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Tele2 — Interim / Quarterly Report 2016
Apr 21, 2016
2981_10-q_2016-04-21_98d40c72-29b5-4802-95f7-0ec92bc83e50.pdf
Interim / Quarterly Report
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Interim Report First Quarter 2016
Q1 2016 HIGHLIGHTS
- Solid mid-single digit LFL mobile-end user service revenue growth
- Strong performance in the Baltic region
- Kazakhstan joint venture finalized
- Netherlands momentum building since launch of iPhone, new SIM-only offering and VoLTE
- The 2016 financial Guidance for the group is confirmed (see p.5)
EBITDA Q1 2016 1,226 SEK million
Key Financial Data
| Q1 | |||
|---|---|---|---|
| SEK million | 2016 | 2015 | % |
| Net sales | 6,446 | 6,511 | –1 |
| Net sales, like for like1) | 6,583 | 6,484 | 2 |
| Mobile end-user service revenue | 3,168 | 3,184 | –1 |
| Mobile end-user service revenue, like for like1) | 3,274 | 3,147 | 4 |
| EBITDA | 1,226 | 1,428 | –14 |
| EBITDA, like for like1) | 1,232 | 1,440 | –14 |
| EBIT | 155 | 702 | –78 |
| EBIT excluding one-off items (Note 3) | 520 | 716 | –27 |
| Net profit | 339 | 517 | –34 |
| Earnings per share, after dilution (SEK) | 0.83 | 1.15 | –28 |
The figures presented in this report refer to Q1 2016 and continuing operations unless otherwise stated. The figures shown in parentheses refer to the comparable periods in 2015.
1) Like for like (LFL) = pro forma, constant currency
CEO word, Q1 2016
In the first quarter we achieved a key milestone - we now offer 4G throughout our footprint. As a result, we have strengthened the foundations of our business to ensure continued success in data growth and data monetization. As Champions of Customer Value, our customers can enjoy access to high quality, high speed mobile connectivity at a great price. I am confident that our focused approach to technology and to data monetization will create continued and sustainable value for both our customers and shareholders.
This quarter, mobile end-user service revenue, on a like for like basis, increased by 4 percent year on year. Group EBITDA declined, mainly as a result of our mobile launch in the Netherlands but also due to a lower EBITDA in Sweden.
The trends we saw in the 4th quarter last year, continued into the first half of this quarter. The Swedish market has been fiercely competitive, particularly in the B2B SME segment. However, in the consumer segment we have seen contin-
ued progress, with positive net intake and positive mobile end-user service revenue growth and we continue to win new customers in B2B large enterprises. To regain momentum and stimulate further growth we have increased our sales and marketing efforts, which had a negative effect on EBITDA, relative to a low investment period in the first quarter of last year. Sweden has continued to leverage its dual brand strategy, with Comviq as the price fighter and Tele2 as the Value Champion. Our customer focused strategy continues to be successful and has resulted in an increased Customer satisfaction score reaching world class benchmark of 85 percent.
The Baltic region continues to deliver a strong performance, monetizing data from increasing 4G coverage, which is now above 90 percent in all markets. With our data centric pricing and increasing demand for data, mobile end-user service revenue continues to grow mid-single digit in the Baltic region with a strong 32 percent EBITDA margin. Smartphone penetration continues to increase at a rapid pace and I am therefore pleased that we now have an agreement with Apple in place, enabling us to offer the iPhone to Baltic consumers.
In the Netherlands, as planned, we achieved important milestones during the quarter by launching the iPhone, introducing a new SIM-only proposition and the launch of VoLTE (Voice over LTE). This has triggered an increased interest in Tele2's 4G services and resulted in a ramp-up of our mobile customer net intake, particularly in the month of March, when all elements became available to the Dutch consumer. With the addition of the iPhone, Tele2 now offers the full range of popular VoLTE-enabled handsets and at the end of the quarter the first customers successfully started to use VoLTE. Our continued focus to attract 4G hungry customers has resulted in us significantly increasing the share of 4G customers in our base. The transfer of our customers to our brand new network is accelerating, and I am therefore very pleased that the research company P3's results on network quality already puts Tele2's network (whilst
"We are well equipped to continue monetizing data throughout the Group which in turn will lead to sustainable value creation for our customers, employees and our shareholders."
it is still being rolled out) on par with the other three MNO's in the market, and one of the best quality networks in the World.
As we announced in the beginning of March, we have now concluded the closing of our Joint Venture in Kazakhstan and immediately launched 4G to Tele2 customers in the geography. The integration is well underway, and business momentum is keeping pace with a solid growth in net intake for the quarter. On a like for like basis mobile end-user service revenue has grown by 31 percent. EBITDA is impacted by both business expansion and the significant devaluation of the Kazakh Tenge. Looking forward, we are excited by the prospect of the next stage of this journey – realizing synergies from consolidation and becoming a stronger and more sustainable player in the Kazakhstan market. An example of this is that during the quarter, we informed our customers of our intention to withdraw the highly unprofitable (and service eroding) unlimited Altel offers, and are now executing on this.
We are now entering the second year of the Challenger program with 60 initiatives up and running. The progress continues in centralizing our Shared Operations organization and I am especially encouraged by our initiatives to move our Network & IT functions to the Cloud. This sets us up for 5G and also enables a more cost efficient network in the future.
Looking forward, we will continue to make progress with 4G penetration in all our markets, to enable surging data consumption. Our Value Champion strategy, combined with benefits from the Challenger program is enabling a platform for further growth in Sweden, Baltics, Netherlands, and in a consolidated Kazakh market. We are well equipped to continue monetizing data throughout the Group which in turn will lead to sustainable value creation for our customers, employees and our shareholders.
Allison Kirkby, President and CEO
Financial Overview
Tele2's financial performance is driven by a consistent focus on developing mobile services on own infrastructure, complemented in certain countries by fixed broadband services and business to business offerings. In addition to investing in mobile, the Group will concentrate on maximizing the return from fixed-line services.
Net customer intake amounted to –9,000 (235,000) customers in Q1 2016. The customer net intake in mobile services amounted to 43,000 (318,000) customers mainly from Netherlands and Kazakhstan.
The fixed broadband customer base decreased by –6,000 (–20,000) in Q1 2016, due to a decline in Sweden, Austria and Germany. As expected, the number of fixed telephony customers fell in Q1 2016 by –46,000 (–63,000). On March 31, 2016, the total customer base amounted to 16,220,000 (13,829,000) including customers from the acquired company Altel in Kazakhstan (Note 11).
Net sales in Q1 2016 amounted to SEK 6,446 (6,511) million. The net sales was negatively affected by the devaluation of the Kazakh Tenge as well as a decline in our fixed operations, and positively affected by strong equipment sales in the Netherlands, Croatia, Latvia and Lithuania.
EBITDA in Q1 2016 amounted to SEK 1,226 (1,428) million, equivalent to an EBITDA margin of 19 (22) percent. EBITDA was primarily impacted by costs associated to the commercial push in the Netherlands following the 4G LTE network launch, Sweden mobile marketing investments and declines in our fixed operations, but also positively by resolved property lease contract incentive in the Netherlands of SEK 73 million (Note 3).
EBIT in Q1 2016 amounted to SEK 520 (716) million excluding one-off items and SEK 155 (702) million including one-off items. EBIT was negatively affected by one-off items totaling SEK –365 (–14) million, mainly attributable to the impairment of goodwill in Kazakhstan of SEK –326 million due to the macro environment including the Tenge devaluation (Note 3).
Profit before tax in Q1 2016 amounted to SEK 504 (675) million positively impacted by the decrease in the value of the Kazakhstan put option obligation to the former non-controlling interest in Tele2 Kazakhstan which positively affected financial items with SEK 413 (73) million (Note 5).
Net profit in Q1 2016 amounted to SEK 339 (517) million. Reported tax for Q1 2016 amounted to SEK –165 (–158) million. Tax payment affecting cash flow amounted to SEK –67 (–115) million during the quarter. Deferred tax assets amounted to SEK 2.0 billion at the end of the quarter, positively affected by a valuation of deferred tax assets of SEK 40 million (Note 6).
Free cash flow in Q1 2016 amounted to SEK –154 (–96) million mainly affected by an increase in CAPEX paid totaling SEK –1,107 (–985) million.
CAPEX in Q1 2016 amounted to SEK 1,154 (938) million, driven principally by investment in the spectrum license in Lithuania (Note 8).
Net debt amounted to SEK 9,415 (9,878) million and economic net debt (Note 4) amounted to SEK 9,397 (9,878) million on March 31, 2016, or 1.70 times 12-month rolling EBITDA. Tele2's available liquidity amounted to SEK 8,354 (7,890) million.
EBITDA/EBITDA margin
SEK million/Percent
FINANCIAL SUMMARY
| SEK million | Q1,2016 | Q1,2015 | FY 2015 |
|---|---|---|---|
| Mobile | |||
| Net customer intake (thousands) | 43 | 318 | 1,126 |
| Net sales | 4,959 | 4,825 | 20,446 |
| EBITDA | 850 | 1,022 | 4,247 |
| EBIT1) | 357 | 533 | 2,241 |
| CAPEX | 724 | 608 | 3,024 |
| Fixed broadband | |||
| Net customer intake (thousands) | –6 | –20 | –57 |
| Net sales | 944 | 1,037 | 3,956 |
| EBITDA | 196 | 225 | 788 |
| EBIT1) | 24 | 49 | 102 |
| CAPEX | 304 | 166 | 636 |
| Fixed telephony | |||
| Net customer intake (thousands) | –46 | –63 | –199 |
| Net sales | 278 | 349 | 1,281 |
| EBITDA | 96 | 114 | 432 |
| EBIT1) | 84 | 97 | 374 |
| CAPEX | 7 | 12 | 35 |
| Total | |||
| Net customer intake (thousands) | –9 | 235 | 870 |
| Net sales | 6,446 | 6,511 | 26,856 |
| EBITDA | 1,226 | 1,428 | 5,757 |
| EBIT excluding one-off items (Note 3) | 520 | 716 | 2,890 |
| EBIT | 155 | 702 | 2,447 |
| CAPEX | 1,154 | 938 | 4,227 |
| EBT | 504 | 675 | 2,012 |
| Net profit | 339 | 517 | 1,268 |
| Cash flow from operating activities, continuing operations | 953 | 839 | 3,481 |
| Cash flow from operating activities | 953 | 889 | 3,529 |
| Free cash flow, continuing operations | –154 | –131 | –519 |
| Free cash flow | –154 | –96 | –486 |
1) Excluding one-off items (Note 3)
| Sweden | 47% | Austria | 4% |
|---|---|---|---|
| Netherlands | 22% | Latvia | 4% |
| Lithuania | 6% | Germany | 3% |
| Kazhakstan | 6% | Estonia | 2% |
| Croatia | 5% | Other | 1% |
Financial guidance
Tele2 AB gives the following guidance for 2016 for continuing operations in constant currency:
- Mobile end-user service revenue growth of mid-single digits.
- Net sales of between SEK 26 and 27 billion.
- EBITDA of between SEK 4.6 and 5.0 billion.
- CAPEX level of between SEK 3.7 and 4.1 billion.
The Challenger Program
A group-wide program focused on increasing productivity was launched in the end of 2014. The program will build over 3 years and is expected to reap full benefits of SEK 1 billion per annum starting in 2018. The investment required will be SEK 1 billion, phased over 3 years. All program investments are, and will be, reported as one-off items, affecting EBIT. For more details, see Note 3.
Dividend Policy 2015–2017
In January 2015 Tele2 adopted a progressive dividend policy which aims to deliver 10 percent growth per annum in the following three year period.
Authorization to pay extraordinary dividends will be sought when the company has excess capital.
Pursuant to the approval received at the 2015 AGM, Tele2 has the authorization to repurchase up to 10 percent of its share capital.
Balance sheet
Tele2 believes the financial leverage should reflect the status of its operations, future strategic opportunities and obligations. It should also be in line with both the industry and the markets in which it operates. This would imply a target economic net debt to EBITDA ratio of 1.5-2.0x over the medium term. As communicated we will be above this range during the period of investments in the Netherlands.
Overview by country
Constant currency basis
Net sales
| SEK million | 2016 Q1 | 2015 Q1 | Growth |
|---|---|---|---|
| Sweden | 3,053 | 3,130 | –2% |
| Netherlands | 1,441 | 1,394 | 3% |
| Kazakhstan | 350 | 210 | 67% |
| Croatia | 316 | 304 | 4% |
| Lithuania | 381 | 331 | 15% |
| Latvia | 232 | 215 | 8% |
| Estonia | 157 | 169 | –7% |
| Austria | 285 | 298 | –4% |
| Germany | 187 | 223 | –16% |
| Other | 44 | 34 | 29% |
| Total, constant FX | 6,446 | 6,308 | 2% |
| FX effects | 203 | –3% | |
| Total | 6,446 | 6,511 | –1% |
Sweden
Total net sales in Q1 2016 was SEK 3,053 (3,130) million and EBITDA amounted to SEK 894 (976) million.
Mobile end-user service revenue was slightly negative, with a continued positive development within the consumer segment and a solid momentum within B2B large enterprise, whilst fierce competition is impacting the SME segment negatively. During the quarter, Tele2 accelerated its efforts to regain momentum in the Tele2 brand, in particular to improve the development within the B2B SME segment.
In the quarter, Tele2 continued to expand its 2G and 4G mobile network coverage to ensure that our customers, wherever they are, have an excellent mobile experience. Customer satisfaction in customer service has increased to a higher level reaching 85 percent in the quarter – which equals world class benchmark.
Mobile in Q1 2016, customer net intake was –41,000 (–43,000) customers mainly due to a decline in prepaid. Net sales amounted to SEK 2,729 (2,766) million. Mobile end-user service revenue declined to SEK 1,797 (1,809) million, negatively impacted primarily by the price aggression in the B2B SME segment, however mitigated by a continued positive development within the consumer segment. Due to intense competition within B2B SME, which has had a negative impact on Tele2's revenue development, the company has accelerated initiatives to regain momentum in this segment and early signs indicate a positive trend. EBITDA amounted to SEK 817 (893) million, affected by those increased sales and marketing initiatives and comparing to a lower investment period in the first quarter previous year.
Fixed broadband Customer net intake amounted to –3,000 (–5,000) customers. Net sales decreased with 8 percent and amounted to SEK 173 (188) million. EBITDA contribution amounted to SEK 20 (33) million.
Fixed telephony Tele2 saw a continued decrease in demand for fixed telephony as a consequence of the ongoing shift to mobile telephony. The EBITDA contribution in the quarter amounted to SEK 33 (41) million.
EBITDA
| SEK million | 2016 Q1 | 2015 Q1 | Growth |
|---|---|---|---|
| Sweden | 894 | 976 | –8% |
| Netherlands | –31 | 140 | –122% |
| Kazakhstan | 6 | – | – |
| Croatia | 11 | 21 | –48% |
| Lithuania | 142 | 124 | 15% |
| Latvia | 69 | 68 | 1% |
| Estonia | 35 | 38 | –8% |
| Austria | 50 | 50 | – |
| Germany | 74 | 32 | 131% |
| Other | –24 | –23 | –4% |
| Total, constant FX | 1,226 | 1,426 | –14% |
| FX effects | 2 | 0% | |
| Total | 1,226 | 1,428 | –14% |
Netherlands
Total net sales in Q1 2016 was SEK 1,441 (1,402) million and EBITDA amounted to SEK –31 (141) million.
Mobile end-user service revenue grew as a result of an increased number of customers, and a shift to more 4G customers. The quarter showed an increasing interest in Tele2's 4G-services resulting in an increase in customer net intake in both residential and B2B customers. During the quarter, Tele2 started selling the iPhone and is now offering a full range of premium VoLTE (Voice over LTE) enabled handsets in all its sales channels. Furthermore, the company introduced a new 4G SIM-only line up. At the end of the quarter the first customers started to use Voice over LTE, making Tele2 the first 4G-only operator in the world.
Tele2 continued to expand its LTE Advanced 4G network which has now reached a 97 percent outdoor population coverage and indoor population coverage of 78 percent.
During the quarter the research company P3 conducted a benchmark in which Tele2's network was graded a 9 out of 10, whilst still in roll-out phase, this puts Tele2 already on par with the other three MNO's in the market, and one of the best in the World.
Mobile Customer net intake in the quarter amounted to 31,000 (21,000) customers, ramping up towards the latter part of the quarter as a result of the iPhone launch and the new SIM-only proposition. Net sales grew 25 percent and amounted to SEK 691 (553) million. Mobile end-user service revenue grew 6 percent and amounted to SEK 322 (305) million. EBITDA, which is impacted negatively by the costs associated with mobile growth and further network rollout amounted to SEK –243 (–106) million, including a positive non-recurring item of SEK 47 million related to the settlement of a new property lease agreement on our Dutch headoffice (Note 3).
Fixed broadband With a growing VULA high speed broadband footprint, Tele2 was able to reverse the negative trend in customer intake resulting in net intake of 1,000 (–9,000) customers. EBITDA amounted to SEK 124 (161) million, including a positive non-recurring item of SEK 19 million. Within the B2B segment, Tele2 signed a framework agreement with VNG (the Association of Dutch Municipalities).
Kazakhstan
The business combination agreement between Tele2's and Kazakhtelecom's mobile businesses in Kazakhstan was completed February 29, 2016. Reported figures are including one month of the acquired company Altel while like for like figures are stated as if Altel was acquired at January 1, 2015 and on a constant currency basis. As part of the closing, an impairment of SEK 326 million was recognized mainly as a result of the current macro environment including the Tenge devaluation (Note 3).
Mobile: Like for like, customer net intake in the quarter was 184,000 (765,000) customers. Like for like, net sales grew with 26 percent and amounted to SEK 487 (386) million. Like for like, mobile end-user service revenue grew 31 percent as a result of increasing number of customers, and amounted to SEK 371 (284) million. Like for like, EBITDA, affected by business expansion and foreign exchange losses, amounted to SEK 12 (14) million.
Reported net sales amounted to SEK 350 (399) million, reported mobile end-users service revenue amounted to SEK 265 (315) million and reported EBITDA amounted to SEK 6 (–) million.
Following the business combination, and hence realization of national roaming between Tele2 and Altel, LTE is available to Tele2 customers in all regions of Kazakhstan and Tele2 network coverage in rural areas is available to Altel customers.
Focus going forward will be on integration of the joint operation and achievement of the synergies as well as to monetize on mobile data traffic growth and continue the rapid LTE network rollout.
Croatia
Mobile Customer net intake amounted to –7,000 (–24,000) customers, with an increase in the postpaid customer segment, but the overall customer base declined as a result of higher prepaid seasonal churn.
Net sales increased by 4 percent and amounted to SEK 316 (303) million due to higher end-user service revenue as well as higher equipment sales.
Mobile end-user service revenue increased by 3 percent and was SEK 202 (197) million.
EBITDA in the quarter was SEK 11 (21) million, negatively affected by higher spectrum fees and higher investment in marketing.
During the quarter the company focused on the final implementation and launch of 4G, offering 4G to 90 percent of the population. This follows the 3G network upgrade completed in the previous quarter. Towards the end of the quarter, Tele2 launched a complete redesign of its postpaid tariff portfolio providing customers with flexible and simple products that they can easily control. Together with the new postpaid portfolio, Tele2 introduced new marketing communication platforms and a new Tele2 store concept.
Lithuania
Mobile Customer net intake in the quarter was –18,000 (–47,000) customers. Net sales grew 14 percent and amounted to SEK 381 (333) million with higher mobile end-user service revenues and sales of equipment contributing positively. Mobile end-user service revenue grew with 8 percent compared to the same period last year and amounted to SEK 226 (210) million due to increased data usage and demand for additional services.
EBITDA grew 15 percent and amounted to SEK 142 (125) million. EBITDA margin was 37 (38) percent, slightly affected by increased sales of low margin handsets.
During the quarter, the company secured vital 900/1800 MHz spectrum bands and is the first in Lithuania to receive an e-money license from the Central Bank. At the end of the quarter Tele2 announced its agreement with Apple, allowing the company to extend its handset portfolio with the iPhone.
Latvia
Mobile Net customer intake in the quarter was –13,000 (–11,000) customers. Net sales grew 7 percent compared to same period last year, and amounted to SEK 232 (216) million driven by strong demand for mobile data, shifting sales towards higher data buckets, and new handsets. Mobile end-user service revenue amounted to SEK 140 (137) million. EBITDA was SEK 69 (68) million, with solid margins of 30 (31) percent.
The company has continued to enhance its mobile data market position, supported by an excellent LTE network with the widest coverage in Latvia. Tele2 will continue to focus on strengthening its market position through a clear mobile data offering and service excellence.
Estonia
Mobile In the quarter, net customer intake was –5,000 (–4,000) customers. Net sales amounted to SEK 146 (141) million. Mobile end-user service revenue increased with 5 percent and amounted to SEK 102 (97) million, mainly driven by a strong demand for data services. Mobile EBITDA amounted to SEK 33 (29) million.
During the quarter Tele2 Estonia completed the agreement with Apple, making Tele2 Estonia the official re-seller of Apple handsets in the country.
Tele2 also received official regulatory approval to start commercial service on the LTE450 MHz frequency.
Austria
Net customer intake in the quarter amounted to –7,000 (–8,000) customers. Net sales amounted to SEK 285 (300) million. EBITDA was stable and amounted to SEK 50 (50) million.
During the quarter, Tele2 activated its first mobile services for B2B customers on the previously launched MVNO platform. Strategic focus is on the ramp up of sales capacity.
Germany
Net customer intake continued to decline in line with expectations and net sales amounted to SEK 187 (224) million. With a focus on profitability and cash contribution EBITDA increased by 131 percent compared to the same quarter last year and amounted to SEK 74 (32) million with an EBITDA margin of 40 (14) percent.
Besides a solid operational performance in line with expectations, several one-time effects connected to last year's strategic shift have positively affected the operational result in the quarter.
Other items
Risks and uncertainty factors
Tele2's operations are affected by a number of external factors.
The risk factors considered to be most significant to Tele2's future development are the availability of frequencies and telecom licenses, new technology and integration of new business models, large scale cyber-attacks, data protection, operations in Kazakhstan, strategic change management, mobile network & service delivery interruptions, dependency on suppliers and business partners, Sweden dependency, geopolitical risks, and financial risks such as currency risk, interest risk, liquidity risk and credit risk. Please refer to Tele2's annual report for 2015 (Directors' report and Note 2) for a detailed description of Tele2's risk exposure and risk management.
Company disclosure
Tele2 AB (publ) Annual General Meeting 2016
The 2016 Annual General Meeting will be held on Tuesday 24 May 2016 at 10.00 a.m. CET at the Hotel Rival, Mariatorget 3 in Stockholm.
Shareholders who wish to attend the Annual General Meeting shall be
- entered in the share register maintained by Euroclear Sweden on Wednesday 18 May 2016,
- give notice of their attendance no later than Wednesday 18 May 2016, preferably before 1.00 p.m. CET. Notice to attend is to be made on the company's website at www.tele2.com, by telephone to +46 (0) 771 246 400 or by mail to Computershare AB "AGM Tele2", P.O. Box 610, SE-182 16 Danderyd, Sweden.
Other
Tele2 will release its financial and operating results for the period ending June 30, 2016 on July 21, 2016.
Auditors' review report
This interim report has not been subject to specific review by the company's auditors.
Stockholm, April 21, 2016 Tele2 AB Allison Kirkby President and CEO
Q1 2016 PRESENTATION
Tele2 will host a presentation with the possibility to join through a conference call, for the global financial community at 10:00 am CEST (09:00 am BST/04:00 am EDT) on Thursday, April 21, 2016. The presentation will be held in English and also made available as a webcast on Tele2's website: www.tele2.com.
Dial-in information
To ensure that you are connected to the conference call, please dial in a few minutes before the start of the conference call to register your attendance.
Dial-in numbers
Sweden: +46(0)8 5065 3937 UK: +44(0)20 3427 1908 US: +1646 254 3367
Louise Tjeder Head of IR Telephone: + 46 (0) 70 426 46 52
Tele2 AB Company registration nr: 556410-8917 Skeppsbron 18 P.O. Box 2094 SE–103 13 Stockholm Sweden Tel + 46 (0)8 5620 0060 www.tele2.com
VISIT OUR WEBSITE: www.tele2.com
CONTACTS APPENDICES
Income statement Comprehensive income Balance sheet Cash flow statement Change in equity Numbers of customers Net sales Mobile external net sales split EBITDA EBIT CAPEX Five-year summary Parent company Notes
TELE2 IS ONE OF EUROPE'S FASTEST GROWING TELECOM OPERATORS, ALWAYS PROVIDING CUSTOMERS WITH WHAT THEY NEED FOR LESS.
We have 16 million customers in 9 countries. Tele2 offers mobile services, fixed broadband and telephony, data network services, content services and global M2M/IoT solutions. Ever since Jan Stenbeck founded the company in 1993, it has been a tough challenger to the former government monopolies and other established providers. Tele2 has been listed on the NASDAQ OMX Stockholm since 1996. In 2015, we had net sales of SEK 27 billion and reported an operating profit (EBITDA) of SEK 5.8 billion.
Income statement
| 2016 | 2015 | 2015 | ||
|---|---|---|---|---|
| SEK million | Note | Jan 1-Mar 31 | Jan 1-Mar 31 | Full year |
| CONTINUING OPERATIONS | ||||
| Net sales | 2 | 6,446 | 6,511 | 26,856 |
| Cost of services provided | 3 | –4,315 | –3,940 | –16,653 |
| Gross profit | 2,131 | 2,571 | 10,203 | |
| Selling expenses | 3 | –1,376 | –1,260 | –5,094 |
| Administrative expenses | 3 | –620 | –646 | –2,917 |
| Result from shares in joint ventures and associated companies | 11 | – | – | –5 |
| Other operating income | 37 | 86 | 401 | |
| Other operating expenses | 3 | –17 | –49 | –141 |
| Operating profit, EBIT | 155 | 702 | 2,447 | |
| Interest income/costs | 4 | –69 | –100 | –376 |
| Other financial items | 5 | 418 | 73 | –59 |
| Profit after financial items, EBT | 504 | 675 | 2,012 | |
| Income tax | 6 | –165 | –158 | –744 |
| NET PROFIT FROM CONTINUING OPERATIONS | 339 | 517 | 1,268 | |
| DISCONTINUED OPERATIONS | ||||
| Net profit/loss from discontinued operations | 11 | – | 1,717 | 1,718 |
| NET PROFIT | 339 | 2,234 | 2,986 | |
| ATTRIBUTABLE TO | ||||
| Equity holders of the parent company | 371 | 2,234 | 2,986 | |
| Non-controlling interests | 11 | –32 | – | – |
| NET PROFIT | 339 | 2,234 | 2,986 | |
| Earnings per share (SEK) | 10 | 0.83 | 5.01 | 6.69 |
| Earnings per share, after dilution (SEK) | 10 | 0.83 | 4.98 | 6.65 |
| FROM CONTINUING OPERATIONS | ||||
| ATTRIBUTABLE TO | ||||
| Equity holders of the parent company | 371 | 517 | 1,268 | |
| Non-controlling interests | –32 | – | – | |
| NET PROFIT | 339 | 517 | 1,268 | |
| Earnings per share (SEK) | 10 | 0.83 | 1.16 | 2.84 |
| Earnings per share, after dilution (SEK) | 10 | 0.83 | 1.15 | 2.82 |
Comprehensive income
| SEK million | Note | 2016 Jan 1-Mar 31 |
2015 Jan 1-Mar 31 |
2015 Full year |
|---|---|---|---|---|
| NET PROFIT | 339 | 2,234 | 2,986 | |
| OTHER COMPREHENSIVE INCOME | ||||
| COMPONENTS NOT TO BE RECLASSIFIED TO NET PROFIT | ||||
| Pensions, actuarial gains/losses | –5 | – | 38 | |
| Pensions, actuarial gains/losses, tax effect | 1 | – | –9 | |
| Components not to be reclassified to net profit | –4 | – | 29 | |
| COMPONENTS THAT MAY BE RECLASSIFIED TO NET PROFIT | ||||
| Exchange rate differences | ||||
| Translation differences in foreign operations | 5 | 102 | –190 | –1,420 |
| Tax effect on above | 10 | –144 | 305 | |
| Reversed cumulative translation differences from divested companies | 11 | – | 18 | 19 |
| Translation differences | 112 | –316 | –1,096 | |
| Hedge of net investments in foreign operations | –36 | –102 | –49 | |
| Tax effect on above | 8 | 22 | 11 | |
| Reversed cumulative hedge from divested companies | 11 | – | –107 | –107 |
| Hedge of net investments | –28 | –187 | –145 | |
| Exchange rate differences | 84 | –503 | –1,241 | |
| Cash flow hedges | ||||
| Loss arising on changes in fair value of hedging instruments | –47 | –28 | –40 | |
| Reclassified cumulative loss to income statement | 15 | 19 | 83 | |
| Tax effect on cash flow hedges | 7 | 2 | –10 | |
| Cash flow hedges | –25 | –7 | 33 | |
| Components that may be reclassified to net profit | 59 | –510 | –1,208 | |
| OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX | 55 | –510 | –1,179 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 394 | 1,724 | 1,807 | |
| ATTRIBUTABLE TO | ||||
| Equity holders of the parent company | 424 | 1,724 | 1,807 | |
| Non-controlling interests | 11 | –30 | – | – |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | 394 | 1,724 | 1,807 |
Balance sheet
| SEK million | Note | Mar 31, 2016 | Mar 31, 2015 | Dec 31, 2015 |
|---|---|---|---|---|
| ASSETS | ||||
| NON-CURRENT ASSETS | ||||
| Goodwill | 8,393 | 9,391 | 8,661 | |
| Other intangible assets | 4,790 | 4,811 | 4,437 | |
| Intangible assets | 13,183 | 14,202 | 13,098 | |
| Tangible assets | 12,667 | 11,408 | 11,592 | |
| Financial assets | 4 | 1,304 | 1,599 | 1,463 |
| Deferred tax assets | 6 | 2,011 | 1,927 | 1,964 |
| NON-CURRENT ASSETS | 29,165 | 29,136 | 28,117 | |
| CURRENT ASSETS | ||||
| Inventories | 622 | 616 | 692 | |
| Current receivables | 7,202 | 5,932 | 7,201 | |
| Current investments | 33 | 37 | 32 | |
| Cash and cash equivalents | 7 | 184 | 2,886 | 107 |
| CURRENT ASSETS | 8,041 | 9,471 | 8,032 | |
| ASSETS | 37,206 | 38,607 | 36,149 | |
| EQUITY AND LIABILITIES | ||||
| EQUITY | ||||
| Attributable to equity holders of the parent company | 19,475 | 24,424 | 17,901 | |
| Non-controlling interests | –11 | 2 | – | |
| EQUITY | 10 | 19,464 | 24,426 | 17,901 |
| NON-CURRENT LIABILITIES | ||||
| Interest-bearing liabilities | 4 | 4,798 | 5,420 | 5,619 |
| Non-interest-bearing liabilities | 6 | 733 | 438 | 697 |
| NON-CURRENT LIABILITIES | 5,531 | 5,858 | 6,316 | |
| CURRENT LIABILITIES | ||||
| Interest-bearing liabilities | 4 | 5,913 | 1,866 | 5,372 |
| Non-interest-bearing liabilities | 6,298 | 6,457 | 6,560 | |
| CURRENT LIABILITIES | 12,211 | 8,323 | 11,932 | |
| EQUITY AND LIABILITIES | 37,206 | 38,607 | 36,149 | |
Cash flow statement
(Total operations)
| SEK million | Note | 2016 Jan 1-Mar 31 |
2015 Jan 1-Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
2014 Q4 |
|---|---|---|---|---|---|---|---|---|---|---|
| OPERATING ACTIVITIES | ||||||||||
| Operating profit from continuing operations | 155 | 702 | 2,447 | 155 | 364 | 788 | 593 | 702 | 735 | |
| Operating profit/loss from discontinued operations | – | 1,701 | 1,702 | – | – | – | 1 | 1,701 | –72 | |
| Operating profit | 155 | 2,403 | 4,149 | 155 | 364 | 788 | 594 | 2,403 | 663 | |
| Adjustments for non-cash items in operating profit | 1,033 | –977 | 1,271 | 1,033 | 736 | 778 | 734 | –977 | 773 | |
| Financial items paid/received | 5 | –46 | –203 | –470 | –46 | –62 | –129 | –76 | –203 | 37 |
| Taxes paid | –67 | –115 | –349 | –67 | –62 | –68 | –104 | –115 | –93 | |
| Cash flow from operations before changes in working capital |
1,075 | 1,108 | 4,601 | 1,075 | 976 | 1,369 | 1,148 | 1,108 | 1,380 | |
| Changes in working capital | –122 | –219 | –1,072 | –122 | –194 | –255 | –404 | –219 | –58 | |
| CASH FLOW FROM OPERATING ACTIVITIES | 953 | 889 | 3,529 | 953 | 782 | 1,114 | 744 | 889 | 1,322 | |
| INVESTING ACTIVITIES | ||||||||||
| CAPEX paid | 8 | –1,107 | –985 | –4,015 | –1,107 | –1,073 | –945 | –1,012 | –985 | –1,084 |
| Free cash flow | –154 | –96 | –486 | –154 | –291 | 169 | –268 | –96 | 238 | |
| Acquisition and sale of shares and participations | 11 | 39 | 4,891 | 4,893 | 39 | – | 7 | –5 | 4,891 | –18 |
| Other financial assets | – | – | –28 | – | –29 | – | 1 | – | –252 | |
| Cash flow from investing activities | –1,068 | 3,906 | 850 | –1,068 | –1,102 | –938 | –1,016 | 3,906 | –1,354 | |
| CASH FLOW AFTER INVESTING ACTIVITIES | –115 | 4,795 | 4,379 | –115 | –320 | 176 | –272 | 4,795 | –32 | |
| FINANCING ACTIVITIES | ||||||||||
| Change of loans, net | 4 | 295 | –1,998 | 2,276 | 295 | 228 | –257 | 4,303 | –1,998 | –308 |
| Dividends | 10 | – | – | –6,626 | – | – | – | –6,626 | – | – |
| Acquisition of non-controlling interests | 10 | –125 | – | – | –125 | – | – | – | – | – |
| Other financing activities | – | – | –2 | – | – | – | –2 | – | – | |
| Cash flow from financing activities | 170 | –1,998 | –4,352 | 170 | 228 | –257 | –2,325 | –1,998 | –308 | |
| NET CHANGE IN CASH AND CASH EQUIVALENTS | 55 | 2,797 | 27 | 55 | –92 | –81 | –2,597 | 2,797 | –340 | |
| Cash and cash equivalents at beginning of period | 107 | 151 | 151 | 107 | 204 | 309 | 2,886 | 151 | 418 | |
| Exchange rate differences in cash and cash equivalents |
22 | –62 | –71 | 22 | –5 | –24 | 20 | –62 | 73 | |
| CASH AND CASH EQUIVALENTS AT END OF THE PERIOD |
7 | 184 | 2,886 | 107 | 184 | 107 | 204 | 309 | 2,886 | 151 |
Change in equity
| Mar 31, 2016 | Mar 31, 2015 | Dec 31, 2015 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Attributable to | Attributable to | Attributable to | ||||||||
| SEK million | Note | equity holders of the parent company |
non controlling interests |
Total equity |
equity holders of the parent company |
non controlling interests |
Total equity |
equity holders of the parent company |
non controlling interests |
Total equity |
| Equity, January 1 | 17,901 | – | 17,901 | 22,680 | 2 | 22,682 | 22,680 | 2 | 22,682 | |
| Net profit/loss for the period | 371 | –32 | 339 | 2,234 | – | 2,234 | 2,986 | – | 2,986 | |
| Other comprehensive income for the period, net of tax |
53 | 2 | 55 | –510 | – | –510 | –1,179 | – | –1,179 | |
| Total comprehensive income for the period |
424 | –30 | 394 | 1,724 | – | 1,724 | 1,807 | – | 1,807 | |
| OTHER CHANGES IN EQUITY | ||||||||||
| Share-based payments | 10 | 7 | – | 7 | 21 | – | 21 | 40 | – | 40 |
| Share-based payments, tax effect | 10 | – | – | – | –1 | – | –1 | – | – | – |
| New share issues | 10 | – | – | – | – | – | – | 3 | – | 3 |
| Repurchase of own shares | 10 | – | – | – | – | – | – | –3 | – | –3 |
| Dividends | 10 | – | – | – | – | – | – | –6,626 | – | –6,626 |
| Acquisition of non-controlling interests | 10 | 456 | 475 | 931 | – | – | – | – | – | – |
| Divestment to non-controlling interests | 10 | 687 | –456 | 231 | – | – | – | – | –2 | –2 |
| EQUITY, END OF THE PERIOD | 19,475 | –11 | 19,464 | 24,424 | 2 | 24,426 | 17,901 | – | 17,901 |
Number of customers
| Number of customers |
Net intake | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2016 | 2015 | 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 | |||
| by thousands | Note | Mar 31 | Mar 31 | Jan 1–Mar 31 | Jan 1–Mar 31 | Full year | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |
| Sweden | |||||||||||||
| Mobile | 3,700 | 3,644 | –41 | –43 | 120 | –41 | 27 | 84 | 52 | –43 | –58 | ||
| Fixed broadband | 67 | 52 | –3 | –5 | –15 | –3 | –3 | –2 | –5 | –5 | –7 | ||
| Fixed telephony | 187 | 222 | –9 | –10 | –46 | –9 | –13 | –12 | –11 | –10 | –11 | ||
| 3,954 | 3,918 | –53 | –58 | 59 | –53 | 11 | 70 | 36 | –58 | –76 | |||
| Netherlands | |||||||||||||
| Mobile | 875 | 834 | 31 | 21 | 31 | 31 | 3 | – | 7 | 21 | 22 | ||
| Fixed broadband | 345 | 360 | 1 | –9 | –25 | 1 | –4 | –7 | –5 | –9 | 1 | ||
| Fixed telephony | 51 | 69 | –4 | –6 | –20 | –4 | –4 | –5 | –5 | –6 | –10 | ||
| 1,271 | 1,263 | 28 | 6 | –14 | 28 | –5 | –12 | –3 | 6 | 13 | |||
| Kazakhstan | |||||||||||||
| Mobile | 6,298 | 3,725 | 110 | 428 | 1,103 | 110 | 38 | 166 | 471 | 428 | 205 | ||
| 6,298 | 3,725 | 110 | 428 | 1,103 | 110 | 38 | 166 | 471 | 428 | 205 | |||
| Croatia | |||||||||||||
| Mobile | 778 | 799 | –7 | –24 | –16 | –7 | –78 | 67 | 19 | –24 | –54 | ||
| 778 | 799 | –7 | –24 | –16 | –7 | –78 | 67 | 19 | –24 | –54 | |||
| Lithuania | |||||||||||||
| Mobile | 1,751 | 1,763 | –18 | –47 | –68 | –18 | –37 | 16 | – | –47 | –40 | ||
| Latvia | 1,751 | 1,763 | –18 | –47 | –68 | –18 | –37 | 16 | – | –47 | –40 | ||
| Mobile | 945 | 964 | –13 | –11 | –17 | –13 | –27 | 11 | 10 | –11 | –28 | ||
| Estonia | 945 | 964 | –13 | –11 | –17 | –13 | –27 | 11 | 10 | –11 | –28 | ||
| Mobile Fixed telephony |
479 1 |
484 3 |
–5 –2 |
–4 – |
–4 – |
–5 –2 |
–2 – |
2 – |
– – |
–4 – |
–6 – |
||
| 480 | 487 | –7 | –4 | –4 | –7 | –2 | 2 | – | –4 | –6 | |||
| Austria | |||||||||||||
| Fixed broadband | 100 | 107 | –2 | –1 | –6 | –2 | –2 | –2 | –1 | –1 | –2 | ||
| Fixed telephony | 126 | 141 | –5 | –7 | –17 | –5 | –3 | –3 | –4 | –7 | –4 | ||
| 226 | 248 | –7 | –8 | –23 | –7 | –5 | –5 | –5 | –8 | –6 | |||
| Germany | |||||||||||||
| Mobile | 205 | 240 | –14 | –2 | –23 | –14 | –12 | –13 | 4 | –2 | 9 | ||
| Fixed broadband Fixed telephony |
51 261 |
59 363 |
–2 –26 |
–5 –40 |
–11 –116 |
–2 –26 |
–2 –35 |
–2 –51 |
–2 10 |
–5 –40 |
–2 –26 |
||
| 517 | 662 | –42 | –47 | –150 | –42 | –49 | –66 | 12 | –47 | –19 | |||
| TOTAL | |||||||||||||
| Mobile | 15,031 | 12,453 | 43 | 318 | 1,126 | 43 | –88 | 333 | 563 | 318 | 50 | ||
| Fixed broadband | 563 | 578 | –6 | –20 | –57 | –6 | –11 | –13 | –13 | –20 | –10 | ||
| Fixed telephony | 626 | 798 | –46 | –63 | –199 | –46 | –55 | –71 | –10 | –63 | –51 | ||
| TOTAL NUMBER OF | |||||||||||||
| CUSTOMERS AND NET | |||||||||||||
| INTAKE | 16,220 | 13,829 | –9 | 235 | 870 | –9 | –154 | 249 | 540 | 235 | –11 | ||
| Acquired companies | 11 | 1,788 | – | – | 1,788 | – | – | – | – | – | |||
| Changed method of | |||||||||||||
| calculation | 2 | 27 | – | –50 | 27 | –22 | – | –28 | – | – | |||
| TOTAL NUMBER OF CUSTOMERS AND NET |
|||||||||||||
| CHANGE | 16,220 | 13,829 | 1,806 | 235 | 820 | 1,806 | –176 | 249 | 512 | 235 | –11 | ||
Net sales
| SEK million Note |
2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
2014 Q4 |
|---|---|---|---|---|---|---|---|---|---|
| Sweden | |||||||||
| Mobile | 2,729 | 2,767 | 11,228 | 2,729 | 2,953 | 2,764 | 2,744 | 2,767 | 3,006 |
| Fixed broadband | 173 | 188 | 715 | 173 | 179 | 172 | 176 | 188 | 187 |
| Fixed telephony | 119 | 146 | 541 | 119 | 125 | 131 | 139 | 146 | 153 |
| Other operations | 32 | 30 | 147 | 32 | 42 | 33 | 42 | 30 | 35 |
| 3,053 | 3,131 | 12,631 | 3,053 | 3,299 | 3,100 | 3,101 | 3,131 | 3,381 | |
| Netherlands | |||||||||
| Mobile 2 |
691 | 553 | 2,535 | 691 | 747 | 643 | 592 | 553 | 567 |
| Fixed broadband | 546 | 615 | 2,326 | 546 | 557 | 576 | 578 | 615 | 626 |
| Fixed telephony | 71 | 92 | 333 | 71 | 75 | 82 | 84 | 92 | 97 |
| Other operations | 137 | 142 | 552 | 137 | 134 | 139 | 137 | 142 | 143 |
| 1,445 | 1,402 | 5,746 | 1,445 | 1,513 | 1,440 | 1,391 | 1,402 | 1,433 | |
| Kazakhstan | |||||||||
| Mobile | 350 | 399 | 1,754 | 350 | 383 | 497 | 475 | 399 | 382 |
| 350 | 399 | 1,754 | 350 | 383 | 497 | 475 | 399 | 382 | |
| Croatia | |||||||||
| Mobile | 316 | 303 | 1,429 | 316 | 416 | 377 | 333 | 303 | 372 |
| 316 | 303 | 1,429 | 316 | 416 | 377 | 333 | 303 | 372 | |
| Lithuania | |||||||||
| Mobile | 386 | 336 | 1,539 | 386 | 405 | 417 | 381 | 336 | 358 |
| 386 | 336 | 1,539 | 386 | 405 | 417 | 381 | 336 | 358 | |
| Latvia | |||||||||
| Mobile | 233 | 218 | 948 | 233 | 248 | 250 | 232 | 218 | 238 |
| 233 | 218 | 948 | 233 | 248 | 250 | 232 | 218 | 238 | |
| Estonia | |||||||||
| Mobile | 146 | 142 | 608 | 146 | 155 | 159 | 152 | 142 | 142 |
| Fixed telephony | 1 | 1 | 7 | 1 | 2 | 2 | 2 | 1 | 2 |
| Other operations | 10 | 28 | 62 | 10 | 11 | 12 | 11 | 28 | 10 |
| 157 | 171 | 677 | 157 | 168 | 173 | 165 | 171 | 154 | |
| Austria | |||||||||
| Fixed broadband | 193 | 195 | 775 | 193 | 192 | 196 | 192 | 195 | 199 |
| Fixed telephony | 33 | 39 | 146 | 33 | 35 | 36 | 36 | 39 | 41 |
| Other operations | 59 | 66 | 267 | 59 | 62 | 70 | 69 | 66 | 71 |
| 285 | 300 | 1,188 | 285 | 289 | 302 | 297 | 300 | 311 | |
| Germany | |||||||||
| Mobile | 101 | 114 | 437 | 101 | 102 | 109 | 112 | 114 | 116 |
| Fixed broadband | 32 | 39 | 140 | 32 | 32 | 35 | 34 | 39 | 39 |
| Fixed telephony | 54 | 71 | 254 | 54 | 59 | 61 | 63 | 71 | 74 |
| 187 | 224 | 831 | 187 | 193 | 205 | 209 | 224 | 229 | |
| Other | |||||||||
| Mobile | 13 | – | – | 13 | – | – | – | – | – |
| Other operations | 33 | 36 | 153 | 33 | 37 | 40 | 40 | 36 | 33 |
| 46 | 36 | 153 | 46 | 37 | 40 | 40 | 36 | 33 | |
| TOTAL | |||||||||
| Mobile | 4,965 | 4,832 | 20,478 | 4,965 | 5,409 | 5,216 | 5,021 | 4,832 | 5,181 |
| Fixed broadband | 944 | 1,037 | 3,956 | 944 | 960 | 979 | 980 | 1,037 | 1,051 |
| Fixed telephony | 278 | 349 | 1,281 | 278 | 296 | 312 | 324 | 349 | 367 |
| Other operations | 271 | 302 | 1,181 | 271 | 286 | 294 | 299 | 302 | 292 |
| 6,458 | 6,520 | 26,896 | 6,458 | 6,951 | 6,801 | 6,624 | 6,520 | 6,891 | |
| Internal sales, elimination | –12 | –9 | –40 | –12 | –8 | –10 | –13 | –9 | –15 |
| Sweden, mobile | – | –1 | –1 | – | – | – | – | –1 | –8 |
| Lithuania, mobile | –5 | –3 | –20 | –5 | –4 | –5 | –8 | –3 | –3 |
| Latvia, mobile | –1 | –2 | –9 | –1 | –2 | –3 | –2 | –2 | –2 |
| Estonia, mobile | – | –1 | –2 | – | – | – | –1 | –1 | – |
| Netherlands, other operations | –4 | – | –2 | –4 | –1 | – | –1 | – | –1 |
| Other, other operations | –2 | –2 | –6 | –2 | –1 | –2 | –1 | –2 | –1 |
| TOTAL | 6,446 | 6,511 | 26,856 | 6,446 | 6,943 | 6,791 | 6,611 | 6,511 | 6,876 |
Mobile external net sales split
| SEK million Note |
2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
2014 Q4 |
|---|---|---|---|---|---|---|---|---|---|
| Sweden, mobile | |||||||||
| End-user service revenue | 1,797 | 1,809 | 7,368 | 1,797 | 1,841 | 1,889 | 1,829 | 1,809 | 1,856 |
| Operator revenue | 218 | 211 | 956 | 218 | 245 | 246 | 254 | 211 | 225 |
| Service revenue | 2,015 | 2,020 | 8,324 | 2,015 | 2,086 | 2,135 | 2,083 | 2,020 | 2,081 |
| Equipment revenue | 546 | 584 | 2,272 | 546 | 706 | 482 | 500 | 584 | 759 |
| Other revenue | 168 | 162 | 631 | 168 | 161 | 147 | 161 | 162 | 158 |
| 2,729 | 2,766 | 11,227 | 2,729 | 2,953 | 2,764 | 2,744 | 2,766 | 2,998 | |
| Netherlands, mobile | |||||||||
| End-user service revenue 2 |
322 | 305 | 1,404 | 322 | 403 | 364 | 332 | 305 | 301 |
| Operator revenue | 43 | 40 | 169 | 43 | 42 | 44 | 43 | 40 | 38 |
| Service revenue | 365 | 345 | 1,573 | 365 | 445 | 408 | 375 | 345 | 339 |
| Equipment revenue | 326 | 208 | 962 | 326 | 302 | 235 | 217 | 208 | 228 |
| 691 | 553 | 2,535 | 691 | 747 | 643 | 592 | 553 | 567 | |
| Kazakhstan, mobile | |||||||||
| End-user service revenue | 265 | 315 | 1,287 | 265 | 253 | 348 | 371 | 315 | 280 |
| Operator revenue | 80 | 80 | 451 | 80 | 127 | 145 | 99 | 80 | 98 |
| Service revenue | 345 | 395 | 1,738 | 345 | 380 | 493 | 470 | 395 | 378 |
| Equipment revenue | 5 | 4 | 16 | 5 | 3 | 4 | 5 | 4 | 4 |
| 350 | 399 | 1,754 | 350 | 383 | 497 | 475 | 399 | 382 | |
| Croatia, mobile | |||||||||
| End-user service revenue | 202 | 197 | 839 | 202 | 207 | 225 | 210 | 197 | 205 |
| Operator revenue | 46 | 43 | 208 | 46 | 36 | 74 | 55 | 43 | 66 |
| Service revenue | 248 | 240 | 1,047 | 248 | 243 | 299 | 265 | 240 | 271 |
| Equipment revenue | 68 | 63 | 382 | 68 | 173 | 78 | 68 | 63 | 101 |
| 316 | 303 | 1,429 | 316 | 416 | 377 | 333 | 303 | 372 | |
| Lithuania, mobile | |||||||||
| End-user service revenue | 226 | 210 | 886 | 226 | 224 | 230 | 222 | 210 | 207 |
| Operator revenue | 55 | 46 | 198 | 55 | 50 | 51 | 51 | 46 | 50 |
| Service revenue | 281 | 256 | 1,084 | 281 | 274 | 281 | 273 | 256 | 257 |
| Equipment revenue | 100 | 77 | 435 | 100 | 127 | 131 | 100 | 77 | 98 |
| 381 | 333 | 1,519 | 381 | 401 | 412 | 373 | 333 | 355 | |
| Latvia, mobile | |||||||||
| End-user service revenue | 140 | 137 | 580 | 140 | 146 | 152 | 145 | 137 | 144 |
| Operator revenue | 49 | 46 | 185 | 49 | 47 | 46 | 46 | 46 | 46 |
| Service revenue | 189 | 183 | 765 | 189 | 193 | 198 | 191 | 183 | 190 |
| Equipment revenue | 43 | 33 | 174 | 43 | 53 | 49 | 39 | 33 | 46 |
| 232 | 216 | 939 | 232 | 246 | 247 | 230 | 216 | 236 | |
| Estonia, mobile | |||||||||
| End-user service revenue | 102 | 97 | 412 | 102 | 106 | 106 | 103 | 97 | 96 |
| Operator revenue | 16 | 17 | 70 | 16 | 17 | 18 | 18 | 17 | 13 |
| Service revenue | 118 | 114 | 482 | 118 | 123 | 124 | 121 | 114 | 109 |
| Equipment revenue | 28 | 27 | 124 | 28 | 32 | 35 | 30 | 27 | 33 |
| 146 | 141 | 606 | 146 | 155 | 159 | 151 | 141 | 142 | |
| Germany, mobile | |||||||||
| End-user service revenue | 101 | 114 | 436 | 101 | 102 | 108 | 112 | 114 | 116 |
| Equipment revenue | – | – | 1 | – | – | 1 | – | – | – |
| 101 | 114 | 437 | 101 | 102 | 109 | 112 | 114 | 116 | |
| Other, mobile | |||||||||
| End-user service revenue | 13 | – | – | 13 | – | – | – | – | – |
| 13 | – | – | 13 | – | – | – | – | – | |
| TOTAL, MOBILE | |||||||||
| End-user service revenue | 3,168 | 3,184 | 13,212 | 3,168 | 3,282 | 3,422 | 3,324 | 3,184 | 3,205 |
| Operator revenue | 507 | 483 | 2,237 | 507 | 564 | 624 | 566 | 483 | 536 |
| Service revenue | 3,675 | 3,667 | 15,449 | 3,675 | 3,846 | 4,046 | 3,890 | 3,667 | 3,741 |
| Equipment revenue | 1,116 | 996 | 4,366 | 1,116 | 1,396 | 1,015 | 959 | 996 | 1,269 |
| Other revenue | 168 | 162 | 631 | 168 | 161 | 147 | 161 | 162 | 158 |
| TOTAL, MOBILE | 4,959 | 4,825 | 20,446 | 4,959 | 5,403 | 5,208 | 5,010 | 4,825 | 5,168 |
EBITDA
| 2016 | 2015 | 2015 | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 | ||
|---|---|---|---|---|---|---|---|---|---|---|
| SEK million | Note | Jan 1–Mar 31 | Jan 1–Mar 31 | Full year | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 |
| Sweden | ||||||||||
| Mobile | 817 | 893 | 3,515 | 817 | 841 | 938 | 843 | 893 | 792 | |
| Fixed broadband | 20 | 33 | 96 | 20 | 17 | 28 | 18 | 33 | 16 | |
| Fixed telephony | 33 | 41 | 166 | 33 | 56 | 34 | 35 | 41 | 44 | |
| Other operations | 24 | 9 | 67 | 24 | 32 | 14 | 12 | 9 | 28 | |
| 894 | 976 | 3,844 | 894 | 946 | 1,014 | 908 | 976 | 880 | ||
| Netherlands | ||||||||||
| Mobile | 2-3 | –243 | –106 | –410 | –243 | –150 | –83 | –71 | –106 | –78 |
| Fixed broadband | 3 | 124 | 161 | 545 | 124 | 116 | 128 | 140 | 161 | 169 |
| Fixed telephony | 3 | 18 | 18 | 50 | 18 | 7 | 12 | 13 | 18 | 20 |
| Other operations | 3 | 70 | 68 | 260 | 70 | 62 | 65 | 65 | 68 | 62 |
| –31 | 141 | 445 | –31 | 35 | 122 | 147 | 141 | 173 | ||
| Kazakhstan | ||||||||||
| Mobile | 6 | – | 54 | 6 | –5 | 50 | 9 | – | 17 | |
| 6 | – | 54 | 6 | –5 | 50 | 9 | – | 17 | ||
| Croatia | ||||||||||
| Mobile | 11 | 21 | 138 | 11 | 29 | 54 | 34 | 21 | 39 | |
| 11 | 21 | 138 | 11 | 29 | 54 | 34 | 21 | 39 | ||
| Lithuania | ||||||||||
| Mobile | 142 | 125 | 538 | 142 | 138 | 143 | 132 | 125 | 128 | |
| 142 | 125 | 538 | 142 | 138 | 143 | 132 | 125 | 128 | ||
| Latvia | ||||||||||
| Mobile | 69 | 68 | 295 | 69 | 78 | 79 | 70 | 68 | 82 | |
| 69 | 68 | 295 | 69 | 78 | 79 | 70 | 68 | 82 | ||
| Estonia | ||||||||||
| Mobile | 3 | 33 | 29 | 133 | 33 | 37 | 37 | 30 | 29 | 49 |
| Fixed telephony | – | 1 | 3 | – | – | 1 | 1 | 1 | 1 | |
| Other operations | 2 | 8 | 20 | 2 | 4 | 3 | 5 | 8 | 5 | |
| 35 | 38 | 156 | 35 | 41 | 41 | 36 | 38 | 55 | ||
| Austria | ||||||||||
| Mobile | –15 | –3 | –30 | –15 | –14 | –6 | –7 | –3 | –2 | |
| Fixed broadband | 46 | 26 | 126 | 46 | 36 | 40 | 24 | 26 | 33 | |
| Fixed telephony | 17 | 22 | 83 | 17 | 20 | 21 | 20 | 22 | 26 | |
| Other operations | 2 | 5 | 24 | 2 | 7 | 6 | 6 | 5 | 5 | |
| 50 | 50 | 203 | 50 | 49 | 61 | 43 | 50 | 62 | ||
| Germany | ||||||||||
| Mobile | 40 | –5 | 14 | 40 | 18 | 10 | –9 | –5 | –10 | |
| Fixed broadband | 6 | 5 | 21 | 6 | 6 | 5 | 5 | 5 | 6 | |
| Fixed telephony | 28 | 32 | 130 | 28 | 36 | 32 | 30 | 32 | 35 | |
| 74 | 32 | 165 | 74 | 60 | 47 | 26 | 32 | 31 | ||
| Other | ||||||||||
| Mobile | –10 | – | – | –10 | – | – | – | – | – | |
| Other operations | –14 | –23 | –81 | –14 | –34 | –12 | –12 | –23 | –55 | |
| –24 | –23 | –81 | –24 | –34 | –12 | –12 | –23 | –55 | ||
| TOTAL | ||||||||||
| Mobile | 850 | 1,022 | 4,247 | 850 | 972 | 1,222 | 1,031 | 1,022 | 1,017 | |
| Fixed broadband | 196 | 225 | 788 | 196 | 175 | 201 | 187 | 225 | 224 | |
| Fixed telephony | 96 | 114 | 432 | 96 | 119 | 100 | 99 | 114 | 126 | |
| Other operations | 84 | 67 | 290 | 84 | 71 | 76 | 76 | 67 | 45 | |
| TOTAL | 1,226 | 1,428 | 5,757 | 1,226 | 1,337 | 1,599 | 1,393 | 1,428 | 1,412 |
EBIT
| SEK million | Note | 2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
2014 Q4 |
|---|---|---|---|---|---|---|---|---|---|---|
| Sweden | ||||||||||
| Mobile | 574 | 647 | 2,544 | 574 | 589 | 711 | 597 | 647 | 515 | |
| Fixed broadband | –4 | 11 | 15 | –4 | –5 | 16 | –7 | 11 | –8 | |
| Fixed telephony | 29 | 35 | 148 | 29 | 51 | 31 | 31 | 35 | 40 | |
| Other operations | 15 | 4 | 40 | 15 | 20 | 12 | 4 | 4 | 18 | |
| 614 | 697 | 2,747 | 614 | 655 | 770 | 625 | 697 | 565 | ||
| Netherlands Mobile |
2–3 | –328 | –155 | –669 | –328 | –223 | –154 | –137 | –155 | –109 |
| Fixed broadband | 3 | – | 30 | 42 | – | –1 | 1 | 12 | 30 | 46 |
| Fixed telephony | 3 | 14 | 13 | 29 | 14 | 2 | 7 | 7 | 13 | 16 |
| Other operations | 3 | 54 –260 |
52 –60 |
193 –405 |
54 –260 |
46 –176 |
47 –99 |
48 –70 |
52 –60 |
45 –2 |
| Kazakhstan | ||||||||||
| Mobile | –57 | –89 | –225 | –57 | –59 | –16 | –61 | –89 | –53 | |
| –57 | –89 | –225 | –57 | –59 | –16 | –61 | –89 | –53 | ||
| Croatia | ||||||||||
| Mobile | –6 | –7 | –20 | –6 | –13 | 10 | –10 | –7 | 16 | |
| –6 | –7 | –20 | –6 | –13 | 10 | –10 | –7 | 16 | ||
| Lithuania | ||||||||||
| Mobile | 116 | 106 | 445 | 116 | 110 | 119 | 110 | 106 | 112 | |
| 116 | 106 | 445 | 116 | 110 | 119 | 110 | 106 | 112 | ||
| Latvia | ||||||||||
| Mobile | 35 | 43 | 173 | 35 | 43 | 50 | 37 | 43 | 54 | |
| 35 | 43 | 173 | 35 | 43 | 50 | 37 | 43 | 54 | ||
| Estonia | ||||||||||
| Mobile | 3 | 13 | 1 | 30 | 13 | 8 | 13 | 8 | 1 | 24 |
| Fixed telephony | –1 | 1 | 3 | –1 | – | 1 | 1 | 1 | 1 | |
| Other operations | –2 | 4 | 9 | –2 | 5 | –1 | 1 | 4 | – | |
| 10 | 6 | 42 | 10 | 13 | 13 | 10 | 6 | 25 | ||
| Austria | ||||||||||
| Mobile | –18 | –3 | –34 | –18 | –17 | –7 | –7 | –3 | –2 | |
| Fixed broadband | 24 | 4 | 29 | 24 | 11 | 16 | –2 | 4 | 11 | |
| Fixed telephony | 14 | 16 | 66 | 14 | 16 | 17 | 17 | 16 | 16 | |
| Other operations | –2 | 2 | 6 | –2 | 1 | 2 | 1 | 2 | – | |
| 18 | 19 | 67 | 18 | 11 | 28 | 9 | 19 | 25 | ||
| Germany | ||||||||||
| Mobile | 38 | –10 | –3 | 38 | 16 | 2 | –11 | –10 | –19 | |
| Fixed broadband | 4 | 4 | 16 | 4 | 4 | 4 | 4 | 4 | 6 | |
| Fixed telephony | 28 | 32 | 128 | 28 | 37 | 31 | 28 | 32 | 33 | |
| 70 | 26 | 141 | 70 | 57 | 37 | 21 | 26 | 20 | ||
| Other | ||||||||||
| Mobile | –10 | – | – | –10 | – | – | – | – | – | |
| Other operations | –10 | –25 | –75 | –10 | –39 | –4 | –7 | –25 | –58 | |
| –20 | –25 | –75 | –20 | –39 | –4 | –7 | –25 | –58 | ||
| TOTAL | ||||||||||
| Mobile | 357 | 533 | 2,241 | 357 | 454 | 728 | 526 | 533 | 538 | |
| Fixed broadband | 24 | 49 | 102 | 24 | 9 | 37 | 7 | 49 | 55 | |
| Fixed telephony | 84 | 97 | 374 | 84 | 106 | 87 | 84 | 97 | 106 | |
| Other operations | 55 | 37 | 173 | 55 | 33 | 56 | 47 | 37 | 5 | |
| 520 | 716 | 2,890 | 520 | 602 | 908 | 664 | 716 | 704 | ||
| One-off items | 3 | –365 | –14 | –443 | –365 | –238 | –120 | –71 | –14 | 31 |
| TOTAL | 155 | 702 | 2,447 | 155 | 364 | 788 | 593 | 702 | 735 |
CAPEX
| SEK million | Note | 2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
2014 Q4 |
|---|---|---|---|---|---|---|---|---|---|---|
| Sweden | ||||||||||
| Mobile | 179 | 129 | 664 | 179 | 185 | 135 | 215 | 129 | 220 | |
| Fixed broadband | 18 | 9 | 95 | 18 | 50 | 16 | 20 | 9 | 8 | |
| Fixed telephony | 1 | 2 | 12 | 1 | 3 | 4 | 3 | 2 | 2 | |
| Other operations | 3 | 2 | 13 | 3 | 3 | 4 | 4 | 2 | 3 | |
| 201 | 142 | 784 | 201 | 241 | 159 | 242 | 142 | 233 | ||
| Netherlands | ||||||||||
| Mobile | 214 | 236 | 1,210 | 214 | 332 | 315 | 327 | 236 | 313 | |
| Fixed broadband | 278 | 139 | 471 | 278 | 140 | 68 | 124 | 139 | 118 | |
| Fixed telephony | 5 | 4 | 15 | 5 | 4 | 3 | 4 | 4 | 7 | |
| Other operations | 22 | 22 | 77 | 22 | 21 | 12 | 22 | 22 | 13 | |
| 519 | 401 | 1,773 | 519 | 497 | 398 | 477 | 401 | 451 | ||
| Kazakhstan | ||||||||||
| Mobile | 79 | 119 | 532 | 79 | 154 | 123 | 136 | 119 | 78 | |
| 79 | 119 | 532 | 79 | 154 | 123 | 136 | 119 | 78 | ||
| Croatia | ||||||||||
| Mobile | 53 | 24 | 272 | 53 | 93 | 74 | 81 | 24 | 70 | |
| 53 | 24 | 272 | 53 | 93 | 74 | 81 | 24 | 70 | ||
| Lithuania | ||||||||||
| Mobile | 8 | 150 | 38 | 114 | 150 | 22 | 28 | 26 | 38 | 27 |
| 150 | 38 | 114 | 150 | 22 | 28 | 26 | 38 | 27 | ||
| Latvia | ||||||||||
| Mobile | 25 | 23 | 113 | 25 | 51 | 20 | 19 | 23 | 34 | |
| 25 | 23 | 113 | 25 | 51 | 20 | 19 | 23 | 34 | ||
| Estonia | ||||||||||
| Mobile | 8 | 21 | 26 | 77 | 21 | 18 | 18 | 15 | 26 | 11 |
| Other operations | – | 2 | 7 | – | 1 | 1 | 3 | 2 | – | |
| 21 | 28 | 84 | 21 | 19 | 19 | 18 | 28 | 11 | ||
| Austria | ||||||||||
| Mobile | 3 | 11 | 38 | 3 | 7 | 9 | 11 | 11 | – | |
| Fixed broadband | 8 | 17 | 68 | 8 | 31 | 8 | 12 | 17 | 12 | |
| Fixed telephony | 1 | 6 | 8 | 1 | 2 | – | – | 6 | 7 | |
| Other operations | 1 | 5 | 10 | 1 | 4 | 1 | – | 5 | 4 | |
| 13 | 39 | 124 | 13 | 44 | 18 | 23 | 39 | 23 | ||
| Germany | ||||||||||
| Mobile | – | 2 | 4 | – | 2 | – | – | 2 | 1 | |
| Fixed broadband | – | 1 | 2 | – | 1 | – | – | 1 | – | |
| – | 3 | 6 | – | 3 | – | – | 3 | 1 | ||
| Other | ||||||||||
| Other operations | 93 | 121 | 425 | 93 | 99 | 93 | 112 | 121 | 102 | |
| 93 | 121 | 425 | 93 | 99 | 93 | 112 | 121 | 102 | ||
| TOTAL | ||||||||||
| Mobile | 724 | 608 | 3,024 | 724 | 864 | 722 | 830 | 608 | 754 | |
| Fixed broadband | 304 | 166 | 636 | 304 | 222 | 92 | 156 | 166 | 138 | |
| Fixed telephony | 7 | 12 | 35 | 7 | 9 | 7 | 7 | 12 | 16 | |
| Other operations | 119 | 152 | 532 | 119 | 128 | 111 | 141 | 152 | 122 | |
| TOTAL | 8 | 1,154 | 938 | 4,227 | 1,154 | 1,223 | 932 | 1,134 | 938 | 1,030 |
Five-year summary
| SEK million Note |
2016 Jan 1-Mar 31 |
2015 Jan 1-Mar 31 |
2015 | 2014 | 2013 | 2012 |
|---|---|---|---|---|---|---|
| CONTINUING OPERATIONS | ||||||
| Net sales | 6,446 | 6,511 | 26,856 | 25,955 | 25,757 | 25,993 |
| Numbers of customers (by thousands) | 16,220 | 13,829 | 14,414 | 13,594 | 13,582 | 14,229 |
| EBITDA | 1,226 | 1,428 | 5,757 | 5,926 | 5,891 | 6,040 |
| EBIT | 155 | 702 | 2,447 | 3,490 | 2,548 | 2,190 |
| EBT | 504 | 675 | 2,012 | 3,500 | 1,997 | 1,668 |
| Net profit | 339 | 517 | 1,268 | 2,626 | 968 | 1,158 |
| Key ratios | ||||||
| EBITDA margin, % | 19.0 | 21.9 | 21.4 | 22.8 | 22.9 | 23.2 |
| EBIT margin, % | 2.4 | 10.8 | 9.1 | 13.4 | 9.9 | 8.4 |
| Value per share (SEK) | ||||||
| Net profit | 0.83 | 1.16 | 2.84 | 5.89 | 2.17 | 2.61 |
| Net profit after dilution | 0.83 | 1.15 | 2.82 | 5.86 | 2.15 | 2.59 |
| TOTAL | ||||||
| Equity | 19,464 | 24,426 | 17,901 | 22,682 | 21,591 | 20,429 |
| Total assets | 37,206 | 38,607 | 36,149 | 39,848 | 39,855 | 49,189 |
| Cash flow from operating activities | 953 | 889 | 3,529 | 4,578 | 5,813 | 8,679 |
| Cash flow after CAPEX | –154 | –96 | –486 | 432 | 572 | 4,070 |
| Available liquidity | 8,354 | 11,316 | 7,890 | 8,224 | 9,306 | 12,933 |
| Net debt | 4 9,415 |
3,465 | 9,878 | 8,135 | 7,328 | 15,187 |
| Economic net debt 1, 4 |
9,397 | 3,465 | 9,878 | 8,135 | 7,328 | 15,187 |
| Net investments in intangible and tangible assets, CAPEX | 1,154 | 951 | 4,240 | 3,976 | 5,534 | 5,294 |
| Investments/divestments in shares and other financial assets |
86 | –4,891 | –4,865 | –439 | –17,235 | 215 |
| Key ratios | ||||||
| Equity/assets ratio, % | 52 | 63 | 50 | 57 | 54 | 42 |
| Debt/equity ratio, multiple | 0.48 | 0.14 | 0.55 | 0.36 | 0.34 | 0.74 |
| Return on equity, % | 7.9 | 16.0 | 14.7 | 10.0 | 69.5 | 15.6 |
| ROCE, return on capital employed, % 10 |
5.6 | 14.5 | 14.0 | 10.1 | 48.0 | 15.4 |
| Average interest rate, % | 3.1 | 5.0 | 4.4 | 5.0 | 5.2 | 6.7 |
| Value per share (SEK) | ||||||
| Net profit | 0.83 | 5.01 | 6.69 | 4.96 | 32.77 | 7.34 |
| Net profit after dilution | 0.83 | 4.98 | 6.65 | 4.93 | 32.55 | 7.30 |
| Equity | 43.65 | 54.79 | 40.13 | 50.90 | 48.49 | 45.95 |
| Cash flow from operating activities | 2.14 | 1.99 | 7.91 | 10.27 | 13.06 | 19.53 |
| Dividend, ordinary | – | – | 5.351) | 4.85 | 4.40 | 7.10 |
| Extraordinary dividend | – | – | – | 10.00 | – | – |
| Redemption | – | – | – | – | 28.00 | – |
| Market price at closing day | 75.30 | 103.10 | 84.75 | 94.95 | 72.85 | 117.10 |
1) Proposed dividend
Parent company
Income statement
| NET LOSS | –81 | –76 | –175 |
|---|---|---|---|
| Tax on loss | 23 | 28 | 56 |
| Loss after financial items, EBT | –104 | –104 | –231 |
| Net interest expenses and other financial items | –58 | –69 | –269 |
| Exchange rate difference on financial items | –32 | –18 | 106 |
| Operating loss, EBIT | –14 | –17 | –68 |
| Administrative expenses | –19 | –32 | –121 |
| Net sales | 5 | 15 | 53 |
| SEK million | Jan 1–Mar 31 | Jan 1–Mar 31 | Full year |
| 2016 | 2015 | 2015 |
Balance sheet
| SEK million | Note | Mar 31, 2016 | Dec 31, 2015 |
|---|---|---|---|
| ASSETS | |||
| NON-CURRENT ASSETS | |||
| Tangible assets | 1 | 1 | |
| Financial assets | 13,673 | 13,666 | |
| NON-CURRENT ASSETS | 13,674 | 13,667 | |
| CURRENT ASSETS | |||
| Current receivables | 6,492 | 5,987 | |
| Cash and cash equivalents | 2 | 3 | |
| CURRENT ASSETS | 6,494 | 5,990 | |
| ASSETS | 20,168 | 19,657 | |
| EQUITY AND LIABILITIES | |||
| EQUITY | |||
| Restricted equity | 10 | 5,549 | 5,549 |
| Unrestricted equity | 10 | 5,247 | 5,346 |
| EQUITY | 10,796 | 10,895 | |
| NON-CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 4 | 3,734 | 4,204 |
| NON-CURRENT LIABILITIES | 3,734 | 4,204 | |
| CURRENT LIABILITIES | |||
| Interest-bearing liabilities | 4 | 5,555 | 4,479 |
| Non-interest-bearing liabilities | 83 | 79 | |
| CURRENT LIABILITIES | 5,638 | 4,558 | |
| EQUITY AND LIABILITIES | 20,168 | 19,657 | |
Notes
NOTE 1 ACCOUNTING PRINCIPLES AND DEFINITIONS
The interim report for the Group has been prepared in accordance with IAS 34 and the Swedish Annual Accounts Act, and for the parent company in accordance with the Swedish Annual Accounts Act and RFR 2 Reporting for legal entities and other statements issued by the Swedish Financial Reporting Board.
The amended IFRS standards (IAS 1, IAS 16, IAS 38, IAS 27 and IFRS 11), which became effective January 1, 2016, have had no material effect on the consolidated financial statements.
As a result of the agreement with Kazakhtelecom, Tele2 introduced in Q1 2016 a new measure; economic net debt. Please refer to Note 4 for additional information.
In all other respects, Tele2 has presented this interim report in accordance with the accounting principles and calculation methods used in the 2015 Annual Report. The description of these principles and definitions is found in the 2015 Annual Report.
Disclosures in accordance with IAS 34 Interim Financial Reporting are presented either in the Notes or elsewhere in the interim report.
NOTE 2 NET SALES AND CUSTOMERS Net sales
In Q4 2015, net sales in Netherlands was positively affected by a net of SEK 90 million mainly due to benefit from a tax settlement with regards to VAT on postpaid subscriptions.
Customers
Due to implementation of new IT systems, leading to more improved reporting of number of customers, the customer stock has changed without effecting the net intake in Q1 2016 in Lithuania with 27,000 customers, in Q4 2015 in Croatia with –22,000 customers, and in Q2 2015 in Sweden with –28,000 customers (the later also due to changed principle for twin cards).
NOTE 3 OPERATING EXPENSES EBITDA
In Q1 2016, the EBITDA in Netherlands was positively affected by SEK 73 million as a result of a resolved lease incentive in connection with termination of old property contracts of which mobile was impacted by SEK 47 million, fixed broadband SEK 19 million, fixed telephony SEK 3 million and other operations SEK 4 million.
In Q4 2014, the EBITDA for mobile in Estonia was positively impacted by SEK 20 million as a result of the sales of a mobile license in the 2600 MHz frequency band.
Bridge from EBITDA to EBIT
| SEK million | 2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
|---|---|---|---|
| EBITDA | 1,226 | 1,428 | 5,757 |
| Impairment of goodwill | –326 | – | –196 |
| Sale of operations | – | – | 12 |
| Acquisition costs | –3 | – | –118 |
| Challenger program | –34 | –14 | –247 |
| Integration costs, Kazakhstan | –2 | – | – |
| Other one-off items | – | – | 106 |
| Total one-off items | –365 | –14 | –443 |
| Depreciation/amortization and other impairment |
–706 | –712 | –2,862 |
| Result from shares in joint ventures and associated companies |
– | – | –5 |
| EBIT | 155 | 702 | 2,447 |
One-off items in segment reporting Impairment of goodwill
In Q1 2016, an impairment loss on goodwill of SEK 326 million was recognized referring to the cash generating unit Kazakhstan. The impairment is due to the macro environment, including the Tenge devaluation which implies weaker consumer purchase power and higher expenses. In addition, intense competitive pressure during Q1 has eroded pricing power for all market participants. This has also resulted in a decrease in the value of the put option obligation to the former non-controlling interest in Tele2 Kazakhstan, which represents an 18 percent economic interest in the new jointly owned company (see Note 11), with a positive effect in the income statement of SEK 413 million reported under financial items (Note 5).
In Q3 2015, an impairment loss on goodwill of SEK 197 million was recognized referring to the cash generating unit Estonia. The impairment loss was based on the estimated value in use of SEK 1.2 billion by using pre-tax discount rate (WACC) of 9 percent. The impairment was recognized as a result of the underlying performance of the Estonian economy and Tele2's operation.
Acquisition costs
In Q1 2016 and Q4 2015, EBIT (administrative expenses) was negatively impacted by SEK –3 and –118 million respectively concerning expenses related to the combination of the Tele2 and Kazakhtelecom mobile operations in Kazakhstan. For further information please refer to Note 11.
Challenger program: restructuring costs
At the end of 2014, Tele2 announced its Challenger program, which is a program to step change productivity in the Tele2 Group. The program will strengthen the organization further and enable it to continue to challenge the industry. The costs associated with the program are reported as one-off items and in the income statement on the following line items.
| 2016 | 2015 | 2015 | |
|---|---|---|---|
| SEK million | Jan 1–Mar 31 | Jan 1–Mar 31 | Full year |
| Costs of service provided | –9 | –4 | –58 |
| Selling expenses | – | – | –34 |
| Administrative expenses | –25 | –10 | –155 |
| Total Challenger program costs | –34 | –14 | –247 |
| of which: | |||
| -redundancy costs | –5 | – | –105 |
| -other employee and consultancy costs | –28 | –14 | –119 |
| -exit of contracts and other costs | –1 | – | –23 |
Integration costs, Kazakhstan
As a result of the acquisition of Altel and the ongoing merger with Tele2's present operations in Kazakhstan, integration costs are reported as one-off items with a negative effect in EBIT (administrative expenses) of SEK 2 million in Q1 2016 relating to employee redundancies.
Other one-off items
In Q3 2015, other operating revenues in Sweden were positively affected by SEK 112 million, concerning transactions related to sales of 2G sites to Net4Mobility, an infrastructure joint operation between Tele2 Sweden and Telenor Sweden, and the result of dismantling 2G sites. The mission for Net4Mobility is to build and operate a combined 2G and 4G network. From its establishment Tele2 and Telenor have transferred sites to the joint operation. These site transfers have now been completed resulting in a positive impact on Tele2's financial statement. Tele2 and Telenor are technically MVNO's with Net4Mobility and hence act as capacity purchasers.
In Q3 2015, other operating expenses were negatively affected by SEK 6 million, related to the devaluation in Kazakhstan. The total foreign exchange rate effect of assets and liabilities in Kazakhstan was reported in other comprehensive income and amounted at the time for the devaluation to SEK –416 million. Please refer to Note 5 regarding effects on change in fair value of put option Kazakhstan.
In Q4 2014, Sweden has been positively affected by SEK 41 million, due to the counterparty withdrew its claim concerning the ruling from the Administrative Court of Appeal in June 2010 regarding price on whole and split copper cable.
NOTE 4 FINANCIAL ASSETS AND LIABILITIES Net debt and economic net debt
| 2016 Jan 1– |
2015 Jan 1– |
2015 | 2014 | 2013 | 2012 | |
|---|---|---|---|---|---|---|
| SEK million | Mar 31 | Mar 31 | Full year | Full year | Full year | Full year |
| Interest-bearing non-current and current liabilities |
10,711 | 7,286 | 10,991 | 9,190 | 9,430 | 17,512 |
| Excluding provisions | –988 | –850 | –926 | –807 | –679 | –559 |
| Excluding equipment financing | –69 | – | – | – | – | – |
| Cash & cash equivalents, current investments and restricted funds |
–218 | –2,923 | –139 | –189 | –1,413 | –1,745 |
| Other financial interest-bearing receivables (swap agreements etc) |
–21 | –48 | –48 | –47 | –10 | –21 |
| Net debt for assets classified as held for sale |
– | – | – | –12 | – | – |
| Net debt | 9,415 | 3,465 | 9,878 | 8,135 | 7,328 | 15,187 |
| Excluding loan from Kazakhtelecom |
–18 | – | – | – | – | – |
| Economic net debt | 9,397 | 3,465 | 9,878 | 8,135 | 7,328 | 15,187 |
As a result of the agreement with Kazakhtelecom, Tele2 introduced in Q1 2016 a new measure; economic net debt. Economic net debt is defined as net debt excluding liabilities from Kazakhtelecom and liabilities guaranteed by Kazakhtelecom.
Financing
| Interest-bearing liabilities | ||||||
|---|---|---|---|---|---|---|
| Mar 31, 2016 | Dec 31, 2015 | |||||
| SEK million | Current Non-current | Current Non-current | ||||
| Bonds NOK, Sweden1) | 980 | – | – | 955 | ||
| Bonds SEK, Sweden | 500 | 3,048 | 500 | 2,548 | ||
| Commercial papers, Sweden | 3,849 | – | 3,784 | – | ||
| Financial institutions | 238 | 640 | 543 | 655 | ||
| 5,567 | 3,688 | 4,827 | 4,158 | |||
| Put option, Kazakhstan (Note 5) | – | – | 125 | 416 | ||
| Provisions | 52 | 936 | 52 | 874 | ||
| Other liabilities | 294 | 174 | 368 | 171 | ||
| 5,913 | 4,798 | 5,372 | 5,619 | |||
| Total interest-bearing liabilities | 10,711 | 10,991 |
1) The bonds in NOK are hedged for currency exposure via currency swaps
At the time of the acquisition of Tele2 Kazakhstan the company had an existing interest free liability to the former owner Kazakhtelecom. In connection with the completion of the agreement with Kazakhtelecom during Q1 2016, the liability maturity period was extended to 2031 and as a consequence the loan was revalued to fair value at the remeasurement date. On March 31, 2016 the reported debt amounted to SEK 18 (247) million and the nominal value to SEK 277 (287) million. The change in book value was reported in equity, please refer to Note 10.
In Q1 2016 and onwards, Tele2 has started to transfer the right for payment of certain operating receivables to financial institutions. The obligation that occur when receiving payment from financial institutions connected to the transfer of right of payment of receivables for sold equipment has been netted against the receivables in the balance sheet and resulted in a positive effect on cash flow.
On February 3, 2016 Tele2 completed the issuance of a SEK 500 million bond in the Swedish bond market. The issue has a final maturity of 3 years with a floating rate coupon. The bond is issued under the Tele2 EMTN program and will not be listed.
On January 13, 2016 Tele2 entered into a syndicated multi-currency revolving credit facility agreement amounting to EUR 800 million with 11 relationship banks. The facility has a tenor of five years with two one-year extension options and it replaces the existing revolving credit facility dated May 2012. The new facility further strengthens Tele2's financial position and secures a structure of diversified funding sources. The new facility was unutilized as of March 31, 2016.
Classification and fair values
Tele2's financial assets consist mainly of receivables from end customers, other operators and resellers as well as cash and cash equivalents. Tele2's financial liabilities consist mainly of loans, bonds and accounts payables. Classification of financial assets and liabilities including their fair value is presented below. During 2016, no transfers were made between the different levels in the fair value hierarchy and no significant changes were made to valuation techniques, inputs used or assumptions except for the valuation of the put option related to Tele2 Kazakhstan according to below.
| Mar 31, 2016 | ||||||||
|---|---|---|---|---|---|---|---|---|
| Assets and liabilities at fair value |
Derivative instruments |
Financial | ||||||
| through profit/loss |
Loans and receiv |
designated for hedge |
liabilities at amor |
Total reported |
Fair | |||
| SEK million | (level 3) | ables | accounting | tized cost | value | value | ||
| Other financial assets | 7 | 1,199 | – | – | 1,206 | 1,206 | ||
| Accounts receivables | – | 1,995 | – | – | 1,995 | 1,995 | ||
| Other current receivables |
– | 3,520 | 21 | – | 3,541 | 3,541 | ||
| Current investments | – | 33 | – | – | 33 | 33 | ||
| Cash and cash equivalents |
– | 184 | – | – | 184 | 184 | ||
| Total financial assets | 7 | 6,931 | 21 | – | 6,959 | 6,959 | ||
| Liabilities to financial institutions and similar liabilities |
– | – | – | 9,255 | 9,255 | 9,541 | ||
| Other interest bearing liabilities |
– | – | 227 | 241 | 468 | 470 | ||
| Accounts payable | – | – | – | 2,316 | 2,316 | 2,316 | ||
| Other current liabilities |
– | – | – | 675 | 675 | 675 | ||
| Total financial liabilities |
– | – | 227 | 12,487 | 12,714 | 13,002 |
| Dec 31 2015 | ||||||
|---|---|---|---|---|---|---|
| Assets and liabilities at fair value through |
Loans | Derivative instruments designated |
Financial liabilities |
Total | ||
| SEK million | profit/loss (level 3) |
and receiv ables |
for hedge accounting |
at amor tized cost |
reported value |
Fair value |
| Other financial assets | 9 | 1,349 | – | – | 1,358 | 1,358 |
| Accounts receivables | – | 2,163 | – | – | 2,163 | 2,163 |
| Other current receivables |
– | 3,296 | 48 | – | 3,344 | 3,344 |
| Current investments | – | 32 | – | – | 32 | 32 |
| Cash and cash equivalents |
– | 107 | – | – | 107 | 107 |
| Total financial assets | 9 | 6,947 | 48 | – | 7,004 | 7,004 |
| Liabilities to financial institutions and similar liabilities |
– | – | – | 8,985 | 8,985 | 9,240 |
| Other interest bearing liabilities |
541 | – | 231 | 308 | 1,080 | 1,049 |
| Accounts payable | – | – | – | 2,746 | 2,746 | 2,746 |
| Other current liabilities |
– | – | – | 502 | 502 | 502 |
| Total financial liabilities |
541 | – | 231 | 12,541 | 13,313 | 13,537 |
Changes in financial assets and liabilities valued at fair value through profit/loss in level 3 is presented below.
| Mar 31, 2016 | Dec 31, 2015 | ||||
|---|---|---|---|---|---|
| SEK million | Assets | Liabilities | Assets | Liabilities | |
| As of January 1 | 9 | 541 | 9 | 887 | |
| Changes in fair value | – | –413 | – | 51 | |
| Divestment of shares | –2 | – | – | – | |
| Payment of liability | –125 | – | – | ||
| Exchange rate differences* | – | –3 | – | –397 | |
| Total | 7 | – | 9 | 541 |
* Recognised in other comprehensive income.
In Q1 2016, an initial purchase price of SEK 125 million was paid to the former non-controlling shareholder Asianet in Tele2 Kazakhstan for its 49 percent stake. According to the agreement between the parties Asianet has right to 18 percent of the economic interest in the new jointly owned company, please refer to Note 11. The estimated fair value of the deferred consideration amounted on March 31, 2016 to SEK – (541) million. The fair value was calculated based on expected future cash flows of the jointly owned company, please refer to Note 5.
NOTE 5 OTHER FINANCIAL ITEMS
Other financial items in the income statement consist of the following items.
| SEK million | 2016 Jan 1–Mar 31 |
2015 Jan 1–Mar 31 |
2015 Full year |
|---|---|---|---|
| Change in fair value, put option Kazakhstan | 413 | 73 | –51 |
| Exchange rate differences | 9 | 2 | 1 |
| EUR net investment hedge, interest component | –1 | 1 | –3 |
| NOK net investment hedge, interest component | – | –1 | –1 |
| Other financial expenses | –3 | –2 | –5 |
| Total other financial items | 418 | 73 | –59 |
In Q1 2016, part of the put option obligation to the former non-controlling interest in Tele2 Kazakhstan was settled and SEK 125 million was paid to the previous non-controlling interest. The remaining part of the fair value of the put option obligation has changed to zero, affecting financial items in the income statement positively by SEK 413 million. The fair value was calculated based on expected future cash flows of the jointly owned company. The reason for the change in fair value is due to the macro environment, including the Tenge devaluation which implies weaker consumer purchase power and higher expenses. In addition, intense competitive pressure during Q1 has eroded pricing power for all market participants. The fair value estimate is sensitive to changes in key assumptions supporting the expected future cash flows for the jointly owned company in Kazakhstan. A positive deviation from the current assumptions would increase the earn-out liability.
In Q3 2015, the fair value of the put option of the business in Kazakhstan decreased by SEK 245 million affecting financial items in the income statement negatively by SEK 30 million and other comprehensive income positively by SEK 275 million mainly due to the devaluation of the Kazakhstan currency during the quarter. For further information please refer to Note 4.
In Q1 and Q3 2015, the cash flow was negatively affected by SEK 130 and 76 million respectively related to currency derivatives designated for hedge accounting.
NOTE 6 TAXES
During the first three months 2016, the effective tax rate was mainly affected by below stated items, indicating an underlying effective tax rate of 21 (21) percent.
| 2016 | 2015 | |||
|---|---|---|---|---|
| SEK million | Jan 1–Mar 31 | Full year | ||
| Profit before tax | 504 | 2,012 | ||
| Income tax | –165 | 32.7% | –744 | 37.0% |
| Tax effect of: | ||||
| Impairment of goodwill, non-deductible | 65 –12.9% | 39 | –1.9% | |
| Not valued tax loss-carry forwards | 111 –22.0% | 144 | –7.2% | |
| Valuation tax loss-carry forwards | –40 | 7.9% | – | – |
| Non-deductible expenses/non-taxable revenue | –77 | 15.3% | 191 | –9.5% |
| Adjustment of taxes from previous years | – | – | –58 | 2.9% |
| Adjusted tax expense and effective tax rate | –106 | 21.0% | –428 | 21.3% |
In Q1 2016, net taxes were positively affected by a valuation of deferred tax assets in Germany of SEK 40 million.
NOTE 7 RELATED PARTIES
Tele2's share of cash and cash equivalents in joint operations, for which Tele2 has limited disposal rights was included in the Group's cash and cash equivalents and amounted at each closing date to the sums stated below.
| SEK million | 2016 | 2015 | 2015 | 2015 | 2015 | 2014 |
|---|---|---|---|---|---|---|
| Mar 31 | Dec 31 | Sep 30 | Jun 30 | Mar 31 | Dec 31 | |
| Cash and cash equivalents in joint operations |
42 | 34 | 1 | 11 | 33 | 4 |
As part of the business combination in Q1 2016, of Tele2's and Kazakhtelecom's operations in Kazakhstan, Kazakhtelecom have 49 percent of the voting rights in the combined company. Tele2 and Kazakhtelecom sell and purchases telecommunication services from each other. Business relations and pricing between the parties are based on commercial terms and conditions. Apart from transactions with joint operations, and previously described transactions, no other significant related party transactions were carried out during 2016. Other related parties are presented in Note 37 of the Annual Report 2015.
NOTE 8 CAPEX
Bridge from CAPEX to paid CAPEX
| 2016 | 2015 | 2015 | |
|---|---|---|---|
| SEK million | Jan 1–Mar 31 | Jan 1–Mar 31 | Full year |
| CAPEX, continued operations | –1,154 | –938 | –4,227 |
| CAPEX, discontinued operations | – | –13 | –13 |
| CAPEX, total operation | –1,154 | –951 | –4,240 |
| This year's unpaid CAPEX and paid CAPEX from | |||
| previous year | 32 | –38 | 205 |
| Received payment of sold non-current assets | 15 | 4 | 20 |
| Paid CAPEX | –1,107 | –985 | –4,015 |
In Q1 2016, CAPEX for Lithuania was affected by SEK 123 million related to licenses in the 900 and 1800 MHz bands. The new licenses will ensure continued operations after 2017 when the current licenses expire. They will also contribute to higher quality and lower costs, due to the quality and price ratio that Tele2 has opted for. SEK 26 million was paid during the quarter and the remaining part will be paid over 15 years of the license lifespan.
In Q4 2014, Tele2 Estonia sold a mobile license in the 2600 MHz frequency band for SEK 24 million.
NOTE 9 CONTINGENT LIABILITIES
| SEK million | Mar 31, 2016 | Dec 31, 2015 |
|---|---|---|
| Asset dismantling obligation | 139 | 137 |
| KPN dispute, Netherlands | 214 | 212 |
| Tax dispute, Russia | 146 | 154 |
| Total contingent liabilities | 499 | 503 |
Tele2 has obligations to dismantle assets and restore premises within fixed telephony and fixed broadband in the Netherlands as well as in Austria. Tele2 assesses such dismantling as unlikely and consequently only reported this obligation as contingent liabilities.
Tele2 Netherlands is, in the ordinary course of its business, involved in several regulatory complaints and disputes pending with the appropriate governmental authorities. In a specific case regarding the rental fees of copper lines, which Tele2 Netherlands uses as part of its fixed operations, the regulator (ACM) has determined that the rental fees are to be adjusted with retroactive effect from 2009. On July 21, 2015 the Supreme Administrative Court (CBb) ruled that ACM had no powers to impose any deduction on the WPC IIA price caps from 2009 till now. This resulted in an additional claim from KPN of EUR 14.5 million for the first 3 years (2009–2011), which were previously deducted by ACM in their ruling. Together with the claim for the period 2012-July 2014 this has resulted in a total claim from KPN for the time period 2009-July 2014 amounting to EUR 23.2 million (SEK 214 million) which is subject to pending appeals and court cases which are expected to go on for several years. Our assessment is that it is unlikely that Tele2 will have to pay these fees and consequently no provision has been made.
The tax authorities in Russia are currently performing tax audits on several of Tele2's former subsidiaries in Russia. Per the sales agreement with the VTB-Group Tele2 is liable for any additional taxes payable as result of the tax audits. On March 31, 2016 (and December 31, 2015 respectively) Tele2 has won tax disputes equivalent to SEK 199 (187) million, of which the Russian tax authorities has appealed SEK 146 (154) million. In addition, Tele2 has lost tax disputes of SEK –17 (–16) million, of which Tele2 has appealed SEK –1 (–7) million. On March 31, 2016 (and December 31, 2015 respectively) total provisions for Russian tax disputes amounted to SEK 17 (16) million. Even though it cannot be ruled out that Tele2 may be liable to certain costs, Tele2 assesses that it is not likely that any additional taxes need to be paid and consequently no additional provisions have been made.
Additional contractual commitments are stated in Note 29 in the Annual Report 2015.
NOTE 10 EQUITY AND NUMBER OF SHARES
Number of shares
| Mar 31, 2016 | Dec 31, 2015 | |
|---|---|---|
| Number of shares | ||
| Outstanding | 446,188,367 | 446,188,367 |
| In own custody | 4,894,972 | 4,894,972 |
| Weighted average | 446,188,367 | 446,032,991 |
| After dilution | 448,364,585 | 449,020,673 |
| Weighted average, after dilution | 448,692,629 | 448,904,102 |
Changes of number of shares during previous year are stated in Note 24 in the Annual Report 2015.
Dividend
Tele2's Board of Directors has proposed an ordinary dividend of SEK 5.35 per share in respect of the financial year 2015 at the Annual General Meeting in May 2016. This corresponds to a total of SEK 2,387 million.
Transactions with non-controlling interests
The transaction with Kazakhtelecom, which is described in Note 11, resulted in Q1 2016, in a positive effect in equity attributable to the equity holders of the parent company of SEK 1,143 million. The positive effect mainly refers to Kazakhtelecom's contribution of Altel to Tele2 in exchange for Kazakhtelecom becoming partly owner of Tele2 Kazakhstan. As part of setting up the new structure in Kazakhstan an initial purchase price of SEK 125 million was paid during the quarter to the former non-controlling shareholder Asianet in Tele2 Kazakhstan for its 49 percent stake.
Long-term incentive program (LTI)
For additional information related to the LTI programs please refer to Note 33 of the Annual Report 2015.
LTI 2015
| Number of share rights | 2016 Jan 1–Mar 31 |
Cumulative from start |
|---|---|---|
| Allocated June 8, 2015 | 1,241,935 | |
| Outstanding as of January 1, 2016 | 1,093,535 | |
| Forfeited | –95,000 | –243,400 |
| Total outstanding share rights | 998,535 | 998,535 |
LTI 2014
| Number of share rights | 2016 Jan 1–Mar 31 |
Cumulative from start |
|---|---|---|
| Allocated June 2, 2014 | 1,180,268 | |
| Outstanding as of January 1, 2016 | 897,508 | |
| Allocated, compensation for dividend | – | 109,288 |
| Forfeited | –84,230 | –430,881 |
| Performance conditions not reached, Norway | – | –43,665 |
| Exercised, cash settled, Norway | – | –1,732 |
| Total outstanding share rights | 813,278 | 813,278 |
| of which will be settled in cash | 9,147 | 9,147 |
LTI 2013
| Number of share rights | 2016 Jan 1–Mar 31 |
Cumulative from start |
|---|---|---|
| Allocated June 4, 2013 | 1,204,128 | |
| Outstanding as of January 1, 2016 | 841,263 | |
| Allocated, compensation for dividend | – | 139,134 |
| Forfeited | –32,224 | –478,174 |
| Performance conditions not reached, Norway | – | –41,260 |
| Performance conditions not reached, other | –444,634 | –444,634 |
| Exercised, cash settled, Norway | – | –14,789 |
| Total outstanding share rights | 364,405 | 364,405 |
| of which will be settled in cash | 19,380 | 19,380 |
The exercise of the share rights in LTI 2013 was conditional upon the fulfilment of certain retention and performance based conditions, measured from April 1, 2013 until March 31, 2016. The outcome of these performance conditions was in accordance with below and the outstanding share rights will be exchanged for shares in Tele2 or cash during Q2 2016.
| Retention and performance based conditions |
Minimum hurdle (20%) |
Stretch target (100%) |
Performance outcome |
Allotment |
|---|---|---|---|---|
| Series A Total Shareholder Return Tele2 (TSR) |
≥ 0% | 24.2% | 100% | |
| Series B Average normalised Return on Capital Employed (ROCE) |
8% | 12.5% | 10.0% | 55.6% |
| Series C Total Shareholder Return Tele2 (TSR) compared to a peer group |
> 0% | ≥ 10% | –5.4% | 0% |
ROCE, return on capital employed
| 2016 | 2015 | |||||
|---|---|---|---|---|---|---|
| Jan 1– | Jan 1– | 2015 | 2014 | 2013 | 2012 | |
| SEK million | Mar 31 | Mar 31 | Full year | Full year | Full year | Full year |
| EBIT, total operation | 155 | 2,403 | 4,149 | 3,102 | 16,339 | 5,653 |
| Financial income, total operation |
5 | 5 | 9 | 26 | 55 | 24 |
| Return1) | 160 | 2,408 | ||||
| Annualised return | 1,618 | 4,508 | 4,158 | 3,128 | 16,394 | 5,677 |
| in relation to | ||||||
| Total assets | 37,206 | 38,607 | 36,149 | 36,015 | 39,407 | 49,189 |
| Non-interest bearing liabilities |
–7,031 | –6,895 | –7,257 | –7,227 | –8,781 | –11,248 |
| Provisions for asset dismantling |
–833 | –645 | –771 | –634 | –488 | –211 |
| Capital employed for assets classified as held for sale |
– | – | – | 3,098 | 395 | – |
| Capital employed, closing balance |
29,342 | 31,067 | 28,121 | 31,252 | 30,533 | 37,730 |
| Capital employed, average | 28,732 | 31,160 | 29,687 | 30,893 | 34,132 | 36,859 |
| Total ROCE, % | 5.6 | 14.5 | 14.0 | 10.1 | 48.0 | 15.4 |
1) Including impairment of goodwill of SEK –326 (2015: capital gain for Norway of SEK 1,708) million
NOTE 11 BUSINESS ACQUISITIONS AND DIVESTMENTS
Acquisitions and divestments of shares and participations affecting cash flow were as follows:
| SEK million | 2016 Jan 1-Mar 31 |
2015 Full year |
|---|---|---|
| Acquisitions | ||
| Cash in acquired company, Altel Kazakhstan | 40 | – |
| Capital contribution to joint ventures | – | –4 |
| Total acquisition of shares and participations | 40 | –4 |
| Divestments | ||
| Norway | – | 4,904 |
| Residential cable and fiber operations, Sweden | – | –6 |
| Transaction costs, Russia | –1 | –6 |
| Proceeds from liquidation, Adworx Austria | – | 5 |
| Total sale of shares and participations | –1 | 4,897 |
| TOTAL CASH FLOW EFFECT | 39 | 4,893 |
ACQUISITIONS
Combination of operations, Kazakhstan
On November 4, 2015 Tele2 announced the agreement with Kazakhtelecom to combine the two businesses' mobile operations in Kazakhstan, Tele2 Kazakhstan and Altel, in a jointly owned company. Necessary regulatory approvals for the transactions were received end of January 2016 and the transaction was completed on February 29, 2016.
Kazakhtelecom has subscribed for newly issued shares in the Dutch holding company Khan Tengri Holding B.V. (previously 100 percent owned by Tele2 after the buyout of Asianet), being the owner of Tele2 Kazakhstan, in exchange for 100 percent of the shares in Altel. The estimated fair value of identifiable net assets in Altel was SEK 821 million.
The business combination will strengthen the position of both companies in the Kazakhstan market by combining Tele2's existing operations in Kazakhstan with Kazakhtelecom's mobile business, Altel. The new business will have more than 6 million customers and a market share of around 23 percent. The business combination with Kazakhtelecoms mobile operation will create a more sustainable and significant player in the market. The process of integrating the businesses is well underway and the expected synergies will be beneficial for both our customers and shareholders.
Tele2 has a 49 percent economic ownership in the jointly owned company and 51 percent of the voting rights. Tele2 has the right to appoint the CEO and all other management roles except for the CFO. Tele2 has concluded that Tele2 has the control over the jointly owned company as defined by IFRS and consequently the company is consolidated by Tele2. After three years Tele2 will under a put option be able to sell its 49 percent stake at fair value to Kazakhtelecom, which holds a symmetrical call option.
As part of the transaction Tele2 acquired Asianet's 49 percent stake in Tele2 Kazakhstan. The purchase price amounted to an initial payment of SEK 125 million and a deferred consideration equivalent to an 18 percent economic interest in the jointly owned company during a three year period. After three years Asianet has a put option on its 18 percent earn out interest and Tele2 has a symmetrical call option. The exercise price of the put and call options will be the fair market value of the 18 percent interest in the jointly owned company, where Asianet will receive, as deferred payment, the first KZT 8.4 billion (SEK 199 million) of any equity value attributable to a 49 percent stake. Thereafter, the purchase agreement with Asianet means that Tele2's effective economic interest in the jointly owned company during the first three years will be 31 percent.
The financing of the jointly owned company has been provided with existing shareholder loans from Tele2 of KZT 97 billion (SEK 2.3 billion) and a pre-existing interest free subordinated loan of KZT 11.7 billion (SEK 277 million) from Kazakhtelecom with extended maturity to 2031. Future funding needs for the jointly owned company will be provided via bank debt guaranteed by Kazakhtelecom.
The current earn-out liability to the previous non-controlling shareholder Asianet on its pre-existing 49 percent stake in Tele2 Kazakhstan was on March 31, 2016 valued at fair value. For further information please refer to Note 4.
Altel is providing telecommunication services, including mobile services and internet services under the trademark ALTEL 4G in Kazakhstan. The business areas consist of prepaid mobile regular and mobile broadband. The company affected net sales of SEK 71 million and EBITDA of SEK 12 million in Q1 2016. Total acquisition costs of SEK –121 million have been reported as operating costs in the income statement in Q4 2015 and Q1 2016 by SEK –118 and –3 million respectively.
Net assets at the time of acquisition
Assets, liabilities and contingent liabilities included in the acquired operations of Altel as of February 29, 2016 are stated below. The valuation of acquired assets and assumed liabilities is still preliminary.
| SEK million | Altel, Kazakhstan |
|---|---|
| Patents and sofware | 7 |
| Licenses | 148 |
| Customer agreements | 81 |
| Trademarks | 66 |
| Tangible assets | 682 |
| Financial assets | 14 |
| Deferred tax assets | 31 |
| Inventories | 37 |
| Current receivables | 134 |
| Cash and cash equivalents | 41 |
| Non-current interest bearing liabilities | –55 |
| Deferred tax liabilities | –29 |
| Current liabilities | –336 |
| Acquired net assets | 821 |
| Purchase price shares | 821 |
| Fair value of equity interest 51 percent in | |
| Khan Tengri Holding at acquisition | –821 |
| Exchange rate differences | 1 |
| Less: cash in acquired companies | –41 |
| NET CASH INFLOW (–) | –40 |
PRO FORMA
The table below shows how the acquired companies on March 31, 2016 would have affected Tele2's net sales and result if they had been acquired on January 1, 2016.
| January 1 – March 31, 2016 | ||||||
|---|---|---|---|---|---|---|
| SEK million | Tele2 Group | Altel, Kazakhstan | Tele2 Group, pro forma |
|||
| Net sales | 6,446 | 137 | 6,583 | |||
| EBITDA | 1,226 | 6 | 1,232 | |||
| Net profit | 339 | –22 | 317 |
The information below shows the pro forma for Kazakhstan and Tele2 Group respectively, if Altel had been acquired on January 1, 2015. The pro forma are to be viewed as preliminary and have to a considerable extend been affected by fluctuations of the currency.
| SEK million (customers by thousands) | 2016 Jan 1-Mar 31 |
2015 Jan 1-Mar 31 |
2015 Full year |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
|---|---|---|---|---|---|---|---|---|
| Pro forma Kazakhstan | ||||||||
| Net sales | 487 | 733 | 3,426 | 487 | 827 | 951 | 915 | 733 |
| Mobile end-user service revenue | 371 | 539 | 2,181 | 371 | 448 | 577 | 617 | 539 |
| EBITDA | 12 | 27 | –14 | 12 | –61 | 45 | –25 | 27 |
| EBIT | –80 | –169 | –633 | –80 | –154 | –112 | –198 | –169 |
| CAPEX | 204 | 198 | 942 | 204 | 354 | 232 | 158 | 198 |
| Net intake | 184 | 765 | 2,040 | 184 | 245 | 290 | 740 | 765 |
| Pro forma Tele2 Group | ||||||||
| Net sales | 6,583 | 6,845 | 28,528 | 6,583 | 7,387 | 7,245 | 7,051 | 6,845 |
| Net sales, mobile | 5,096 | 5,159 | 22,118 | 5,096 | 5,847 | 5,662 | 5,450 | 5,159 |
| Mobile end-user service revenue | 3,274 | 3,408 | 14,106 | 3,274 | 3,477 | 3,651 | 3,570 | 3,408 |
| EBITDA | 1,232 | 1,455 | 5,689 | 1,232 | 1,281 | 1,594 | 1,359 | 1,455 |
| EBITDA, mobile | 856 | 1,049 | 4,179 | 856 | 916 | 1,217 | 997 | 1,049 |
| EBIT | 132 | 640 | 2,055 | 132 | 268 | 691 | 456 | 640 |
| EBIT, mobile | 334 | 453 | 1,833 | 334 | 359 | 632 | 389 | 453 |
| CAPEX | 1,279 | 1,017 | 4,637 | 1,279 | 1,423 | 1,041 | 1,156 | 1,017 |
| CAPEX, mobile | 849 | 687 | 3,434 | 849 | 1,064 | 831 | 852 | 687 |
| Net intake | 65 | 572 | 1,807 | 65 | 53 | 373 | 809 | 572 |
| Net intake, mobile | 117 | 655 | 2,063 | 117 | 119 | 457 | 832 | 655 |