CEO comment

Taking it to the next level. Together

At Tele2 we are proud but never satisfied, and our Q1 2010 interim results are proof that hard work pays off. EBITDA grew by 5 percent to SEK 2,358 million, resulting in a strong margin of 25 percent.

Mobility is at the core of Tele2's business model and will take our operations to the next level. We will focus on defending voice revenues while defining new business models to drive further growth in a maturing market. To gain the loyalty of our customers, we will also ensure that our services are intuitive and exciting. Indeed, an important part of offering the Best Deal consists in offering services that are easy to understand, easy to buy and easy to use.

Another major priority for Tele2 is to respond to the fast-rising demand for bandwidth. This is why we are pushing hard to build out 4G in Sweden during the year - and we will see to it that we leverage what we have learnt there in our other important markets.

The development of our corporate business remains one of our focus areas in 2010, as there is a significant potential for further profitable growth in this segment. We will introduce business-to-business services in more Tele2 countries. At the same time, we will work on getting more economies of scale from existing assets and skills in markets where we already have a presence in the corporate segment.

In terms of geographical presence, we will continue to carefully explore new opportunities in Russia and the CIS. We aim to maintain a healthy balance between growth regions and more mature markets.

Russia

Our Russian operations have carried on their successful roll-out in new regions and all licences received in 2007 have now been commercially launched. This marks a very important milestone and we now aim to rapidly increase our market share in the new regions whilst targeting to reach operational break-even within two years of commercial launch.

Nordic

We continued to do well in the Swedish postpaid segment and we still aim to increase our market share. More importantly, Q1 2010 showed a stabilizing ARPU profile in the consumer postpaid segment, which to me is an early sign of a market recovery.

Central Europe & Eurasia

The situation in the Baltic region continues to be tough and recovery is still expected to be very slow. Our focus is to maintain cash flow contribution and further exploit opportunities in the corporate segment. Croatia is developing according to plan and we are firm in our belief that we will be able to reach EBITDA break-even in the 2H 2010. Lastly, we would like to welcome our latest member of the Tele2 Group – Tele2 in Kazakhstan, currently operating under the brand NEO.

Western Europe

The market area once again proved that it can generate sustainable and profitable growth by further optimizing its structure and sales processes. To maintain high performance, it is important that we further differentiate our strategy and improve commercial quality at all levels. There shall be no reason not to choose Tele2.

Going forward the strategy is simple – Tele2 always offers the best deal.

Lars Nilsson
CFO & Interim President and CEO, Tele2 AB