IoT Top 10 Europe
Infrastructure
CompetenceDigitalization and Communication Partner
MARKET NEW NEW BEHAVIOR & POLITICAL
TRENDS TECHNOLOGY EXPECTATIONS AMBITIONS
Collaboration Productivity Workplace Agility Insights Sustainability Employee
Health
CUSTOMER
NEEDS
OUR To be the trusted digitalization &
AMBITION
communication partner
OUR We want to deliver reliable premium services and
ENABLER
be our customers’ friendly expertTele2’s Role in a Digitalized Society
Digitalization in the market accelerates the need of adoption among our
customers, where Tele2 takes clear steps to meet those needs
Workplace agility & Digitalization & efficiency
collaboration improvement in public
New technology
Sustainability, Productivity &
security & simplicity automationSegmented Customer Focus
SME Large Public
Ambition Ambition Ambition
Take back market share by offering Improve Large private segment profitability Maintain and defend our Public Segment
simplified packages and bundling's based on by increasing higher margin sale, grow asset by carefully choosing our new bets and
customer needs through as-a-service & Mobile bundling’s continue delivering reliable solutions for a
sustainable society
Key drivers Key drivers Key drivers
• Turn around trend in Fixed • EBITDA turnaround • Stabilizing Mobile ASPU
• Simplified Mobile portfolio • Bundling opportunities • Grow engagement
• FMC & Mobile bundling • IoT enablement • Professional services/advisory
EUSR
Trend
Margin
High Medium Medium-Low
ProfileSmall- and Medium Enterprise
Take back market share in SME by offering simplified packages and bundlings
based on customer needs
6% ~1/3**
Turn around trend in
Fixed
25 %
Key drivers & customer needs
Easy to use
Fixed Device
Simplified mobile
Flexible WoW Security portfolio
Positive RGU trend in Q1
Mobile Customer Experience
Anytime/anywhere Network
UC&C
FMC opportunities
69 %
Fixed
Quality Mobile
Solutions
Margin profile: High EUSR Trend *current share of EUSR
**EUSR split based on Tele2’s 2020 reported numbersLarge Private Enterprise
Improve Large private segment profitability by increasing higher margin sale,
grow through 5G Enterprise Networks & Mobile bundlings
~1/3**
EBITDA turnaround
Effortless usage
Key drivers & customer needs
27 %
41 %
Customization 5G enterprise networks
opportunities
Combination
of services
IoT enablement
32 %
Fixed
Seamless
experience Mobile
Solutions
Margin profile: Medium EUSREUSR
TrendTrend *current share of EUSR
**EUSR split based on Tele2’s 2020 reported numbersPublic Enterprise
Maintain and defend our Public Segment asset by carefully choosing our new
bets and continue delivering reliable solutions for a sustainable society
~1/3**
15 %
Stabilizing Mobile ASPU
Key drivers & customer needs
Reliable com.
solutions
Integration to
customer processes Grow engagement
27 %
58 %
Security
demand & reg.
Professional services
opportunities
Flexible Fixed
deployment Mobile
Solutions
Margin profile: Medium-Low EUSR Trend
EUSR Trend *current share of EUSR
**EUSR split based on Tele2’s 2020 reported numbersOperational Excellence
PORTFOLIO QUALITY OF SIMPLIFICATION & DATA & ANALYTICS
OPTIMIZATION SERVICE & FUTURE PROOF IT
AUTOMATION SYSTEMS
5% YoY increase of NBO model for
UC profitability Portfolio Average Top 2 in NPS/CSAT 100% of customers All data sources in
order handled entire B2B customer
improvements: simplification cost/delivery performance in the in target BSS 2021 BI target platform
online vs customer base released in H2
+4% Q1 program -15% market Q4 2023
service 2022
High employee
Employee diversity
+3% p.p. by Q4 2022 COMPETENCE engagement:
82/100 Q4 2022A Turnaround Towards Growth
The EBITDA impact trend is gradually improving, and we can see a
turnaround towards growth for Tele2 Sweden B2B
EUSR development
Key factors illustrative
– Fixed legacy decline phased out by 2023
– More selective approach in Large Private & Public
– Covid return to new normal
– FMC & bundling will drive volume and ASPU
– Start monetizing 5G and enterprise networks
EUSR Legacy Selective Covid FMC & 5G & ICT EUSR
– Continue IoT growth journey
today approach unwind bundling IoT Ecosystem future
LE/Public
– ICT partner ecosystem
Improved efficiency will be achieved by portfolio optimization, automation and increased use of data & analyticsPositive Signs in Several Strategic Focus Areas
We are already seeing positive signs in several strategic focus
areas supporting our ambition to turnaround to EUSR growth
-27%
Q1 2021 YoY in reduced churn on
Mobile Post Paid RGUs in the
small segment Significant profit improvements +25% YoY in IoT EUSR in Q1 2021
on large accounts
39% 81%
Large & Public customer base Customer satisfaction improvement Successful 5G pilots create a lot of buzz
in target IT stack by Q4 2021 Datanet accessKey Takeaways
Updated B2B Financial ambition Signs of change
strategy in place
• Important role to play in • Return to revenue growth • Positive signs that support both
digitalization profitability improvement and
EUSR turnaround
• Clear focus areas and strategic • Improving EBITDA trend
ambitionAgenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
OUR STRATEGIC ENABLING CONTEXT INITIATIVES FACTORS
OUR CONTEXT
DCT – Our New IT and Network Organization
Fixed infrastructure – 3,5M households reach and
1,7 households connected with our HFC
DIGITAL CAPABILITIES
Significant spectrum advantage
& TECHNOLOGY
Strong customer base
Advanced services e.g. TV & IoT
End-to-End mindset
Strong network sharing agreements
Legacy systems and
opportunity for streamliningEnd-to-End
Embracing End-to-End through a unified
customer, IT & network perspective
Always asking ourselves
what it means for the customer
maintains a strict customer focus
Billions of touchpoints, transactions and
network metrics provide us with a
complete 360° customer view Customer impact Customer behavior Customer needsGB A reliable home essential utility
Continuously Improving our Operating Model
Network sharing makes us Automation to optimize Simplifying our assets
cost-efficient processes
Our operating model and sustainability focus make Tele2 the most energy efficient operator in Sweden
Source: Company reported figures, Internal analysisSTRATEGIC INITIATIVES
STRATEGIC PILLARS Superior reliability Enabling new Leading by quality and revenues digital telco simplification
Our IT Journey After the Merger
> 6 different IT stacks Simplified target systems with modern
architecture
Online Online
Online Shops
Shops
Shops Customer care
Customer care
Customer care
Solutions sales Mass-market
Case M
Case M
Billing
CRM
Billing
CRM
Case M
Billing
CRM
Migrations &
decommissioning
Online Online
Online Shops
Shops
Shops Customer care
Customer care
Customer care
Case M
Billing
Case M
CRM
Billing
CRM
Case M
Billing
CRM
Today status decommissioning:
1 1 2
Stack completed Stack ongoing Planned
(2020) (2021) (2022)Building Architecture to Enable Digital Customer Experience
Inhouse capabilities to become a true digital telco… …with interactions according to customer preference
Fit for purpose Strong open-source
IT-stacks capabilities
Solutions sales Mass-market
Encapsulating
complexity into simple Transparency in
services information sharing Network, Services & IT systems10G Fixed Access Network Modernization with Remote-Phy
Physical cabel modem Virtualized cable modem termination
termination system system core
Analog optics Coaxial devices Ethernet Metro IP over Ethernet Uplink
x10 25% 70%
Increased Downstream Capacity Fewer Less Power
capacity &
Increase
Customer Incidents
Reduced Consumption
high speed x25 satisfaction 15% Opex baseline 30%
Upstream Capacity Fewer Support Less
Increase Contacts to CS Maintenance
Source: internal numbers from Remote PHY pilots in Motala & Sundsvall10G Fixed Access Network Roll-out
Highly data-driven CX Centric
22k 1.7M
Landlords Households
Automated
P&L OptimizedFull Network Modernization
RAN modernization Mobile Core and IP network First in Sweden
and 5G rollout modernization with real 5G
-20%
-31%
-48%
-60%
2021 2022 2023 2024
Aiming for lowest Simplicity and quality uplift New business
production costs per GB opportunities
Decreased Mobile Access Standardized design and state of e.g., Enterprise networks & MEC,
production cost per data unit vs 2020 the art solutions eMBB & FWASUNAB Closedown in Progress with Customer Experience in Mind
90%
>15% VoLTE share
Closedown plan
of total voice
minutes
70%
of sites 25%
Today
Goal End 2021
Closedown of SUNAB Past 3 years
3G Network Closedown Goal 2021 Accelerating VoLTE
Total sites in Tele2’s Networks Streamlining to one single network
2G 3G 4G 5G
700 800 900 1,8 2,1 2,6 3,5
MHz MHz MHz GHz GHz GHz GHz
Band 2*10 2*10 2*20 2*30 2*20 2*40 100
size
(MHz)
Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24 Jan-25A Significantly Better Network and Customer Experience
Delivering next level …and a mobile network with >100% …performed with lower
reliability and quality… increased capacity… total JV Opex
2G 3G 4G 5G
N4M
-3%
-8% -12%
-18%
SUNAB
GB
2020 2021 2022 2023 2024Proactive Capex management to serve increased demands
Meet the customer demands of tomorrow on premium user experience throughout the entire customer journey End-to-End
Unlock new business opportunities
Steady historical growth of Fixed Data Steady historical growth of Mobile Data
The share of 3G data is declining
(total data consumption in fixed network) (total data consumption in mobile network)
12.0%
2y CAGR 25% 10.0%
4y CAGR 28%
8.0%
6.0%
4.0%
2.0%
0.0%
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q17
3Q17
4Q17
1Q18
2Q18
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21ENABLING FACTORS
Grass Root Analytics Customer & Business Data E2E CX Insight Network & Operations Data KPIs & Processes Culture & Skills Architecture Technology
Enabling Our Success by the Way We Work
Aligned
Effectively
Before at site utilizing Big
autonomy and
Effective tools
fit for purpose
Room Planning for remote
ways of
with over 1000 collaboration
Now remote participants
working with
full agilityKey Takeaways
3 1
Making Easy & Simple 2 1
RAN Networks Bran
dX
6 2
SWEDEN
4G 5G
3G
Full Modernization 2G
Enable Grass Root AnalyticsAgenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Strong Growth in OCF
Reducing steady state capex
• Entire Swedish RAN consolidated into Net4Mobility Top-line growth, cost cutting, and
• More efficient fixed network with Remote Phy a capex efficient model leads to
strong operating cash flow growth
• Fewer IT systems
• Fewer CPEs and more digital sales
As a result, capex will return to low levels post 5G rollout.
Capex excluding spectrum and leases
During 5G rollout SEK 2.8-3.3bn
Post 5G rollout Lower than pre 5G rolloutHigh Cash Conversion
This means that we only need low single digit service
revenue growth to achieve strong cash flow growth
Tele2 Group cash conversion*
80%
70%
60%
50%
40%
30%
20%
10%
0%
2015 2016 2017 2018 2019 2020
Cash conversion = operating cash flow / underlying EBITDAaLSustainable Distribution of Over 100% of Equity Free Cash Flow
Growing underlying EBITDAaL and equity free cash flow leads to higher
shareholder remuneration in accordance with our distribution policy
– No significant spectrum ahead
Room for additional
– Predictable taxes and working capital
Even stronger EFCF – Debt financing at attractive levels
shareholder remuneration
through re-levering as
– No need for significant M&A 100% of EFCF underlying EBITDAaL grows
Room for additional 20%
of EFCF as dividend
At least 80% of EFCF in
ordinary dividend in
accordance with our policy
– Strong cash generation along
Superior Shareholder with attractive leverage range
Remuneration leads to superior shareholder
remuneration
Equity Free Cash Flow Shareholder RemunerationAdditional Shareholder Remuneration
On top of EFCF growth and the re-levering effect we have additional
opportunities to crystalize value for shareholders
The Netherlands
Previous state Current state
25% ownership in number
Number 4 player
1 player in mobile
Mobile only FMC capabilities through
fixed infrastructure
Negative OFCF Positive OFCFAiming For a Consistently Growing Ordinary Dividend
Ordinary dividend, SEK bn (in the year it was paid)
4.1
3.8
3.2
3.0
2.9
2.7 2.6
2.4
2.2
2.0 2.0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024Superior Shareholder Remuneration
EFCF growth through EUSR growth, cost efficiencies
and low capex
Re-levering growing underlying EBITDAaL at 2.5-3.0x
and distributing the cash
Additional monetization of non-core assets.Agenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Lead in Sustainability - Update
First telco in Nordics and Baltics to be
climate neutral in our own operations.
Approved science-based target
Positive trend for ESG-rating results for
several years in a row
Implementing the recommendations of
the Task-force on Climate Related
Financial Disclosures
For more information, please see the
recorded presentation which is
available on Tele2.comLead in sustainability – Our Four Focus Areas
Advance circular economy to Boost innovation for
combat climate change sustainability
By 2025 Tele2 will develop winning offerings for By 2025 Tele2 will use connectivity combined
relevant customer segments in B2B and B2C, with innovative technology to create product
based on a circular business model and reduced and service offerings in partnerships that meet
climate impact. a growing demand from B2B and B2C
customers, increase internal efficiencies, and
create sustainability value.
Maximize potential through an Protect children in a
inclusive and diverse workplace connected society
By 2023 Tele2 will implement technical solutions
By 2023, Tele2 will build an inclusive environment and drive behavioral change to protect children
where diverse talent can perform at their best and at online and win customers.
the same time a gender balanced workforce.Employee Engagement
Keeping employee engagement high and evolving Tele2:s
culture to maintain a competitive advantage
Diverse & Inclusive workplace:
Ambition is to be gender balanced in the end of 2023
How happy are you
working for Tele2
EMPLOYEES
69% 68% 67% 60%
31% 32% 33% 40%
2018 2019 2020 2023
MANAGERS
Tele2 has a great
73% 71% 69% culture
60%
27% 29% 31% 40%
2018 2019 2020 2023
GROUP LEADERSHIP TEAM
92% 82% 75% 75%
60%
40% People at Tele2 live
12% 25% 25%
8%
the company values
2018 2019 2020 2021 2023
Male FemaleAgenda 1. Intro and Overview 2. Sweden Consumer 3. Sweden Business 4. Technology 5. Capex, Cash Flow and Remuneration 6. Sustainability and Organization 7. Summary
Key Strategic Initiatives
Consolidate brands in Sweden Continue growth in the Baltics and
Tele2 to be the leading premium brand prepare for FMC
Continue the Comviq success story Consolidate and decommission IT
Balanced growth through volume and value systems over next 6 quarters
Invest for growth in broadband Deliver at least SEK 1bn savings
Turn around Sweden B2B
Trend shift 2021 and stabilize 2022Our medium
term ambition LEADING TELCO
In the Nordic & Baltic region
3-year horizon
Superior Best industry High employee Lead in
customer experience shareholder return engagement sustainability
Our growth strategy Reignite growth Recognized leader Continued growth
in Sweden Consumer in Sweden B2B & IoT in the Baltics
• Distinctly positioned leading brands • To be the trusted digitalization & • Lead in customer satisfaction and brand
communication partner reputation
• Win the household through FMC and
excellent customer experience • Multi-segment approach with value • Develop next-generation household offerings
• Accelerate digitalization of customer journeys creation focus
• Strengthen our position in B2B
• Lead through FMC, future proof
business models & technologies
Our strategic enablers Unique people and culture Reliable connectivity Next generation operations
• Walk the talk leadership that aligns • Network modernization through 5G and • Execute on the Business Transformation Program
and engages 10G • Ensure end-to-end process harmonization
• Evolve Tele2:s culture to maintain • Distinct partner to commercial business units • Execution powered by data driven insight
competitive advantage • Customer focused network operations • Continuous optimization to achieve efficiency
• Attract and retain performance driven • Architecture enabling Leading Digital Telco
people with future proof
competencies
• Diverse and inclusive workplace to be
proud of
Our Culture The Tele2 WayDisclaimer This presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (’relevant persons’). Any person who is not a relevant person should not act or rely on this presentation or any of its contents. Information in the following presentation relating to the price at which relevant investments have been bought or sold in the past or the yield on such investments cannot be relied upon as a guide to the future performance of such investments. This presentation does not constitute an offering of securities or otherwise constitute an invitation or inducement to any person to underwrite, subscribe for or otherwise acquire securities in any company within the Tele2 Group. The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law, and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about, and observe, such restrictions. This presentation contains statements regarding the future in connection with the Tele2 Group’s growth initiatives, profit figures, outlook, strategies and objectives. In particular, the slide “A Model for Superior Shareholder Remuneration” contains forward-looking statements regarding the Tele2 Group’s expectations. All statements regarding the future are subject to inherent risks and uncertainties, and many factors can lead to actual profits and developments deviating substantially from what has been expressed or implied in such statements. Ambitions are given on the IFRS 16 accounting standard.
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