Financial overview

Financial Overview

Tele2’s financial performance is a function of a continued focus on developing mobile services on our own infrastructure, complemented in some countries by fixed broadband services and business-to-business offerings. Mobile sales, which continued to grow compared to the same period last year, and a greater focus on mobile services on own infrastructure have further improved our EBITDA margin. The decline in the fixed telephony customer base is expected to persist. The company will focus on maximizing the return from fixed-line operations.

Net customer intake amounted to 811,000 (5,000) in Q1 2010. Including the acquisition of NEO in Kazakhstan, the net customer intake amounted to 1,076,000. The customer intake in mobile services almost tripled to 972,000 (264,000), of which 33,000 (22,000) were mobile internet users. This result was mainly driven by a solid performance in Tele2 Russia. During the period, Tele2 Russia’s customer base grew by 949,000 (220,000) customers, of which 683,000 (84,000) were derived from new operations. Fixed broadband customer intake amounted to 9,000 (-4,000) customers in Q1 2010, thanks to a good intake in Sweden and the Netherlands. As expected, the number of fixed telephony customers decreased during the quarter. However the churn rate in the fixed telephony customer base improved in the quarter. In Q1 2010, the total customer base increased to 27,655,000 (24,023,000) driven by continued success in mobile services and the inclusion of the customer base of Tele2 in Kazakhstan following the closure of the transaction in the quarter.

Net sales in Q1 2010 amounted to SEK 9,535 (9,828) million, a decrease of -3 percent. The revenue development was mainly a result of negative sales development in fixed telephony together with the divestment of Tele2 Norway’s fixed broadband operations in Q2 2009.

EBITDA in Q1 2010 amounted to SEK 2,358 (2,244) million, equivalent to an EBITDA margin of 25 (23) percent. The EBITDA development was positively affected by strong operational development in fixed broadband services and was to some extent hampered by an increased push in mobile marketing spend with an emphasis on the roll-out of new regions in Russia.

EBIT in Q1 2010 amounted to SEK 1,549 (1,351) million excluding one-off items of SEK -3 (-4) million . Including one-off items, EBIT amounted to SEK 1,546 (1,347) million.

Profit/loss before tax amounted to SEK 1,588 (755) million.

Net profit/loss amounted to SEK 1,249 (474) million. Reported tax for Q1 2010 amounted to SEK -339 (-281) million affected by one-off items amounting to SEK 0 (-196) million . Tax payment affecting cash flow amounted to SEK -233 (-456) million.

Cash flow after Capex amounted to SEK 1,683 (682) million.

CAPEX amounted to SEK 582 (1,168) million, due to a temporary delay in investments in Tele2 Russia

Net debt amounted to SEK 3,203 (4,433) million on March 31, 2010, or 0.34 times full-year 2009 EBITDA. Including guarantees to joint ventures, the net debt to full-year 2009 EBITDA amounted to 0.53 times. Tele2’s available liquidity amounted to SEK 13,188 (10,147) million.
 

SEK million	Q1 2010	Q1 2009	FY 2009
Mobile1)
Net customer intake (thousands)	972	264	3,139
Net sales	6,183	5,853	24,609
EBITDA	1,689	1,515	6,605
EBIT	1,260	1,154	4,887
CAPEX	247	841	3,119
Fixed broadband1)
Net customer intake (thousands)	9	-4	-11
Net sales	1,548	1,804	6,691
EBITDA	282	241	1,055
EBIT	17	-154	-370
CAPEX	152	185	661
Fixed telephony1)
Net customer intake (thousands)	-170	-255	-801
Net sales	1,320	1,611	5,986
EBITDA	372	422	1,590
EBIT	319	357	1,332
CAPEX	25	18	82
Total
Net customer intake (thousands)	811	5	2,327
Net sales2)	9,535	9,828	39,458
EBITDA	2,358	2,244	9,394
EBIT3)	1,549	1,351	5,747
CAPEX	582	1,168	4,439
EBT	1,588	755	5,236
Net profit/loss	1,249	474	4,755
Cash flow from operating activities	2,291	1,831	9,118
Cash flow after CAPEX	1,683	682	4,778
1) Less one-off items (see section of EBIT page 20) 2) Including one-off items (see Note 2) 3) Total EBIT includes result from sale of operations, impairment and other one-off items stated under the segment reporting section of EBIT (page 20)