NEW YORK & TORONTO ROADSHOWROADSHOW

28-30 June 2010

AGENDAAGENDA

Tele2 in Brief

Market Area Update

Fi i l iFinancial review

Concluding remarksConcluding remarks

2

TELE2 MOBILE EASTERN EUROPEAN GROWTH MACHINE

• 28 million customers in 11 countries

• We have grown our mobile footprint, today covering more than 100 illi l ith t ll d li

6%Mobile Fixed broadband Fixed telephony Other operations

million people with controlled licenses

15%

Percentage of sales, 2009

62%17%

3

TELE2 FOOTPRINTTELE2 FOOTPRINTRUSSIAMobile

SWEDENFull product suite

NORWAYMobile, Fixed telephone

ESTONIAMobile, Fixed telephone

LATVIAM bil Fi d t l hMobile, Fixed telephone

LITHUANIAFull product suite

KAZAKHSTAN

GERMANYFixed broadband, fixed telephony

NETHERLANDSFull product suite

CroatiaMobile

KAZAKHSTANMobile

fixed telephony

AUSTRIAFixed broadband, fixed telephony

4

TELE2 ALWAYS PROVIDES THETELE2 ALWAYS PROVIDES THE

P i l d hi• Price leadership through best in class cost controlclass cost control

• Price winning gquality network

• Standardized product portfolio

5

AGENDAAGENDA

Tele2 in Brief

Market Area Update

Fi i l iFinancial review

Concluding remarksConcluding remarks

6

MARKET AREA NORDICSMARKET AREA NORDICSMobile• Positive revenue growth• Solid customer intake in postpaid• Secured No1 market share position in

prepaid mobile internet in Sweden• Roll-out of 4G in Sweden and 3G in NorwayMarket strategy• Further develop and calibrate our increased

focus on mobile postpaid segment

7

SHIFT TOWARDS SMART PHONESSHIFT TOWARDS SMART PHONESSmartphones 2008Smartphones 2010

HIGH

ARPU

LOW

ARP ARPUTele2/Comviq target segment

ARPU

• Smart Phones are becoming mass market, mainly driven by iPhone- Smartphone prices are coming down which will drive the shift even faster

• Demand for mobile data is increasing, also for handset customers- Data represented 40% of the revenue growth in the residential mobile market 2009

• Fixed to Mobile substitution- 14% of Swedish population have actively substituted their fixed phone with a mobile only service

• Prepaid market value is declining in relation to Postpaid- Prepaid has gone from 35% of total market value in 2005 to 29% in 2009. We

8

predict that it will drop further down to 20% in 2015

MARKET AREA RUSSIAMARKET AREA RUSSIAMobile• Record high EBITDA margin in mature

regions in Q1 2010• Record high net intake in Q1 2010

– Adding 949 000 customers– 16.1 million customers as of May 2010

Market strategy• Continue unique distribution strategy• Increase customer life time value in the old

iregions• Focus on customer intake in the new

i9

regions

RUSSIAN TELECOM MARKETRUSSIAN TELECOM MARKET

Player License Cover, # Regions May 2010

MTS 82 regions 69 845 174

MegaFon 83 regions 52 665 805g g

Vimpelcom 80 regions 50 950 904

TELE2 37 regions 16 102 000

*Source: ACM

10

MOBILE SUBSCRIBER PENETRATIONMOBILE SUBSCRIBER PENETRATION

Penetration levels in Tele2 licensed areas• Market penetration: 146%*• Active SIM penetration: 95%**• Estimated human penetration: 82%***

11

* & ** Source: ACM* and internal TELE2 research**

TELE2 RUSSIA IS EXPANDINGTELE2 RUSSIA IS EXPANDING

• 37 regions with a population coverage of 61 million

• Over 16 million customers- 339 000 in May- 363 000 in April

12

HIGHLIGHTS TELE2 RUSSIAHIGHLIGHTS TELE2 RUSSIANet Intake - New regions Net Intake - Old regions EBITDA margin

36%

38%

1200

1400

32%

34%

800

1000

nds)

26%

28%

30%

600

800

(In th

ousa

n

22%

24%

26%

200

400

(

20%0Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

13

CLEAR BUSINESS GOALS THROUGH EVOLUTION

base

DefenderDefender 17 REGIONS

RetentionARPU protection

p/ S

ubsc

riber

ChallengerChallenger

17 REGIONS

S b ib i iti

Subscribers acquisitionARPU protection

Retention

ce le

ader

ship

NewcomerNewcomer

Subscribers acquisition

Perc

eive

d pr

ic

20 REGIONS

1,5 – 2 years 2,5 – 3 years >3 years

P

14

TELE2 RUSSIA OLD REGIONSTELE2 RUSSIA – OLD REGIONS

15

TELE2 IS NUMBER ONE IN 14 OF 17 OLD REGIONS

40%%.

Tele2 share Beeline Share MTS Share Megafon Share Other Share

37%

30%

35%

40%

regi

ons,

%

21%21%18%20%

25%

in e

xist

ing

3%5%

10%

15%

rket

sha

re i

3%

0%

5%

As of January 2010

Mar

Source: Internal Tele2 research

16

TELE2 RUSSIA NEW REGIONSTELE2 RUSSIA NEW REGIONS

KALININGRAD PETROZAVODSK

NARYAN-MAR

PSKOV

TVER VOLOGDA

BRYANSK KALUGAKOSTROMA

OREL TULA

TAMBOV

RYAZANVLADIMIR

KRASNODAR

KIROV

KOSTROMA

TURAADYGEI

TOMSK

NOVOSIBIRSKNOVOSIBIRSK

17

MARKET AREA CENTRAL EUROPE AND EURASIAMobileMobile • Defend market share and expand when

possiblepossible• First signs of economic recovery in the Baltic

statesstatesMarket strategy• Economic turmoil creates opportunities for aEconomic turmoil creates opportunities for a

price leader in the Baltic states• Reach break even in Croatia 2H 2010

18

HIGHLIGHTS TELE2 BALTIC REGIONHIGHLIGHTS TELE2 BALTIC REGION

400

500 EBITDA CAPEX EBITDA - CAPEX

200

300

lion)

100

(SE

K m

ill

-100

0Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

-200

19

KAZAKHSTAN

• Market entrance in line with expansion strategy in

KAZAKHSTAN

• Market entrance in line with expansion strategy in Eurasia

• New CEO in place

Operate nder the brand name NEO• Operate under the brand name NEO- Re-launch H2 2010

• Network roll-out

20

MARKET AREA WESTERN EUROPEMARKET AREA WESTERN EUROPECorporate segment p g• Gold standard for the group in the

NetherlandsMarket strategy• Investing for the future in the Netherlandsg• Further restructuring in Austria• Cash flow focus in Germanyy

21

AGENDAAGENDA

Tele2 in Brief

Market Area Update

Fi i l iFinancial review

Concluding remarksConcluding remarks

22

Q1 2010 GROUP RESULTSQ1 2010 GROUP RESULTSSEK million Q1 10 Q1 09 Change %Continuing operations, Net Sales 9,535 9,828 -3%EBITDA 2,358 2,244 5%

EBITDA margin (%) 24 7% 22 8%- EBITDA margin (%) 24,7% 22,8%Depreciation and joint venture -809 -893- Depreciation of net sales (%) 8,5% 9,1%O ff itOne-off items -3 -4

EBIT 1,549 1,351Normalized EBIT 1,546 1,347- Normalized EBIT margin (%) 16,2% 13,7%Financial items 42 -592Taxes -339 -281339 281Net result, continuing operations 1,249 474Net result, discontinued operations 19 197

Net result 1 268 671

23

Net result 1,268 671

CASH FLOW FOR Q1 2010CASH FLOW FOR Q1 2010SEK million Q1 10 Q1 09OPERATING ACTIVITIESCash flow from operations, less paid taxesTaxes paid

2,341-233

1,923-456

Changes in working capital 183 364CASH FLOW FROM OPERATING ACTIVITIES 2,291 1,831

INVESTING ACTIVITIESCAPEX -608 -1,149Cash Flow after CAPEX 1,683 682Acquisition and sale of shares and participations, net -819

864-97585

24

ROCEROCE20%

17%18%19%20%

13%14%15%16%

9%10%11%12%13%

6%7%8%9%

6%Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1

2007 2008 2009 2010

25

GROUP FINANCIAL PROFILEGROUP FINANCIAL PROFILE

Net debt Net debt incl JV

25 000 2,5

Net debt Net debt incl. JVNet debt/ EBITDA 2009 Net debt incl. JV/ EBITDA 2009

20 000

on)

2

10 000

15 000

SE

K m

illio

1

1,5

0

5 000

(S

0

0,5

0Q207

Q307

Q407

Q108

Q208

Q308

Q408

Q109

Q209

Q309

Q409

Q110

0

26

TELE2 GOING FORWARDTELE2 GOING FORWARD

B t D l iti• Best Deal position – Perceived price leader – Expected quality– Expected quality

• Targeting a long term mobile EBITDA margin on own infrastructure at least 35 percentp

• All operations should have the ambition of reaching ROCE of at least 20 percent

• The capability to reach a top 2 position, in terms of customer market share, in an individual country or regionregion

27

SWEDEN OUTLOOKSWEDEN OUTLOOK• Tele2 will continue to target the postpaid segment, which in the longer g p p g , g

term will lead to:– Increased ARPU

Lower churn– Lower churn

• In the short term, this strategy will lead to higher total acquisition costs, gy g qresulting in:– A full year EBITDA margin in the range of 33-35 percent depending on

customer intakecustomer intake

28

RUSSIA OUTLOOKRUSSIA OUTLOOK• Subscriber base should be able to reach 19-20 million by YE 2011y• Maintain ARPU growth at 5 percent by 2011• EBITDA 2010-2011

Old regions’ EBITDA margin should stabilize at 45 percent– Old regions EBITDA margin should stabilize at 45 percent– New regions’ EBITDA margin should break even 2 years from launch– EBITDA contribution from new regions should be in the range of SEK -600

to -800 millionto 800 million– Russia’s total EBITDA margin should develop in the range of 27-32

percent • Capex 2010-2011Capex 2010 2011

– Accumulated Capex in Russia should be in the range of SEK 4.5-5.0 billion

• Selected acquisitions – when available and under right conditionsSelected acquisitions when available and under right conditions

29

CROATIA OUTLOOKCROATIA OUTLOOK

”WE WILL REACH EBITDA BREAK EVEN DURING 2H 2010”

30

NET DEBT AND DIVIDEND TARGETSNET DEBT AND DIVIDEND TARGETS• Shareholder remuneration

– “Tele2’s intention over the medium term is to pay a progressively increasing ordinary dividend”

• Long-term financial leverage– “Tele2’s longer-term financial leverage, defined as the

net debt /EBITDA ratio, should be in line with the industry and the markets in which it operates”

• Short-term consideration– “The company needs to take the uncertainties in the financial

markets into consideration and act accordingly”markets into consideration and act accordingly

31

AGENDAAGENDA

Tele2 in Brief

About Q1 2010

R i fRussian focus

Financial reviewFinancial review

Concluding remarksConcluding remarks

32

CONCLUDING REMARKSCONCLUDING REMARKS

N di 2010 i t tNordic• Continued revenue growthRussia

2010 an investment year• Russia• KazakhstanRussia

• Record high EBITDACentral Europe and Eurasia

• 4G Sweden• 3G Norway

• Stable cash flow contributionWestern Europe• Solid operational performanceSolid operational performance

33

MATS GRANRYDMATS GRANRYDAppointed President and CEO of Tele2

• Excellent understanding of emerging markets, technologies and consumer implementation

BackgroundBackground• Head of Northern Europe and Central Asia for Ericsson, AB• Head of MU North Western Europe and Head of Global Customer Account

Vodafone (2009 - 2010)• Head of MU-India/Sri Lanka (2005 - 2009)( )• Head of Business Unit CDMA, Senior Vice President Ericsson (2003 -

2005)• Head of Market Unit North Africa and President Ericsson Egypt (2001 -

2003)Vi P id t E i S d (1997 2001)• Vice President Ericsson Sweden (1997 - 2001)

• Manager Production, Nynäshamns factory (1995 - 1997)• ARRIGO Consultants (1991-1995)• Andersen Consulting (1988-1991)

• Royal Institute of Technology, Stockholm– Master of Science in Mechanical Engineering

34

APPENDIXAPPENDIX

35

TAXESTAXES

Taxes in income statement (MSEK) One-Off Normal ReportedQ1 - -339 -339

Taxes in cash flow statement (MSEK) One-Off Normal ReportedQ1 - -233 -233

In 2010: Tele2 forecast a corporate tax rate of approximately 22 (earlier 20) percent excluding one-off items. The tax payment will affect cash flow by approximately SEK 800 (earlier 700) million due to better than expected operational performance in Tele2 Russia.

36

GROUP NET INTAKE PER SEGMENTGROUP NET INTAKE PER SEGMENT

M bil Fi d b db d Fi d t l h

1 2001 400

Mobile Fixed broadband Fixed telephony

8001 000

1 200

ds)

400

600

thou

san

200

0200

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

(In

-400-200 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

37

GROUP CUSTOMER STOCKGROUP CUSTOMER STOCK

Group Mobile Customer Stock

20 000

25 000

)

Prepaid voice Postpaid voice Mobile InternetGroup Customer Stock

25 000

30 000Mobile Fixed Broadband Fixed Telephony

5 000

10 000

15 000

20 000

(In th

ousa

nds)

10 000

15 000

20 000

25 000

In th

ousa

nds)

0

5 000

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

(

0

5 000

Q3 08 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

(I

• Strong intake in the mobile segment– Driven by Russia adding 949 000 new customers

38

GROUP EBITDAGROUP EBITDAMobile Fixed broadband Fixed telephony

3 000 26%

p yOther Group EBITDA margin

2 000

2 500

on)

24%

1 000

1 500

SE

K m

illio

22%

%

0

500(S 22%

-500 Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10 20%

39

GROUP MOBILE EBITDAGROUP MOBILE EBITDA

1 800

Mobile EBITDA on own infrastructure Mobile EBITDA (MVNO)Mobile EBITDA margin on own infratsructure Total mobile EBITDA margin

1 6501 7001 7501 800

n) 30%

32%

34%

1 4501 5001 5501 600

(SE

K m

illio

n

24%

26%

28%

30%

1 3001 3501 4001 450

Q Q Q Q Q Q20%

22%

24%

Q4 08 Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

40

MoU AND ARPU DEVELOPMENTMoU AND ARPU DEVELOPMENT

Russia

60 240

Sweden

220 260

50

SEK

220200

220

SEK 220

240

260

30

40

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10180

200

160

180

Q1 09 Q2 09 Q3 09 Q4 09 Q1 10

S

180

200

ARPU MoU

Q Q Q Q Q

ARPU MoU• Relatively stable development

– Swedish ARPU being diluted by an increasing customer base in Mobile Internet and g y gsoftness in corporate customer MoU

41

42