Tele2 - Third quarter 2011

THIRD QUARTER 2011

Tele2 AB19 October 2011

2

Agenda

• About Q3 2011

• Financial Review

• Concluding remarks

3

Tele2 Group Q3 highlights

Q3 Financials

• In the third quarter, group net sales (curr. adj.) grew by 6 percent

• All time high EBITDA (curr. adj.) amounted to SEK 2 893 mn, corresponding to an increase of 8 percent

• EBITDA margin (curr. adj.) amounted to 28 percent

Q3 Operational

• Tele2’s customer base amounted to 33.5 million customers

• Russian subscriber base reached 20.4 million customers and subscriber base in Kazakhstan surpassed 1 million customers

• Tele2 acquired Network Norway

4

FocusContinue strong growth in customer intake, maximizing the 2G opportunityEnsure that newcomer and challenger regions reach the same operational trends as defender regionsEvaluate possibilities to expand carefully its operations through new licenses as well as by complementary acquisitions

Market Area Russia: Overview

Population Appr. 140 million

Tele2 Russia43 regions of Russian Federation20.4 million subscribersMobile operator #4 in Russia in terms of subscribers and revenue

Represents 30% of total net sales Q3 2011

5

Q3 Highlights Tele2 Russia

Moscow

30%

35%

40%

45%

50%

600

800

1000

1200

1400

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

400

650

900

1 150

1 400

14 000

16 000

18 000

20 000

22 000

Q3 10 Q4 10 Q1 11 Q2 11 Q3 110%

10%

20%

30%

40%

50%

2 400

2 600

2 800

3 000

3 200

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Customer base (left)

Customer net intake (right)

EBITDA margin (right) YoY net sales growth (right)

EBITDA (left) Net sales (left)

SEK Million SEK Million Thousands of customers

EBITDA and EBITDA MARGIN

NET SALES and YoY NET SALES GROWTH

CUSTOMER BASE and CUSTOMER INTAKE

Region’s position Market share EBITDA

Defender (10 regions) Leader in the region (avg. 46%)

≥ 35%(avg. 47%)

Challenger (17 regions) ≥ 20% (avg. 31%)

< 35%(avg. 31%)

Newcomer (16 regions) < 20% (avg. 17%)

≥ 0

6

RUR/month

Understanding Russia’s mobile market

SUBSCRIBER MARKET SHARE

NET ADDITIONS

MOBILE SUBSCRIBERS AND PENETRATIONMillion

ARPU DEVELOPMENT TELE2 RUSSIA

0%

5%

10%

15%

20%

25%

30%

35%

Q2 10 Q3 10 Q4 10 Q1 11 Q2 11

Tele2 VimpelcomMegaFon MTS

-40%

-20%

0%

20%

40%

60%

80%

100%

100%

120%

140%

160%

180%

50

100

150

200

250

06 07 08 09 10 11F 12F 13F 14F 15F

Subscribers Penetration

Percent

200

208

215

223

230

Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q111 Q211 Q311

Percentage of total number of subscribers

7

Tele2 Russia: Regulatory update

With regards to regulation of use of frequencies in Russia, the following should be highlighted:

• The Regulator in principle admits that Technology Neutrality can be applied to 900/1800 MHz spectrum. However, to avoid GSM service quality deterioration if the LTE is launched alongside GSM frequencies, this topic has to be examined further. The study shall be finished by March 2012.

• The Regulator has also announced that it is possible for seven operators to run LTE services in Russia starting from 2015 onwards, and that the new LTE license tenders will be run by the end of Q1 2012.

8

Market Area Nordic: Overview

Population 14.4 million

Tele2 Sweden and Tele2 Norway Home market and test bed for new services

Represents 38% of total net sales Q3 2011Sweden 31%; Norway 7%

FocusSweden: Building on mobile growth and 4G roll-out coupled with household/ corporate fiber strategyNorway: Integration of recently acquired Network Norway

9

Q3 Highlights Tele2 Sweden

• Net sales grew by 3% amounting to SEK 3,222 mln and EBITDA amounted to SEK 861 mln

• Rationalisation within the Swedish organisation with savings target of SEK 100 mn in personnel cost annually

SEK 45 mln one-off cost

0%

5%

10%

15%

20%

1500

2000

2500

3000

3500

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-40

0

40

80

120

4600

4650

4700

4750

4800

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11




Mobile Fixed telephonyFixed broadband Other Customer base (left) Customer net intake (right)



0%

10%

20%

30%

40%

200

400

600

800

1000

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

10

Mobile operational performance

84%

16%

Mobile voice

Mobile data

MOBILE REVENUE DISTRIBUTION TELE2 SWEDEN

MOBILE REVENUE and MOBILE EBITDA MARGIN TELE2 SWEDENSEK Million

Revenue (left) EBITDA margin (right)

We believe mobile revenue will continue to grow driven by a strong customer demand for data

28%

30%

32%

34%

36%

2100

2200

2300

2400

2500

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

11

Smartphone market development

*Postpaid residential, quantity of handsets

0%

25%

50%

75%

100%

Last year TodayHigh end Mid range Low end

0%

25%

50%

75%

100%

1103 1104 1105 1106 1107 1108 1109

SMARTPHONE PRICE RANGE

SMARTPHONE MARKET SHARE*

Sales of top ten mobile phones Tele2 Sweden (Sept 2011)

1. iPhone 4 16 Black2. Samsung Galaxy S23. Huawei Sonic4. SE Cedar5. Samsung Galaxy Gio6. ZTE Blade7. Samsung Galaxy Ace8. SE Xperia Ray9. iPhone 4 32GB 10. HTC Sensation

Regular phone Smartphone

12

Benefits of mobile networks in JVs

0

70

140

210

280

350

2012 2013 2014

SEK Million

• Significant benefits can be obtained from network sharing

• Net4Mobility rolling out state of the art 4G network with improved 2G capabilities through EDGE

MOBILE EBIT SAVING NET4MOBILITY

We are building Sweden’s best 2G/4G network expecting to cover 99% of population by end 2012

13

Q3 Highlights Tele2 Norway

• The Tele2 Norway / Network Norway / Mobile Norway integration continues at full speed

• New management team appointed on the 5th of October• Revenue is SEK 705 mln and EBITDA is SEK -19 mln, the latter

a consequence of reduced MTR

50%50%

14

Market shares on Norweigan market

53.4 %

20.2 %

5.5 %

6.3 %

7.8 %

2.8 % 3.9 %

Telenor

NetCom (Telia Sonera)

Chess (Telia Sonera)

Network Norway (with OneCall and Lebara)Tele2

Ventelo

Others

Det norske markedet for elektroniskekommunikasjonstjenster 2010”,Post- og teletilsynet, 20 May 2011.

Long term market share of 25% and alignment with Tele2 Group targets

MOBILE REVENUE MARKET SHARES

15

Market Area Western Europe: Overview

FocusNetherlands Grow in mobile and SMEAustria Continue growth in B2BGermany Grow FVM product

Population106 million

Leading the group in business to business services and consumer fixed broadband

Represents 20% of total net sales Q3 2011Netherlands 14%; Germany 3%; Austria 3%

16

Q3 Highlights Tele2 Netherlands

• Tele2 Netherlands reached EBITDA of 35% on broadband

• Re-organisation in Q2 becomes visible in bottom line result

• On-going evaluation of possibilities for Tele2 Netherlands to become MNO

-20%

-10%

0%

10%

20%

0

400

800

1200

1600

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-40

-30

-20

-10

0

800

900

1000

1100

1200

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Mobile Fixed telephonyFixed broadband Other


Customer base (left) Customer net intake (right)

27%

29%

31%

33%

35%

0

125

250

375

500

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11





17

Evaluating a move from MVNO to MNO

RATIONALE

Customers increasingly demand mobility

Strong Group experience in mobile data networks

The opportunity in NL is unique and now. The upcoming auction will set the scene till 2030

AUCTION CONDITIONS

Auction planned for Q2 2012

2x10 MHz reserved in the valuable 800 MHz band for new entrants

Auction start price per 2x5MHz 800 license is EUR 35 mln

Roll out obligation for low frequencies will be stricter than for high frequencies

18

Q3 Highlights Tele2 Germany and Tele2 Austria

• Both markets are strong cash flow contributors to the Group

• Tele2 Germany: Fixed via Mobile product has taken off; 14,000 customers migrated from existing customers base

• Tele2 Austria: Strong sales performance and improved profitability within B2B

15%

20%

25%

30%

35%

Q3 10 Q4 10 Q1 11 Q2 11 Q3 1115%

20%

25%

30%

35%

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

TELE2 GERMANYEBITDA MARGIN

TELE2 AUSTRIAEBITDA MARGIN

19

FocusStability and improvements in BalticsGrowth in revenue, profits and market share in CroatiaEstablish Tele2 in all regions and continue to grow rapidly in Kazakhstan

Market Area Central Europe and Eurasia: Overview

Population28 million

Represents 13% of total net sales Q3 2011Estonia 2%; Latvia 3%; Lithuania 3%; Croatia 4%; Kazakhstan 1%

20

Q3 Highlights Tele2 Lithuania

-30%

-23%

-15%

-8%

0%

250

275

300

325

350

Q3 10 Q4 10 Q1 11 Q2 11 Q3 1125%

30%

35%

40%

45%

60

80

100

120

140

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

• Tele2 Lithuania had a positive net intake of 22,000 customers

• EBITDA margin amounted to 37% (37%)

EBITDA (left) EBITDA margin (right)

Net sales(left) Net sales YoY growth (right)

SEK Million SEK Million



-50

0

50

100

150

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

EBITDA-CAPEXEBITDA CAPEX

SEK Million

EBITDA-CAPEX

21

Q3 Highlights Tele2 Latvia

-30%

-23%

-15%

-8%

0%

250

270

290

310

330

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

• Tele2 Latvia had a positive net intake of 13,000 customers

• Tele2 reached an EBITDA margin of 34% (32%)

20%

25%

30%

35%

40%

40

60

80

100

120

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11EBITDA (left)

EBITDA margin (right)


-40

0

40

80

120

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11




EBITDA-CAPEX

SEK Million SEK Million SEK Million

22

Q3 Highlights Tele2 Estonia

-20%

-15%

-10%

-5%

0%

195

205

215

225

235

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

• Substantial efforts to increase efficiency show results

• Tele2 Estonia reached an EBITDA margin of 31% (24%)

15%

20%

25%

30%

35%

40

50

60

70

80

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-30

0

30

60

90

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11EBITDA (left)

EBITDA margin (right)





EBITDA-CAPEX


23

Q3 Highlights Tele2 Croatia

-14%

-7%

0%

7%

14%

250

300

350

400

450

Q3 10 Q4 10 Q1 11 Q2 11 Q3 110%

3%

6%

9%

12%

0

15

30

45

60

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

• Positive free cash flow of SEK 86 mln• Solid net intake of 45,000 customers • EBITDA margin amounted to 11% (4%)

EBITDA (left) EBITDA margin (right)


-80

-40

0

40

80

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11* YoY net sales growth positive in local currency



NET SALES and YoY NET SALES GROWTH*

EBITDA-CAPEX


24

Tele2 Croatia forward looking statement

The following assumptions should be taken into account when estimating the Croatian mobile operations in 2011:

• Tele2 expects Croatia to reach an EBITDA margin of 20 percent by Q3 2013 (earlier free cash flow break-even by 2H 2011)

25

Q3 Highlights Tele2 Kazakhstan

SEK

0

30

60

90

120

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11-200

0

200

400

600

0

300

600

900

1200

Q3 10 Q4 10 Q1 11 Q2 11 Q3 1150

60

70

80

90

10

20

30

40

50

01 11 02 11 03 11 04 11 05 11 06 11 07 11 08 11 09 11

Min

• Commercial launch of Tele2 brand completed in 8 regions

• Solid net intake of 459,000 customers• Total number of customers surpassed

1.1 million

Net salesMinutes of use (right)

Customer base (left) Customer intake (right)

ARPU (left)

NET SALES ARPU and MINUTES OF USE

SEK Million Thousands of customers


26

All regions launched by year-end

Almaty

Karagandy

KokshetauAstana

AktobeOral

AktauKyzyl-Orda

Kostanay

Petropavl

Pavlodar

Shymkent

Taraz

SemeyOskemen

Atyrau

Pavlodar launched on

1st of October

27

Tele2 Kazakhstan forward looking statement

The following assumptions should be taken into account when estimating the operational performance of the total operations in Kazakhstan:

• Tele2 expects the subscriber base to reach 2.3-2.5 million by year-end 2012

• Tele2 expects an EBITDA contribution in 2011 of appr. SEK -400 (earlier -500) million

• Tele2 expects capex to be appr. SEK 1,000 million (earlier in the range of SEK 1,200-1,400 million) by year-end 2011

• Tele2 expects to reach EBITDA break-even by 2H 2013 • Tele2 expects to reach a long-term mobile customer market share of

30 percent

2010-10-2028

Agenda

• About Q3 2011



2010-10-2029

Q3 2011 Group resultsSEK million Q3 11 Q3 10 Change %Net Sales 10 340 9 989 +3.5%

EBITDA 2 893 2 751 +5.2%- EBITDA margin (%) 27.9% 27.5%

Depreciation and Joint Ventures -923 -885

- Depreciation of Net sales (%) 9% 9%

One-off items -20 17

EBIT 1 950 1 892 +3.1%Normalized EBIT 1 970 1 875

- Normalized EBIT margin (%) 19% 19%

Financial items -263 -16

Taxes -428 608

Net profit/loss 1 259 2 484

Net result, discontinued operations 1 29

Net result total operations 1 260 2 513

One-off item of SEK 1,049 mlnaffecting Q310

2010-10-2030

Currency movements (vs. SEK)

YoY difference in YTD Ave FX rates, 2011 vs. 2010

EUR -6.6%

RUB -8.3%

EUR/EUR pegged and RUB currencies approximately 2/3 of sales and EBITDA

End of Q3 spot rate vs. 31/12-2010

EUR +3.0%

RUB -4.3%

2010-10-2031

0

2 000

4 000

6 000

8 000

10 000

12 000

Q3 10 Q3 110

500

1 000

1 500

2 000

2 500

3 000

3 500

Q3 10 Q3 11

Currency-adjusted sales and EBITDA (excl. one-off)

CURRENCY-ADJUSTED EBITDA, TOTAL +8 %SEK Million

CURRENCY-ADJUSTED SALES, TOTAL +6%SEK Million

MA Western Europe MA Central Europe and Eurasia MA Russia MA Nordic

+1%

+20%

-1%

+10%

-1%

+29%

-6%

+9%

2010-10-2032

Taxes

Taxes in income statement YTD Q3 11 Q3 10

Normal -1 196 -428 -441

One-Off - - 1 049

Total -1 196 -428 608

Taxes in cash flow Q3 11 Q3 10Normal -785 -235 -152

Deferred tax assets amounted to SEK 3.2 (3.3) billion

2010-10-2033

SEK million Q3 11 Q3 10OPERATING ACTIVITIESCash flow from operations, before paid tax 2833 2733Cash flow from operations, paid taxes -235 -152

Changes in working capital 77 39Cash flow from operating activities 2675 2 620

INVESTING ACTIVITIESCAPEX -1 073 -923Cash flow after CAPEX 1 602 1 697

Cash flow for Q3 2011

2010-10-2034

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

0.0

2.5

5.0

7.5

10.0

12.5

15.0

17.5

20.0

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11Pro Forma Net Debt #REF!Pro Forma Net Debt / EBITDA 12'M ROLLING

Group financial profile

PROFORMA NET DEBT INCL. JV / EBITDA 12’M ROLLING

SEK BillionRatio

Ordinary dividendExtraordinary dividend

Upper limit

Lower limit

2010-10-2035

Debt profile September 2011

1.3 bn2.0 bn2.7 bn0.3 bn

Gross debt position SEK 14.1 bn

Net debt amounts to 11.2 bn

RCF (SEK)RCF (EUR)Kazakhstan debtRubel bondOff balance sheet

7.8 bn

2010-10-2036

Bal. sheet consideration / Fin. leverage

Shareholder remuneration

Cash / Buffer

M&A / New growth opportunities

When available, invest in value accretive M&A or new business opportunities meeting Tele2’s

strict financial hurdles

Enhance shareholder value by distributing recurring cash to shareholders

Retain financial buffer

Prudent assessment based on (a) status of operations, (b) future strategic opportunities, (c) competitive landscape and (d) general macroeconomic status

CASH

GENERATION

2010-10-2037

Net debt and dividend targets

Shareholder remuneration“Tele2 will seek to pay a progressive ordinary dividend of no less than 50 percent of net income excluding one-off items. Extraordinary dividends and the authority to purchase Tele2’s own shares will be recommended or sought when the anticipated total return to shareholders is deemed to be greater than the achievable returns from the deployment of the capital within the group's operating segments or the acquisition of assets within Tele2’s economic requirements.”

Balance sheet“Tele2 has a target net debt to EBITDA ratio of between 1.25 and 1.75 times over the medium term. The company’s longer term financial leverage should be in line with the industry and the markets in which it operates and reflect the status of its operations, future strategic opportunities and contingent liabilities.”

2010-10-2038

Group financialsMobile Fixed telephony OtherFixed broadband

22%

24%

26%

28%

30%

1500

2000

2500

3000

3500

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

GROUP EBITDA and GROUP EBITDA MARGIN

4000

6000

8000

10000

12000

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

0

400

800

1200

1600

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

GROUP CAPEX

18%

20%

22%

24%

26%

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

ROCE

GROUP NET SALES

SEK Million SEK Million

SEK Million Percent

Group EBITDA margin

2010-10-2039

Group mobile EBITDA

GROUP MOBILE EBITDASEK Million Percent

25.0%

27.5%

30.0%

32.5%

35.0%

0

750

1 500

2 250

3 000

Q3 10 Q4 10 Q1 11 Q2 11 Q3 11

Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO)

Mobile EBITDA margin on own infrastructure Total mobile EBITDA margin

2010-10-2040

Sweden mobile revenue explainedSWEDEN MOBILE REVENUE WATERFALLSEK Million

Revenue Q3 2010 Non recurring Adjusted external revenue

Underlying mobile Mobile equipment Revenue Q3 2011

2218 -32103 (+4.7%) 2368

2186 79 (+3.6%)

2010-10-2041

EBITDA Q3 2010 GM2 (incl SUNAB) Other N4M EBITDA Q3 2011

Sweden mobile EBITDA explained

SWEDEN MOBILE EBITDA WATERFALLSEK Million

748 26 (+3.5%) -47 (-6.2%)722

-5 (-0.7%)

N4M -13

Challenge Sweden -34

2010-10-2042

Agenda

• About Q3 2011



2010-10-2043

Concluding remarks

• We experience yet another record quarter in the third quarter of 2011.

• We and our industry have shown good resilience towards current financial turmoil.

• We constantly chase unnecessary costs in order to stay on our toes.

• We are part of a growth industry, where data is forecasted to grow.

• We offer the best of both worlds.

2010-10-2044

Q&A

2010-10-2045

Investor Relations

Tele2 - Third quarter 2011