Tele2 — Interim / Quarterly Report 2023

Jul 18, 2023

2023

Interim Report Second Quarter

Q2 2023 HIGHLIGHTS

• End-user service revenue of SEK 5.3 billion increased by 4% organically compared to Q2 2022 due to strong performance in the Baltics and Sweden B2B. Total revenue of SEK 7.2 billion increased by 3% organically compared to Q2 2022.
• Underlying EBITDAaL of SEK 2.5 billion remained unchanged organically compared to Q2 2022 as end-user service revenue growth and cost savings related to the Business Transformation Program were offset mainly by inflationary pressures.
• Net profit from total operations of SEK 0.9 (0.8) billion and earnings per share of SEK 1.28 (1.23).
• Equity free cash flow of SEK 1.2 (0.8) billion. Over the last twelve months, SEK 4.1 billion was generated, equivalent to SEK 5.9 per share. Our first dividend tranche was largely covered by cash generated in H1 2023.
• Tele2 successfully issued a new EUR 500 million bond in the quarter.
• Full-year 2023 financial guidance updated on the following metrics:
  • Low to mid-single digit growth of end-user service revenue
  • Capex1) to sales below 14%.
• Mid-term financial ambition updated on the following metrics:
  • Low to mid-single digit growth of end-user service revenue
  • Capex1) to sales of 10% to 14% with 2024 in the upper end of the range, followed by a gradual decline towards the lower end of the range in 2025–2026.

1) Excluding spectrum and leases.

Key financial data

SEK million	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %	Full year 2022
Continuing operations
End-user service revenue	5,254	4,969	4%	10,367	9,850	4%	20,097
Revenue	7,153	6,820	3%	14,162	13,565	3%	28,102
Operating profit	1,243	1,140		2,507	4,044		6,596
Profit after financial items	1,086	1,022		2,137	3,695		5,907
Underlying EBITDAaL	2,512	2,463	0%	5,004	4,934	0%	10,060
Capex excluding spectrum and leases	888	737		1,951	1,407		3,171
Operating cash flow	1,624	1,726		3,054	3,527		6,889
Operating cash flow, rolling 12 months				6,416	6,754		6,889
Equity free cash flow	1,176	750		2,296	1,660		3,461
Equity free cash flow, rolling 12 months				4,097	5,331		3,461
Total operations
Net profit	887	847		1,736	3,322		5,574
Earnings per share (SEK)	1.28	1.23		2.51	4.81		8.07
Equity free cash flow	1,176	750		2,296	1,660		3,461
Economic net debt to underlying EBITDAaL				2.6x	2.5x		2.5x

Underlying EBITDAaL Q2 2023 2,512

SEK million

Revenue Q2 2023

7,153

SEK million

Continuing and discontinued operations

Figures presented in this report refer to the period April-June 2023 and continuing operations unless otherwise stated. Figures shown in parentheses refer to the comparable periods in 2022. For discontinued operations, see Note 10.

Non-IFRS measures

This report contains certain non-IFRS measures which are defined and reconciliated to the closest reconcilable line items in the section Non-IFRS measures. Note that organic growth rates exclude effects from currency movements. For further definitions of industry terms and acronyms, please refer to the Investor section at www.tele2.com or see section Other financial metrics.

CEO LETTER – Q2 2023

I am glad to see that we can uphold the growth momentum at Tele2. "

As we are passing the half-way point of 2023, I am glad to see that we can uphold the growth momentum at Tele2. During Q2, we have also secured long-term financing at attractive margins that replaces the financing put in place at the time of the Tele2-Com Hem merger in 2018. Coupled with our efficient revenue to cash conversion profile and prudent balance sheet management over time, this means that Tele2 is well prepared to invest in 5G networks and radio spectrum while continuing to pay healthy dividends to our shareholders. Tele2 has also progressed well within our sustainability agenda and was rated No. 1 in the Financial Times overview of climate leaders in Europe.

Investing with maintained dividend capacity

Our commercial priority is to build sustainable growth. We can all read in the newspapers about higher interest rates, inflation and general uncertainties affecting societies. It is likely that the next couple of quarters will see challenges to many retail exposed companies and industries. At Tele2, we choose to see this as an opportunity. Through prudent fiscal management over time, we enter this period with a strong balance sheet and a high pace of development both with respect to 5G rollout and IT transformation. We have bought important radio spectrum over the last year, at attractive prices, and intend to maintain a competitive portfolio in all our markets going forward. Having entered this investment period at the lower end of our leverage range makes us confident about seeing the next quarters as an opportunity to invest for a strengthened Tele2 in the longer term, while upholding our dividend and remaining within our leverage guidance.

Improved customer experience

We will continue our transformation at pace also through 2024. There is a need to be steadfast and carry out our transition towards a model that is less dependent on third party retail and brings more customers over to our own digital channels. Customer satisfaction measurements also show that customers appreciate a digital interface. When making these transitions, we prepare ourselves to lead a multi-year journey in the Swedish market towards convergent, easy to understand and reliable services that cater for a growing segment of the market that Tele2 has unique capabilities to serve. Our mobile, broadband and aggregated TV & streaming services represent powerful building blocks for a converged strategy.

We will have put together all of the Tele2, Com Hem and Comviq consumer businesses on one platform within the next six to nine months, as communicated previously. We will have a 5G population coverage in Sweden by the end of this year that compares well with many European countries that started building networks ahead of us and the Tele2 network is a real 5G network based on high frequency spectrum, which contrasts to many other operators.

Continued growth and an updated guidance

When it comes to the numbers, we see that we are growing topline close to 4%, while our underlying EBITDAaL is flat, mostly due to timing, and we succeed in keeping a good pace in our network rollout and IT transformation. Building on our ability to grow and continue strengthening our foundations, this leads to an updated 2023 guidance of:

• End-user service revenue: Low to mid-single digit growth
• Underlying EBITDAaL: Low single-digit growth (unchanged)
• Capex to sales: < 14%

As usual, we will provide our guidance for the upcoming year in relation to the Q4 presentation, but we expect long term capex to sales to be in the range of 10–14%, with the upper level relevant for 2023–2024 and a gradual decline towards the lower level in 2025–2026.

Tele2 is Europe's #1 climate leader

In May, Financial Times ranked Tele2 as Europe's climate leader. We are proud of this achievement as it symbolizes our focus on sustainability. But we are not here for the awards, we are here to make an impact. That is why we recently announced our commitment to take back and recycle at least 30% of distributed mobile phones in 2030. Not only is increased circularity a necessity, but it also opens new business opportunities as our B2B customers increasingly demand circular flows and solutions. I am also proud to see how our 5G network enables new sustainable solutions, such as Zeam, the world's first fully electric and autonomous passenger ferry that premiered in Stockholm in June.

Tele2's strong and unique culture sets us up for future success

Finally, I just want to highlight how rewarding it was to gather all colleagues at the annual Tele2 Awards in June to celebrate collective and individual success from the past year. The event is an institution and a testimony to Tele2's unique culture, and feeling the energy from so many of our employees not only makes me proud, but it also gives me confidence that we are set up to leverage the challenges and opportunities ahead.

Kjell Johnsen

President and Group CEO

Financial overview

Analysis of revenue

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %	Full year 2022
Mobile	1,470	1,453	1%	2,898	2,862	1%	5,862
- Postpaid	1,240	1,203	3%	2,447	2,382	3%	4,880
- Prepaid	230	249	-8%	451	480	-6%	983
Fixed	1,442	1,432	1%	2,866	2,859	0%	5,726
- Fixed broadband	744	708	5%	1,461	1,412	3%	2,826
- Digital TV	663	674	-2%	1,332	1,344	-1%	2,707
- Cable & Fiber	424	424	0%	853	843	1%	1,706
- DTT	239	250	-5%	479	501	-4%	1,001
- Fixed telephony & DSL	36	51	-30%	73	103	-29%	193
Landlord & Other	164	165	-1%	330	336	-2%	664
Sweden Consumer	3,076	3,050	1%	6,094	6,056	1%	12,252
Sweden Business	1,036	989	5%	2,056	1,962	5%	3,977
Baltics	1,141	929	12%	2,218	1,832	12%	3,867
End-user service revenue	5,254	4,969	4%	10,367	9,850	4%	20,097
Operator revenue	573	608	-7%	1,117	1,203	-8%	2,416
Equipment revenue	1,327	1,243	3%	2,678	2,511	4%	5,590
Revenue	7,153	6,820	3%	14,162	13,565	3%	28,102

Second quarter

End-user service revenue increased by 4% organically primarily driven by continued strong performance in the Baltics and Sweden B2B. International roaming revenue had a positive effect of around SEK 10 million compared to Q2 2022.

• Sweden Consumer increased by 1% as growth in Mobile and Fixed broadband exceeded continued decline in legacy services.
• Sweden Business grew by 5% as growth in mobile and solutions exceeded continued decline in fixed.
• Baltics grew by 12% in local currency driven by both volume growth and strong ASPU (Average Spend Per User) growth from price adjustments and upselling.

Total revenue increased by 3% organically driven by growth in end-user service revenue and equipment revenue whereas operator revenue declined.

Refer to Note 2 and Overview by segment for a breakdown of the segments.

First half year

End-user service revenue increased by 4% organically primarily driven by continued strong performance in the Baltics and Sweden B2B. International roaming revenue had a positive effect of around SEK 30 million compared to H1 2022.

• Sweden Consumer increased by 1% as growth in Mobile, Fixed broadband and Digital TV Cable & Fiber exceeded continued decline in legacy services.
• Sweden Business grew by 5% as growth in mobile and solutions exceeded continued decline in fixed.
• Baltics grew by 12% in local currency driven by both volume growth and strong ASPU growth from price adjustments and upselling.

Total revenue increased by 3% organically driven by growth in end-user service revenue and equipment revenue whereas operator revenue declined.

Refer to Note 2 and Overview by segment for a breakdown of the segments.

Analysis of income statement

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Revenue	7,153	6,820	14,162	13,565	28,102
Underlying EBITDAaL	2,512	2,463	5,004	4,934	10,060
Reversal lease depreciation and interest	370	326	731	653	1,335
Underlying EBITDA	2,882	2,790	5,735	5,588	11,395
Items affecting comparability	-76	-88	-144	-133	-294
EBITDA	2,806	2,702	5,591	5,454	11,101
Depreciation/amortization	-1,563	-1,560	-3,083	-3,080	-6,176
- of which amortization of surplus from acquisitions	-420	-433	-841	-866	-1,725
- of which lease depreciation	-326	-301	-642	-607	-1,231
- of which other depreciation/amortization	-817	-826	-1,600	-1,607	-3,221
Result from shares in associated companies and joint ventures	—	-1	-1	1,670	1,672
Operating profit	1,243	1,140	2,507	4,044	6,596
Net interest and other financial items	-156	-118	-370	-349	-689
Income tax	-198	-175	-399	-377	-694
Net profit	888	847	1,738	3,318	5,213

Second quarter

Underlying EBITDAaL was unchanged organically as higher end-user service revenue and cost savings from the Business Transformation Program were offset by general inflation pressures including the weak Swedish krona, higher wage inflation and content costs.

We have so far received confirmation of SEK 10 million of electricity support in Sweden, which has been recorded during Q2. Despite this, our energy costs increased by SEK 13 million compared to Q2 2022.

Items affecting comparability of SEK -76 (-88) million was mainly driven by restructuring costs related to the Business Transformation Program in Sweden. Refer to Note 3 for more details.

Net interest and other financial items of SEK -156 (-118) million increased compared to Q2 2022 due to higher financing costs for outstanding debt despite a SEK 77 million other financial gain related to bond repurchase.

First half year

Underlying EBITDAaL was unchanged organically as higher end-user service revenue and cost savings from the Business Transformation Program were offset by general inflation pressures including the weak Swedish krona, higher wage inflation and content costs.

We have so far received confirmation of SEK 10 million of electricity support in Sweden, which has been recorded during H1. Despite this, our energy costs increased by SEK 21 million compared to H1 2022.

Items affecting comparability of SEK -144 (-133) million was mainly driven by restructuring costs related to the Business Transformation Program in Sweden. Refer to Note 3 for more details.

Result from shares in associated companies and joint ventures of SEK -1 (1,670) million decreased compared to H1 2022 as a result of the divestment of T-Mobile Netherlands.

Net interest and other financial items of SEK -370 (-349) million increased somewhat compared to H1 2022. Higher financing costs for outstanding debt were partly offset by significantly improving other financial items as 2023 was positively impacted by the gain related to bond repurchase, whereas 2022 was burdened by exchange rate losses from hedges related to the T-Mobile Netherlands transaction.

Analysis of cash flow statement

SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022	Full year 2022
Continuing operations
Underlying EBITDA	2,882	2,790	5,735	5,588	11,395
Items affecting comparability	-76	-88	-144	-133	-294
Amortization of lease liabilities	-293	-275	-679	-657	-1,226
Capex paid	-889	-855	-1,814	-1,609	-3,561
Changes in working capital	158	-323	215	-546	-1,380
Net financial items paid	-220	-162	-411	-270	-389
Taxes paid	-408	-379	-663	-768	-1,215
Other cash items	22	42	56	56	132
Equity free cash flow	1,176	750	2,296	1,660	3,461
Equity free cash flow, rolling 12 months1)			4,097	5,331	3,461

No equity free cash flow has been reported related to discontinued operations.

1) Reconciliation of equity free cash flow rolling 12 months are presented in an Excel document (Q2-2023-financial-and-operational-data) on Tele2's website www.tele2.com.

Second quarter

Capex paid of SEK -889 (-855) million increased slightly compared to Q2 2022 due to higher network investments.

Changes in working capital of SEK 158 (-323) million were mainly impacted by lower levels of equipment receivable.

Net financial items paid of SEK -220 (-162) million increased compared to Q1 2022 due to higher interest rates both on loans and leases.

Taxes paid of SEK -408 (-379) million increased compared to Q2 2022.

First half year

Capex paid of SEK -1,814 (-1,609) million increased compared to H1 2022 due to higher network investments.

Changes in working capital of SEK 215 (-546) million were mainly impacted by lower levels of inventory and equipment receivable.

Net financial items paid of SEK -411 (-270) million increased compared to H1 2022 due to higher interest rates both on loans and leases.

Taxes paid of SEK -663 (-768) million declined compared to H1 2022, which was negatively impacted by timing of final tax payments relating to 2020.

Equity free cash flow over the last twelve months amounted to SEK 4.1 billion, equivalent to approximately SEK 5.90 per share.

Analysis of financial position

Total operations SEK million	Jun 30 2023	Dec 31 2022
Bonds	24,007	22,475
Commercial papers	—	796
Financial institutions and other liabilities	4,140	4,050
Cash and cash equivalents	-1,473	-1,116
Other adjustments	-818	-558
Economic net debt	25,855	25,647
Lease liabilities	4,958	5,460
Net debt	30,813	31,108
Underlying EBITDAaL, rolling 12 months1)	10,130	10,060
Economic net debt to Underlying EBITDAaL	2.6x	2.5x
Unutilized overdraft facilities and credit lines	9,034	8,582

1) Includes all operations owned and controlled by Tele2 at the end of each reporting period.

Economic net debt was SEK 25.9 billion by the end of Q2 2023 (SEK 25.6 billion by the end of 2022). The first tranche of the ordinary dividend was largely covered by cash generated in the business.

Economic net debt to underlying EBITDAaL (financial leverage) of 2.6x by the end of Q2 2023 (2.5x by the end of 2022) was in the lower part of the target range of 2.5–3.0x.

Financial guidance

Financial guidance (updated)

Tele2 AB provides the following guidance for continuing operations in constant currencies.

Full year 2023

• Low to mid-single digit growth of end-user service revenue [previously low single digit growth]
• Low single digit growth of underlying EBITDAaL
• Capex to sales below 14% (excluding spectrum and leases) [previously capex excluding spectrum and leases of SEK 2.8-3.3 billion]

Mid-term ambition

• Low to mid-single digit growth of end-user service revenue [previously low single digit growth]
• Mid-single digit growth of underlying EBITDAaL
• Capex to sales of 10% to 14% (excluding spectrum and leases) [previously annual capex excluding spectrum and leases of SEK 2.8-3.3 billion during the roll-out of 5G and Remote-PHY]

Dividend

The Annual General Meeting on 15 May 2023 approved that an ordinary dividend of SEK 6.80 per share shall be paid out in two separate payments of SEK 3.40 per share. The first tranche was paid out on 22 May, and the second tranche is estimated to be paid out on 13 October 2023.

Guidance (updated)

Tele2 provides financial guidance for the inherent year and on a midterm basis (three-year horizon). Reflecting our good topline momentum we expect low to mid-single digit growth in end-user service revenue. In 2023, we expect it to filter through to a low single digit growth in underlying EBITDAaL, as inflationary pressure weighs on the results.

In line with standard practice, we will announce our 2024 guidance in relation to the full-year 2023 results. However, in the mid-term our ambition is to return to mid-single digit underlying EBITDAaL growth.

In 2023–2024, while we are modernizing our network and roll out 5G, we expect capex to sales (excluding spectrum and leases) in the upper end of the 10–14% target range. A gradual decline is then anticipated, moving towards the lower end of the 10–14% range in 2025–2026.

Financial policy

• Tele2 will seek to operate within a range for economic net debt to underlying EBITDAaL of between 2.5–3.0x, and to maintain investment grade credit metrics.
• Tele2's policy will aim to maintain target leverage by distributing capital to shareholders through:
  • An ordinary dividend of at least 80 percent of equity free cash flow, and,
  • Extraordinary dividends and/or share repurchases, based on remaining equity free cash flow, proceeds from asset sales and re-leveraging of underlying EBITDAaL growth.

Group summary

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
END-USER SERVICE REVENUE
Sweden	4,113	4,039	2%	8,149	8,018	2%
Lithuania	619	511	10%	1,195	1,008	10%
Latvia	348	269	18%	681	530	19%
Estonia	175	149	7%	341	294	7%
Total	5,254	4,969	4%	10,367	9,850	4%
REVENUE
Sweden	5,507	5,397	2%	10,938	10,761	2%
Lithuania	952	835	4%	1,860	1,646	5%
Latvia	487	398	11%	959	785	13%
Estonia	243	222	0%	473	433	1%
Internal sales, elimination	-36	-32	2%	-68	-60	5%
Total	7,153	6,820	3%	14,162	13,565	3%
UNDERLYING EBITDAaL
Sweden	1,846	1,938	-5%	3,732	3,903	-4%
Lithuania	399	317	15%	760	622	13%
Latvia	213	160	21%	409	314	20%
Estonia	54	48	1%	104	95	1%
Total	2,512	2,463	0%	5,004	4,934	0%
CAPEX
Sweden	724	627	15%	1,604	1,237	30%
Lithuania	60	50	10%	145	79	70%
Latvia	56	26	100%	100	37	152%
Estonia	48	35	25%	102	54	73%
Capex excluding spectrum and leases	888	737	19%	1,951	1,407	37%
Spectrum	18	64		18	68
Right-of-use assets (leases)	192	236		399	398
Total	1,099	1,037		2,368	1,873
of which:
– Network	591	439		1,311	799
– IT	210	170		422	350
– Customer equipment	82	112		205	216
– Other	4	16		12	43
Capex excluding spectrum and leases	888	737		1,951	1,407

Overview by segment

Sweden

Tele2 Sweden end-user service revenue increased by 2% in the second quarter driven by 5% growth in B2B and 1% in B2C. International roaming revenue continued to recover with a positive effect of SEK 7 million compared to Q2 2022.

Optimization within legacy IT and Network was executed in the quarter as part of the Business Transformation Program. Annualized run rate savings for the program reached SEK 1,005 million at the end of the quarter and the effect on underlying EBITDAaL was approximately SEK 240 million with a net effect of SEK 85 million year-on-year. The program has now been successfully completed after reaching the target of at least SEK 1 billion in annual run-rate savings.

Underlying EBITDAaL declined by 5% in the quarter as higher end-user service revenue and continued execution of the Business Transformation Program was more than offset by general inflationary pressures including the weak Swedish krona, wage inflation and continued margin pressure from product mix changes as legacy services decline.

Capex excluding spectrum and leases amounted to SEK 724 million as our network investments continue at a high pace.

Financials SEK million	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
End-user service revenue	4,113	4,039	2%	8,149	8,018	2%
Revenue	5,507	5,397	2%	10,938	10,761	2%
Underlying EBITDA	2,159	2,217		4,352	4,459
Underlying EBITDAaL	1,846	1,938	-5%	3,732	3,903	-4%
Underlying EBITDAaL margin	34%	36%		34%	36%
Capex
Network	457	358		1,029	678
IT	187	148		374	314
Customer equipment	76	108		194	210
Other	4	13		7	36
Capex excluding spectrum and leases	724	627		1,604	1,237
Spectrum	—	40		—	40
Right-of-use assets (leases)	147	213		321	339
Capex	871	880		1,925	1,617
Capex excluding spectrum and leases / revenue	13%	12%		15%	11%

Sweden Consumer

The quarter has been characterized by continued pricing activity in the market on mobile and broadband services as well as access services by communications operators. The slower demand on handsets continued as consumers have been more mindful about their spend. Despite this, overall commercial activity kept pace, with healthy demand for unlimited and family SIM only offers. For broadband and entertainment services demand remained intact for higher speeds and richer entertainment packages as the relevance of digital services for households continues to evolve.

Total end-user service revenue grew by 1% in the quarter from a combination of volume and ASPU performance in core connectivity, partly offset by declining legacy businesses.

Mobile postpaid net intake was positive with 25,000 RGUs in the quarter. Mobile end-user service revenue grew by 1% as postpaid RGU growth and a stable postpaid ASPU more than offset 8% end-user service revenue decline on prepaid, amplified by the registration requirement from 1 February.

Fixed broadband end-user service revenue grew by 5% on the back of solid RGU and ASPU growth, the latter supported by pricing.

Digital TV end-user service revenue declined by 2% with a flat development for Digital TV Cable & Fibre and a 5% decline for the legacy DTT business. The new Viaplay-infused packages continued to contribute positively to both sub-segments.

	Apr-Jun 2023	Apr-Jun 2022	Jun 30 2023	Jun 30 2022	Organic %
RGUs (thousands)	Net intake			RGU base
Mobile	-16	37	2,871	2,970	-3%
– Postpaid	25	21	2,032	1,966	3%
– Prepaid	-41	16	839	1,004	-16%
Fixed	-8	-13	1,975	2,016	-2%
– Fixed broadband	7	6	960	937	2%
– Digital TV	-8	-13	871	905	-4%
– Cable & Fiber	-1	-5	630	631	0%
– DTT	-7	-8	241	274	-12%
– Fixed telephony & DSL	-7	-6	143	174	-18%
Total RGUs	-24	24	4,846	4,986	-3%
Addressable fixed footprint	45	32	3,833	3,688	4%

	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
ASPU (SEK)
Mobile	170	164	4%	167	161	3%
– Postpaid	205	205	0%	202	203	0%
– Prepaid	89	83	7%	85	80	7%
Fixed	243	236	3%	241	235	2%
– Fixed broadband	259	253	3%	255	252	1%
– Digital TV	252	246	2%	252	245	3%
– Cable & Fiber	224	223	1%	225	221	2%
– DTT	325	301	8%	321	297	8%
– Fixed telephony & DSL	81	95	-15%	81	95	-15%
Revenue (SEK million)
Mobile	1,470	1,453	1%	2,898	2,862	1%
– Postpaid	1,240	1,203	3%	2,447	2,382	3%
– Prepaid	230	249	-8%	451	480	-6%
Fixed	1,442	1,432	1%	2,866	2,859	0%
– Fixed broadband	744	708	5%	1,461	1,412	3%
– Digital TV	663	674	-2%	1,332	1,344	-1%
– Cable & Fiber	424	424	0%	853	843	1%
– DTT	239	250	-5%	479	501	-4%
– Fixed telephony & DSL	36	51	-30%	73	103	-29%
Landlord & Other	164	165	-1%	330	336	-2%
End-user service revenue	3,076	3,050	1%	6,094	6,056	1%
Operator revenue	185	194		368	382
Equipment revenue	429	435		907	873
Revenue	3,691	3,679	0%	7,368	7,311	1%

Sweden Business and Wholesale

In Sweden B2B, we hold on to our overall strategy and all business segments are contributing to the solid end-user service revenue growth of 5% during the quarter. Our core services that have fuelled growth for a long time continued to do so also in this quarter, offsetting further decline in legacy services. While Mobile and Solutions largely maintained previous service revenue growth rates, we recorded increasing equipment sales growth associated with these services. In Q2, we continued the decommissioning of our legacy copper services across the board, and concluded several parts such as certain transmission migration, Fixed telephony and ADSL for the Micro segment. We have complemented our portfolio with new partners for 5G Private network, Networking, and value-added service for our Unified Communications business. We have also continued to invest in improving capabilities in sustainability and customer experience.

Mobile net intake was positive in the quarter with 11,000 RGUs. The macroeconomic situation, which we continue to monitor closely, is affecting some of our customer groups more than others, but so far without significant impact on our business.

Sweden Wholesale revenue declined 5% during the second quarter, mainly as we exited the legacy international voice business during 2022.

Sweden Business

	Apr-Jun 2023	Apr-Jun 2022	Jun 30 2023	Jun 30 2022	Organic %
RGUs (thousands)	Net intake			RGU base
Mobile (excluding IoT)
– Postpaid	11	23	1,127	1,060	6%

	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
ASPU (SEK)
Mobile (excluding IoT)
– Postpaid	136	134	1%	134	134	0%
Revenue (SEK million)
Mobile	556	503	11%	1,092	990	10%
Fixed	192	207	-8%	395	419	-6%
Solutions	289	279	4%	568	553	3%
End-user service revenue	1,036	989	5%	2,056	1,962	5%
Operator revenue	24	26		48	51
Equipment revenue	483	417		939	874
Internal sales	1	1		2	2
Revenue	1,544	1,432	8%	3,044	2,889	5%

Sweden Wholesale

Financials SEK million	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
Operator revenue	269	284		521	558
Internal sales	1	1		3	2
Revenue	271	286	-5%	524	560	-6%

Baltics

Lithuania

In Q2, we continued to execute on our more-for-more strategy by upselling and prolonging existing customers and by offering bundles to new customers. We also continued our 5G network rollout at a high pace. The market environment remained highly competitive in the quarter with key focus on 5G, B2B and mobile broadband.

Net intake in mobile postpaid was positive with 5,000 RGUs driven by successful activities in both consumer and business segments. Mobile ASPU grew by 7% in local currency due to price adjustments based on upselling and our more-for-more strategy in the consumer segment.

End-user service revenue grew by 10% in local currency driven by both ASPU and volume growth.

Underlying EBITDAaL increased by 15% in local currency driven by enduser service revenue growth and successful cost management.

	Apr-Jun 2023	Apr-Jun 2022	Jun 30 2023	Jun 30 2022	Organic %
RGUs (thousands)	Net intake			RGU base
Mobile	21	26	2,030	1,974	3%
– Postpaid	5	14	1,344	1,291	4%
– Prepaid	16	12	686	683	0%

	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
ASPU (EUR)
Mobile	8.9	8.3	7%	8.7	8.1	6%
– Postpaid	10.7	10.2	5%	10.6	10.1	5%
– Prepaid	5.2	4.7	10%	4.9	4.6	7%
Revenue (SEK million)
Mobile	615	509	10%	1,189	1,003	10%
– Postpaid	495	409	10%	962	808	10%
– Prepaid	120	99	10%	227	196	7%
Fixed	3	3	14%	6	5	16%
End-user service revenue	619	511	10%	1,195	1,008	10%
Operator revenue	43	48		82	100
Equipment revenue	270	257		544	505
Internal sales	20	18		38	32
Revenue	952	835	4%	1,860	1,646	5%
Underlying EBITDA	422	336		803	662
Underlying EBITDAaL	399	317	15%	760	622	13%
Underlying EBITDAaL margin	42%	38%		41%	38%
Capex	87	61		179	108
Capex excluding spectrum and leases	60	50		145	79
Capex excluding spectrum and leases / revenue	6%	6%		8%	5%

Latvia

In Latvia, the market environment continued to be highly competitive meanwhile consumers and businesses feel the pressure from persisting high inflation. While operators tended to protect market shares, both our consumer and business segments achieved good results thanks to a continued successful combination of new sales and customer retention. We also continued our significant investments into network capacity upgrades, swap related projects and 5G.

Net intake in mobile postpaid was positive with 8,000 RGUs in the quarter thanks to a combination of new sales and continued migration from mobile prepaid, which gained 6,000 RGUs in the quarter. Mobile ASPU grew by 16% in local currency driven by our more-for-more strategy, the two price adjustments during 2022 in both consumer and business segments, as well as customer base mix shift towards more postpaid.

End-user service revenue grew by 18% in local currency mainly due to ASPU, but to some extent also due to a larger postpaid base.

Underlying EBITDAaL grew by 21% in local currency driven by end-user service revenue growth more than offsetting inflationary pressures.

	Apr-Jun 2023	Apr-Jun 2022	Jun 30 2023	Jun 30 2022	Organic %
RGUs (thousands)	Net intake			RGU base
Mobile	15	10	1,022	1,010	1%
– Postpaid	8	11	807	776	4%
– Prepaid	6	-0	215	234	-8%

	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
ASPU (EUR)
Mobile	9.9	8.5	16%	9.8	8.4	17%
– Postpaid	11.4	9.9	14%	11.3	9.8	15%
– Prepaid	4.5	3.9	15%	4.2	3.7	13%
Revenue (SEK million)
Mobile	346	268	17%	678	528	19%
– Postpaid	313	239	19%	616	473	21%
– Prepaid	33	29	4%	62	55	5%
Fixed	2	1	73%	3	2	32%
End-user service revenue	348	269	18%	681	530	19%
Operator revenue	29	35		57	69
Equipment revenue	99	85		201	166
Internal sales	11	9		20	19
Revenue	487	398	11%	959	785	13%
Underlying EBITDA	228	172		436	338
Underlying EBITDAaL	213	160	21%	409	314	20%
Underlying EBITDAaL margin	44%	40%		43%	40%
Capex	71	56		127	81
Capex excluding spectrum and leases	56	26		100	37
Capex excluding spectrum and leases / revenue	12%	6%		10%	5%

Estonia

In Estonia, we have successfully expanded our customer base, primarily within the consumer postpaid segment. Our position as a price leader has been instrumental in maintaining growth, even during periods of economic crises and high inflation. As part of efforts to maintain growth, we initiated price plan migrations and price increases towards the end of Q2. The economic situation, with inflation and consumer uncertainty, has adversely impacted our device business.

Mobile net intake was positive with 2,000 RGUs mostly driven by postpaid. Mobile ASPU grew by 4% in local currency driven by a combination of unlimited price plans, price adjustments and continued customer base mix shift towards more postpaid.

End-user service revenue grew by 7% in local currency driven by both ASPU and volume growth. Underlying EBITDAaL grew by 1% in local currency, driven by higher end-user service revenue, offsetting the pressure from an increased cost base due to high inflation.

	Apr-Jun 2023	Apr-Jun 2022	Jun 30 2023	Jun 30 2022	Organic %
RGUs (thousands)	Net intake			RGU base
Mobile	2	10	462	455	1%
– Postpaid	2	8	410	394	4%
– Prepaid	1	2	51	61	-16%

	Apr-Jun 2023	Apr-Jun 2022	Organic %	Jan-Jun 2023	Jan-Jun 2022	Organic %
ASPU (EUR)
Mobile	10.0	9.6	4%	9.9	9.5	5%
– Postpaid	10.8	10.5	3%	10.7	10.4	3%
– Prepaid	3.5	3.5	0%	3.4	3.5	-2%
Revenue (SEK million)
Mobile	158	135	7%	309	266	7%
– Postpaid	152	128	8%	297	254	8%
– Prepaid	6	7	-15%	12	13	-12%
Fixed	17	14	4%	32	28	7%
End-user service revenue	175	149	7%	341	294	7%
Operator revenue	22	22	-9%	41	43	-12%
Equipment revenue	44	49	-18%	86	92	-14%
Internal sales	3	2	6%	5	5	8%
Revenue	243	222	0%	473	433	1%
Underlying EBITDA	74	65		143	129
Underlying EBITDAaL	54	48	1%	104	95	1%
Underlying EBITDAaL margin	22%	22%		22%	22%
Capex	70	40		137	68
Capex excluding spectrum and leases	48	35		102	54
Capex excluding spectrum and leases / revenue	20%	16%		21%	13%

Other items

Risks and uncertainty factors

The present challenging macro-economic and geo-political environment also affects Tele2, primarily through increasing energy costs, inflationary pressure, and changes in exchange rates. Tele2 has a resilient business model, offering services that are highly valued and prioritized by our customers. In addition, we have a solid balance sheet. We are convinced that we are able to navigate through these uncertain times. Please refer to the section Enterprise risk management on p. 27–29 and Note 2 on p. 111–115 in Tele2's Annual and Sustainability Report 2022 for more information about Tele2's risk exposure and risk management.

Events during the quarter

April 17. New research project demonstrates AI reduces energy consumption in Tele2's 5G network

Tele2 has led the European research project investigating how Artificial Intelligence (AI) can be used to reduce energy consumption in mobile networks while simultaneously optimizing capacity to meet consumer needs. The project demonstrated that smarter mobile networks can reduce energy consumption by between 30 to 40 percent in the long term. Tele2's participation in the AI4Green project is an important part of the company's sustainability efforts and a step along the way to building Europe's most modern 5G network.

May 15. Tele2 ranked number one in Europe's Climate Leaders 2023

For the third time The Financial Times in partnership with Statista ranked Europe top 500 Climate Leaders. Tele2 is ranked number one with a total score of 86,9. The list was compiled by calculating companies' performance in cutting their emissions intensity in scope 1, their own operations, and scope 2, the energy they buy, for the period 2016–21, but also by assigning a score to reflect transparency on scope 3, supply chain emissions, plus other indicators of commitment to reducing emissions.

May 19. Tele2 has successfully issued a new EUR 500 million bond

The bond was successfully placed with a broad range of institutional investors across Europe. With this transaction Tele2 successfully managed to further broaden its investor base.

June 27. Tele2 commits to reuse and recycle 30% of its distributed phones by 2030

Tele2 has made a commitment to take back and recycle 30% of its distributed mobile phones by 2030. In developing this commitment, Tele2 has co-led an international industry project organized by the global mobile network operator industry association GSMA, setting a new ambition for take back and recycling of devices for the global telecom sector.

Events after the end of the second quarter 2023

No significant events expected to have a material impact on Tele2's financial statements have occurred after the end of the second quarter 2023.

Financial calendar

October 18 Tele2 Q3 Interim Report 2023

Auditors' review

This report has been subject to a limited review by Tele2's auditors.

Board's assurance

The Board of Directors and CEO declare that the report provides a fair overview of the parent company's and Group's operations, their financial position and performance, and describes material risks and uncertainties facing the parent company and other companies in the Group.

Stockholm, July 18, 2023 Tele2 AB

Andrew Barron Stina Bergfors Georgi Ganev Chairman

Sam Kini Eva Lindqvist Lars-Åke Norling

Kjell Johnsen President and CEO

Auditors' review report

Introduction

We have reviewed the interim report for Tele2 AB (publ) for the period January 1 – June 30, 2023. The Board of Directors and the President are responsible for the preparation and presentation of this interim report in accordance with IAS 34 and the Annual Accounts Act. Our responsibility is to express a conclusion on this interim report based on our review.

Scope of Review

We conducted our review in accordance with the International Standard on Review Engagements ISRE 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A review consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review has a different focus and is substantially less in scope than an audit conducted in accordance with ISA and other generally accepted auditing practices. The procedures performed in a review do not enable us to obtain a level of assurance that would make us aware of all significant matters that might be identified in an audit. Therefore, the conclusion expressed based on a review does not give the same level of assurance as a conclusion expressed based on an audit.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the interim report is not, in all material respects, prepared for the Group in accordance with IAS 34 and the Annual Accounts Act, and for the Parent Company in accordance with the Annual Accounts Act.

Stockholm, July 18, 2023

Deloitte AB

Didrik Roos Authorized Public Accountant

Q2 2023 PRESENTATION

Tele2 will host a teleconference and webcast with presentation at 10:00 CEST (09:00 BST, 04:00 EDT) on Tuesday 18 July 2023. The presentation will be held in English.

Registration for the webcast and a separate registration for the teleconference will be available at www.tele2.com/investors.

This information is information that Tele2 AB (publ) is obliged to make public pursuant to the EU Market Abuse Regulation. The information was submitted for publication, through the agency of the contact persons set out below, at 07:00 am CET on Tuesday 18 July, 2023.

Fredrik Hallstan

Head of External Communications, Phone: +46 761 15 38 30

Stefan Billing

Head of Investor Relations, Phone: +46 701 66 33 10

Tele2 AB

Company registration nr: 556410-8917 P.O. Box 62 SE–164 94 Kista, Stockholms län Sweden Tel + 46 (0) 8 5620 0060 www.tele2.com

Visit our website: www.tele2.com

Contacts Contents

Condensed consolidated income statement Condensed consolidated comprehensive income Condensed consolidated balance sheet Condensed consolidated cash flow statement Condensed consolidated statement of changes in equity Parent company Notes Non-IFRS measures Other financial metrics

Condensed consolidated income statement

SEK million	Note	Apr-Jun	Apr-Jun	Jan-Jun	Jan-Jun
		2023	2022	2023	2022
Revenue	2	7,153	6,820	14,162	13,565
Cost of services provided and equipment sold	3	-4,272	-4,075	-8,444	-8,073
Gross profit		2,881	2,745	5,718	5,492
Selling expenses	3	-1,137	-1,116	-2,235	-2,091
Administrative expenses	3	-577	-545	-1,104	-1,077
Result from shares in associated companies and joint ventures	4	—	-1	-1	1,670
Other operating income	3	96	69	182	119
Other operating expenses	3	-21	-11	-53	-69
Operating profit	3	1,243	1,140	2,507	4,044
Interest income		19	6	35	12
Interest expenses		-259	-131	-482	-248
Other financial items		83	6	77	-113
Profit after financial items		1,086	1,022	2,137	3,695
Income tax		-198	-175	-399	-377
Net profit, continuing operations		888	847	1,738	3,318
Net profit discontinued operations	10	-1	1	-2	4
Net profit, total operations		887	847	1,736	3,322
Continuing operations
Attributable to:
Equity holders of the parent company		888	847	1,738	3,318
Net profit, continuing operations		888	847	1,738	3,318
Earnings per share (SEK)	8	1.28	1.22	2.51	4.81
Earnings per share, after dilution (SEK)	8	1.28	1.22	2.50	4.78
Total operations
Attributable to:
Equity holders of the parent company		887	847	1,736	3,322
Net profit, total operations		887	847	1,736	3,322
Earnings per share (SEK)	8	1.28	1.23	2.51	4.81
Earnings per share, after dilution (SEK)	8	1.28	1.22	2.50	4.79

Condensed consolidated comprehensive income

SEK million	Note	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
NET PROFIT		887	847	1,736	3,322
Components not to be reclassified to net profit
Pensions, actuarial gains/losses		22	99	109	95
Pensions, actuarial gains/losses, tax effect		-5	-20	-22	-20
Components not to be reclassified to net profit/loss		18	79	87	75
Components that may be reclassified to net profit
Translation differences in foreign operations		270	170	346	221
Reversed cumulative translation differences from divested companies	3	—	—	-1	—
Translation differences in associated companies	4	2	1	2	-6
Translation differences		271	171	347	215
Hedge of net investments in foreign operations		-168	-111	-216	-54
Tax effect on above		35	23	44	11
Hedge of net investments		-133	-88	-171	-43
Exchange rate differences		138	83	176	172
Profit/loss arising on changes in fair value of hedging instruments		1	46	-18	107
Reclassified cumulative profit/loss to income statement		9	-9	12	-16
Tax effect on cash flow hedges		-2	-8	1	-19
Cash flow hedges		8	29	-5	72
Components that may be reclassified to net profit/loss		146	112	172	245
OTHER COMPREHENSIVE INCOME FOR THE PERIOD, NET OF TAX		164	191	258	320
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		1,051	1,038	1,994	3,642
Attributable to:
Equity holders of the parent company		1,051	1,038	1,994	3,642
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD		1,051	1,038	1,994	3,642

Condensed consolidated balance sheet

SEK million	Note	Jun 30 2023	Dec 31 2022
ASSETS
Goodwill		30,059	29,905
Other intangible assets		12,865	13,835
Intangible assets		42,925	43,740
Tangible assets		8,836	8,220
Right-of-use assets		4,944	5,422
Shares in associated companies and joint ventures	4	6	6
Other financial assets	5	985	957
Capitalized contract costs		687	633
Deferred tax assets		52	81
Non-current assets		58,434	59,060
Inventories		1,052	1,254
Trade receivables		2,049	1,986
Other current receivables		4,059	4,029
Current investments		197	156
Cash and cash equivalents	6	1,473	1,116
Current assets		8,830	8,542
Assets classified as held for sale	10	34	54
TOTAL ASSETS		67,298	67,656
EQUITY AND LIABILITIES
Attributable to equity holders of the parent company		21,021	23,683
Equity	8	21,021	23,683
Liabilities to financial institutions and similiar liabilities	5	23,237	24,080
Lease liability		3,812	4,289
Provisions		1,224	1,286
Other interest-bearing liabilities		203	193
Interest-bearing liabilities		28,475	29,848
Deferred tax liability		3,581	3,807
Non-interest-bearing liabilities		3,581	3,807
Non-current liabilities		32,056	33,655
Liabilities to financial institutions and similiar liabilities	5	4,217	2,550
Lease liability		1,146	1,172
Provisions		78	76
Other interest-bearing liabilities		491	498
Interest-bearing liabilities		5,932	4,296
Trade payables		1,821	2,165
Dividend payable		2,352	—
Other current non interest-bearing liabilities		4,024	3,766
Non-interest-bearing liabilities		8,197	5,931
Current liabilities		14,128	10,227
Liabilities directly associated with assets classified as held for sale	10	93	91
TOTAL EQUITY AND LIABILITIES		67,298	67,656

Condensed consolidated cash flow statement

Total operations SEK million	Note	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Operating activities
Net profit		887	847	1,736	3,322
Adjustments for non-cash items in net profit		1,313	1,356	2,838	1,151
Changes in working capital		158	-323	215	-546
Cash flow from operating activities		2,358	1,881	4,789	3,926
Investing activities
Additions to intangible and tangible assets		-889	-855	-1,814	-1,609
Acquisition and sale of shares and participations	9	24	-15	22	8,972
Other financial assets, lending		-72	-82	-41	-82
Cash flow from investing activities		-937	-953	-1,833	7,281
Financing activities
Proceeds from loans		2,595	1,885	2,878	3,231
Repayments of loans		-934	-719	-3,152	-3,770
Dividends paid	8	-2,351	-11,315	-2,351	-11,315
Cash flow from financing activities		-690	-10,149	-2,624	-11,853
Net change in cash and cash equivalents		731	-9,221	332	-646
Cash and cash equivalents at beginning of period		722	9,567	1,116	880
Exchange rate differences in cash and cash equivalents		20	245	25	357
Cash and cash equivalents at end of the period	6	1,473	591	1,473	591

Condensed consolidated statements of changes in equity

Total operations SEK million	Jun 30, 2023
		Attributable to equity holders of the parent company
		Share capital	Other paid-in capital	Hedge reserve	Translation reserve	Retained earnings	Total equity
Equity at January 1		869	27,378	-378	589	-4,775	23,683
Net profit		—	—	—	—	1,736	1,736
Other comprehensive income for the period, net of tax		—	—	-176	347	87	258
Total comprehensive income for the period		—	—	-176	347	1,823	1,994
Other changes in equity
Share-based payments	8	—	—	—	—	43	43
Share-based payments, tax effect	8	—	—	—	—	2	2
New shares issues	8	2	—	—	—	—	2
Repurchase of own shares	8	—	—	—	—	-2	-2
Dividends	8	—	—	—	—	-4,702	-4,702
Equity at end of the period		870	27,378	-554	936	-7,610	21,021

Total operations SEK million	Note	Jun 30, 2022
			Attributable to equity holders of the parent company
		Share capital	Other paid-in capital	Hedge reserve	Translation reserve	Retained earnings	Total equity
Equity at January 1		866	27,378	-301	152	3,047	31,142
Net profit		—	—	—	—	3,322	3,322
Other comprehensive income for the period, net of tax		—	—	29	215	75	320
Total comprehensive income for the period		—	—	29	215	3,397	3,642
Other changes in equity
Share-based payments	8	—	—	—	—	34	34
Share-based payments, tax effect	8	—	—	—	—	7	7
New share issues	8	3	—	—	—	—	3
Repurchase of own shares	8	—	—	—	—	-3	-3
Dividends	8	—	—	—	—	-13,629	-13,629
Equity at end of the period		869	27,378	-272	367	-7,147	21,196

Parent company

Condensed income statement

SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Revenue	15	12	27	24
Administrative expenses	-26	-20	-55	-46
Operating loss	-11	-8	-28	-22
Dividend from group company	—	6,300	—	6,300
Interest revenue and similar income	68	45	116	95
Interest expense and similar costs	-296	-213	-512	-426
Profit/loss after financial items	-239	6,123	-423	5,948
Tax on profit/loss	49	36	87	64
Net profit	-190	6,159	-336	6,012

Condensed balance sheet

SEK million	Note	Jun 30 2023	Dec 31 2022
ASSETS
Financial assets		76,274	73,337
Non-current assets		76,274	73,337
Current receivables		195	2,444
Current investments		197	157
Current assets		393	2,601
TOTAL ASSETS		76,667	75,938
EQUITY AND LIABILITIES
Restricted equity	8	5,856	5,854
Unrestricted equity	8	27,926	32,927
Equity		33,781	38,781
Untaxed reserves		610	610
Interest-bearing liabilities	5	28,343	29,341
Non-interest-bearing liabilities		—	4
Non-current liabilities		28,343	29,346
Interest-bearing liabilities	5	11,597	6,951
Non-interest-bearing liabilities		2,335	251
Current liabilities		13,932	7,202
TOTAL EQUITY AND LIABILITIES		76,667	75,938

Notes

NOTE 1 ACCOUNTING PRINCIPLES AND DEFINITIONS

The interim financial information for the Group for the six month period ended June 30, 2023 has been prepared in accordance with International Accounting Standard (IAS) 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB) 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. In all respects other than those described below, Tele2 has presented the financial statements for the period ended June 30, 2023 in accordance with the accounting policies and principles applied in the Annual and Sustainability Report 2022. The description of these principles and definitions are found in Note 1 in the Annual and Sustainability Report 2022. Disclosures as required by IAS 34 p. 16 A are presented both in the financial statements and notes as well as in other parts of the interim report.

The amendments to IFRSs applicable from January 1, 2023 have no effects to Tele2's financial reports for the six month period ended June 30, 2023.

Figures presented in this report refer to April 1 – June 30 (Q2), 2023 and continuing operations unless otherwise stated. Figures shown in parentheses refer to the comparable periods in 2022.

NOTE 2 REVENUE AND SEGMENTS

Revenue per segment

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Sweden	5,507	5,397	10,938	10,761
Lithuania	952	835	1,860	1,646
Latvia	487	398	959	785
Estonia	243	222	473	433
Total including internal sales	7,189	6,852	14,230	13,625
Internal sales, elimination	-36	-32	-68	-60
TOTAL	7,153	6,820	14,162	13,565

Internal sales

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Sweden	2	2	5	4
Lithuania	20	18	38	32
Latvia	11	9	20	19
Estonia	3	2	5	5
TOTAL	36	32	68	60

Revenue split per category

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Sweden Consumer
End-user service revenue	3,076	3,050	6,094	6,056
Operator revenue	185	194	368	382
Equipment revenue	429	435	907	873
Total	3,691	3,679	7,368	7,311
Sweden Business
End-user service revenue	1,036	989	2,056	1,962
Operator revenue	24	26	48	51
Equipment revenue	483	417	939	874
Internal sales	1	1	2	2
Total	1,544	1,432	3,044	2,889
Sweden Wholesale
Operator revenue	269	284	521	558
Internal sales	1	1	3	2
Total	271	286	524	560
Lithuania
End-user service revenue	619	511	1,195	1,008
Operator revenue	43	48	82	100
Equipment revenue	270	257	544	505
Internal sales	20	18	38	32
Total	952	835	1,860	1,646
Latvia
End-user service revenue	348	269	681	530
Operator revenue	29	35	57	69
Equipment revenue	99	85	201	166
Internal sales	11	9	20	19
Total	487	398	959	785
Estonia
End-user service revenue	175	149	341	294
Operator revenue	22	22	41	43
Equipment revenue	44	49	86	92
Internal sales	3	2	5	5
Total	243	222	473	433
Internal sales, elimination	-36	-32	-68	-60
CONTINUING OPERATIONS
End-user service revenue	5,254	4,969	10,367	9,850
Operator revenue	573	608	1,117	1,203
Equipment revenue	1,327	1,243	2,678	2,511
TOTAL	7,153	6,820	14,162	13,565

Underlying EBITDAaL

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Sweden	1,846	1,938	3,732	3,903
Lithuania	399	317	760	622
Latvia	213	160	409	314
Estonia	54	48	104	95
TOTAL	2,512	2,463	5,004	4,934

NOTE 3 PROFIT AFTER FINANCIAL ITEMS

Reconciling items to reported profit operating profit/loss

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Underlying EBITDAaL	2,512	2,463	5,004	4,934
Reversal lease depreciation and interest	370	326	731	653
Underlying EBITDA	2,882	2,790	5,735	5,588
Restructuring costs	-43	-66	-86	-114
Disposal of non-current assets	-1	-24	-13	-22
Other items affecting comparability	-32	2	-45	2
Items affecting comparability	-76	-88	-144	-133
EBITDA	2,806	2,702	5,591	5,454
Depreciation/amortization	-1,563	-1,560	-3,083	-3,080
Result from shares in associated companies and joint ventures	—	-1	-1	1,670
Operating profit	1,243	1,140	2,507	4,044
Net interest and other financial items	-156	-118	-370	-349
Profit after financial items	1,086	1,022	2,137	3,695

In Q1 2022 Tele2 AB and Deutsche Telekom completed the divestment of T-Mobile Netherlands, for an enterprise value of EUR 5.1 billion. Tele2 received SEK 9.0 billion for its 25% share in T-Mobile Netherlands. The capital gain amounted to SEK 1.6 billion, reported under Result from shares in associated companies and joint ventures last year.

Restructuring costs

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Redundancy costs	-7	-27	-13	-33
Other employee and consultancy costs	-7	-8	-15	-22
Exit of contracts and other costs	-30	-31	-58	-58
Restructuring costs	-43	-66	-86	-114
Reported as:
– Cost of services provided	-25	-7	-43	-15
– Selling expenses	-6	-26	-13	-41
– Administrative expenses	-12	-32	-31	-57

The restructuring costs are related to the business transformation program in Sweden, which was successfully concluded in Q2 2023.

Disposal of non-current assets

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Closure of projects and systems	—	-12	-9	-12
Network equipment scrapping	-4	—	-8	—
Other	4	-12	5	-10
Disposal of non-current assets1)	-1	-24	-13	-22

1) Reported as other operating income and other operating expenses.

Other items affecting comparability

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Legal disputes and settlements	-12	—	-11	—
Legacy receivable reconciliation	-20	—	-20	—
Legacy insurance costs	—	—	-16	—
Other	—	2	2	2
Total	-32	2	-45	2
Reported as:
– Selling expenses	-20	2	-33	2
– Administrative expenses	-12	—	-12	—

In Q2 2023, a negative non-recurring item of SEK 20 million was recognized, related to reconciliation of receivables in a legacy billing system. In addition, a provision of SEK 12 million was made related to an administrative fine issued by the Swedish Authority for Privacy Protection due to Tele2's use of the tool Google Analytics. Tele2 has stopped using the relevant version of the tool and has appealed the decision.

NOTE 4 SHARES IN ASSOCIATED COMPANIES AND JOINT VENTURES

As of June 30, 2023, Tele2 had no material values attached to associated companies.

NOTE 5 FINANCIAL ASSETS AND LIABILITIES

Financing

SEK million	Jun 30 2023	Dec 31 2022
Bonds SEK	6,793	8,392
Bonds EUR	17,214	14,083
Commercial papers	—	796
Financial institutions	3,446	3,359
Total liabilities to financial institutions	27,453	26,630

Average maturity and average interest rate (including derivatives) for outstanding debt to financial institutions at June 30, 2023 amounted to 4.4 years and 3.05 percent, respectively.

As of the date of this report, Tele2 has a credit facility with a syndicate of eight banks maturing in 2027.

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, lease liabilities and trade payables. For the category "Liabilities to financial institutions" the reported value amounted on June 30, 2023 to SEK 27,453 (December 31, 2022: 26,630) million and the fair value to SEK 26,215 (December 31, 2022: 25,350) million.

During 2023, no transfers have been made between the different levels in the fair value hierarchy and no significant changes were made to valuation techniques, inputs used or assumptions.

NOTE 6 RELATED PARTIES

Tele2's share of cash and cash equivalents in joint operations (Svenska UMTS-nät AB and Net4Mobility HB, Sweden, including subsidiaries) for which Tele2 has limited disposal rights was included in the Group's cash and cash equivalents and amounted at June 30, 2023 to SEK 64 (December 31, 2022: 135) million. Other transactions with joint operations and other related parties mainly consists of the same items as prior year end and are presented in Note 34 of the Annual and Sustainability Report 2022.

NOTE 7 CONTINGENT LIABILITIES

As of June 30, 2023, Tele2 had no material contingent liabilities.

NOTE 8 EQUITY, NUMBER OF SHARES AND INCENTIVE PROGRAMS

Number of shares

	Jun 30 2023	Dec 31 2022
Total number of shares	696,221,597	695,021,597
Number of treasury shares	-4,588,520	-4,010,230
Number of outstanding shares	691,633,077	691,011,367
Number of outstanding shares, weighted average	691,166,795	690,647,136
Number of shares after dilution	696,113,066	695,074,506
Number of shares after dilution, weighted average	695,597,819	694,353,388

In Q1 2023, Tele2 issued, and immediately repurchased, 1,200,000 new C shares to be used for future exercises of long-term incentive programs (LTI), resulting in an increase in share capital of SEK 1.5 million.

In Q2 2023, 621 710 share rights attached to LTI 2020 were exchanged for shares (see also later in Note 8). Changes in shares during previous year are stated in Note 23 in the Annual and Sustainability Report 2022.

Outstanding share right programs

	Jun 30 2023	Dec 31 2022
LTI 2023	1,567,496	—
LTI 2022	1,468,367	1,460,226
LTI 2021	1,444,126	1,441,908
LTI 2020	—	1,161,005
Total outstanding share rights	4,479,989	4,063,139

All outstanding long-term incentive programs (LTI 2021, LTI 2022 and LTI 2023) are based on the same structure. Additional information regarding the objective, conditions and requirements related to the LTI programs is stated in Note 31 of the 2022 Annual and Sustainability Report. During the six months in 2023, the total cost including social security costs for all the programs amounted to SEK 52 (54) million before tax.

LTI 2023

At the Annual General Meeting held on May 15, 2023, the shareholders approved a retention and performance based incentive program (LTI 2023) for senior executives and other key employees in the Tele2 Group. In order to participate in the program, participants must own Tele2 Class B shares, which give the participants retention and performance rights. Subject to fulfilment of certain retention and performance based conditions during the periods January 1, 2023 – December 31, 2025 (the "Cash flow Measurement Period") and April 1, 2023 – March 31, 2026 (the "TSR Measurement Period") and the participant maintaining the invested shares at the release of the interim report for January – March 2026 and, with certain exceptions, as well maintaining the employment within the Tele2 Group, each right entitles the participant to receive Tele2 shares free of charge (subject to income taxation).

Total costs before tax for outstanding rights in the incentive program are expensed over the three year vesting period. These costs are expected to amount to SEK 101 million, of which social security costs amount to SEK 34 million. To ensure the delivery of Class B shares under the program, the Annual General Meeting decided to authorize the Board of Directors to resolve on a directed share issue of a maximum of 700,000 Class C shares and subsequently to repurchase the Class C shares. The Board of Directors has not yet used its mandate.

LTI 2020

The exercise of the share rights in LTI 2020 was conditional upon the fulfilment of certain retention and performance based conditions. The TSR criterias (serie A and B below) were measured from April 1, 2020 until March 31, 2023, while operating cashflow (serie C below) was measured from January 1, 2020 to December 31, 2022. The outcome of these performance conditions was in accordance with below and 621,710 share rights have been exchanged for shares in Tele2 during Q2 2023.

Serie	Performance criteria	Minimum level	Stretch level	Vesting at minimum	Target fulfiment	Allotment
A	Total Shareholder Return (TSR) - Tele2	0%	N/A	100%	2.5%	100%
B	Tele2s Relative Total Shareholder Return (TSR) compared to a peer group	0%	20%	50%	-16.4%	0%
C	Operating cash flow vs .target	90%	110%	30%	104.4%	80.3%

Dividend

The Annual General Meeting (AGM) held on May 15, 2023, resolved on an ordinary dividend of SEK 6.80 per share in respect of the financial year 2022, to be paid in two tranches of SEK 3.40 each. The first tranche of the ordinary dividend, amounting to SEK 2,352 million, was distributed to the shareholders on May 22, 2023. The second tranche of the ordinary dividend is estimated to be distributed to the shareholders on October 13, 2023.

NOTE 9 BUSINESS ACQUISITIONS AND DIVESTMENTS

Acquisitions and divestments of shares and participations affecting cash flow were as follows:

SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Acquisitions
Other minor acquisitions	—	—	—	-6
Total acquisition of shares and participations	—	—	—	-6
Divestments
Tele2 Germany	24	22	24	22
T-Mobile Netherlands	—	-37	—	8,956
Other minor divestments	—	—	-2	—
Total sale of shares and participations	24	-15	22	8,978
TOTAL CASH FLOW EFFECT	24	-15	22	8,972

No material acquisitions or divestments have been made in 2023. The proceeds from Tele2 Germany refer to the earnout component, see Note 10.

In Q1 2022, the divestment of T-Mobile Netherlands was completed. The cash proceeds for Tele2's 25% share of the company amounted to SEK 9.0 billion (see also Note 3). Information on acquisitions and divestments made in 2022 is provided in the Annual and Sustainability Report 2022, Note 14 and Note 33.

NOTE 10 DISCONTINUED OPERATIONS

Tele2 Germany

In December 2020 Tele2 completed the divestment of its German business to the Tele2 Germany management. The purchase price included an earnout component, dependent upon the financial performance of the business until the end of 2024.

So far Tele2 has received accumulated earnout payments of SEK 171 million, of which SEK 24 million in Q2 2023. On June 30, 2023 the estimated fair value of the future cash flows amounted to SEK 34 million (December 31, 2022; SEK 54 million).

Income statement

All discontinued operations are included below. Tele2 Germany and Tele2 Croatia were divested in 2020, while Tele2 Netherlands were divested in 2019.

Further information about effects in the income statement under discontinued operations in 2022 is provided in Note 33 of the Annual and Sustainability Report 2022.

Discontinued operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Interest expenses	—	-1	—	-2
Profit/loss after financial items	—	-1	—	-2
Net profit/loss from the operation	—	-1	—	-2
Profit/loss on disposal of operation including sales costs and cumulative exchange rate gain	-1	2	-2	6
– of which Germany	3	5	4	9
– of which Croatia	-3	-2	-4	-2
– of which Netherlands	-1	-1	-2	-1
NET PROFIT	-1	1	-2	4
Attributable to:
Equity holders of the parent company	-1	1	-2	4
NET PROFIT	-1	1	-2	4
Earnings per share (SEK)	0.00	0.01	0.00	0.00
Earnings per share, after dilution (SEK)	0.00	0.00	0.00	0.01

Balance sheet

Assets and liabilities associated with assets held for sale as of June 30, 2023 refer to an earnout asset and provisions related to the divested operations in Germany, Croatia and the Netherlands.

Discontinued operations	Jun 30	Dec 31
SEK million	2023	2022
ASSETS
Financial assets	17	32
Non-current assets	17	32
Current receivables	17	22
Current assets	17	22
Assets classified as held for sale	34	54
LIABILITIES
Interest-bearing liabilities	27	26
Non-current liabilities	27	26
Interest-bearing liabilities	62	61
Non-interest-bearing liabilities	4	4
Current liabilities	66	65
Liabilities directly associated with assets classified as held for sale	93	91

Cash flow statement

Discontinued operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Cash flow from investing activities	24	22	22	22
Net change in cash and cash equivalents	24	22	22	22

Non-IFRS measures

This report contains certain financial measures that are not defined by IFRS but are used by Tele2 to assess the financial performance of the business. These measures are included in the report as they are considered important supplementary measures of operating performance and liquidity. They should not be considered a substitute to Tele2's financial statements prepared in accordance with IFRS. Tele2's definitions of these measures are described below, but other companies may calculate non-IFRS measures differently and these measures are therefore not always comparable to similar measures used by other companies.

EBITDA

Tele2 considers EBITDA to be a relevant measure to present profitability aligned with industry standard.

EBITDA: Operating profit/loss before depreciation/amortization, impairment as well as results from shares in associated companies and joint ventures.

Underlying EBITDA

Tele2 considers underlying EBITDA to be a relevant measure to present in order to illustrate the profitability of the underlying business, and as these are used by management to assess the performance of the business.

Underlying EBITDA: EBITDA excluding items affecting comparability.

Items affecting comparability: Disposals of non-current assets and transactions from strategic decisions, such as capital gains and losses from sales of operations, acquisition costs, integration costs due to acquisition or merger, restructuring programs from reorganizations as well as other items that affect comparability.

Underlying EBITDAaL and underlying EBITDAaL margin

Tele2 considers underlying EBITDAaL and the related margin to be relevant measures of the business performance since underlying EBITDAaL includes the cost of leased assets (depreciation and interest), which is not included in underlying EBITDA according to IFRS 16.

Underlying EBITDAaL: Underlying EBITDA as well as lease depreciation and lease interest costs according to IFRS 16.

Underlying EBITDAaL margin: Underlying EBITDAaL in relation to revenue excluding items affecting comparability.

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Operating profit	1,243	1,140	2,507	4,044
Reversal:
Result from shares in associated companies and joint ventures	—	1	1	-1,670
Depreciation and amortization	1,563	1,560	3,083	3,080
EBITDA	2,806	2,702	5,591	5,454
Reversal, items affecting comparability:
Restructuring costs	43	66	86	114
Disposal of non-current assets	1	24	13	22
Other items affecting comparability	32	-2	45	-2
Total items affecting comparability	76	88	144	133
Underlying EBITDA	2,882	2,790	5,735	5,588
Lease depreciation	-326	-307	-642	-615
Lease interest costs	-45	-19	-89	-38
Underlying EBITDAaL	2,512	2,463	5,004	4,934
Revenue	7,153	6,820	14,162	13,565
Revenue excluding items affecting comparability	7,153	6,820	14,162	13,565
Underlying EBITDAaL margin	35%	36%	35%	36%

Non-IFRS measures – Capex paid and capex

Tele2 considers capex paid relevant to present as it provides an indication of how much the company invests organically in intangible and tangible assets to maintain and expand its business. Tele2 believes that it is relevant to present capex to provide a view on how much Tele2 invests organically in intangible and tangible assets as well as in right-of-use assets (lease) to maintain and grow its business that is not dependent on the timing of cash payments.

Capex paid: Cash paid for the additions to intangible and tangible assets net of cash proceeds from sales of intangible and tangible assets.

Capex: Additions to intangible assets, tangible assets and right-of-use assets that are capitalized on the balance sheet.

SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
CONTINUING OPERATIONS
Additions to intangible and tangible assets	-893	-863	-1,819	-1,619
Sale of intangible and tangible assets	4	8	5	10
Capex paid	-889	-855	-1,814	-1,609
This period's unpaid capex and reversal of paid capex from previous period	-14	62	-150	143
Reversal received payment of sold intangible and tangible assets	-4	-8	-5	-10
Capex intangible and tangible assets	-906	-801	-1,969	-1,476
Additions to right-of-use assets	-192	-236	-399	-398
Capex	-1,099	-1,037	-2,368	-1,873

No capex has been reported related to discontinued operations.

Non-IFRS measures – Operating cash flow

Tele2 considers operating cash flow a relevant measure to present as it gives an indication of the profitability of the underlying business while also taking into account the investments needed to maintain and grow the business.

Operating cash flow: Underlying EBITDAaL less capex excluding spectrum and leases.

Continuing operations SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
Underlying EBITDAaL	2,512	2,463	5,004	4,934
Capex excluding spectrum and leases	-888	-737	-1,951	-1,407
Operating cash flow	1,624	1,726	3,054	3,527

Non-IFRS measures – Equity free cash flow

Tele2 considers equity free cash flow to be relevant to present as it provides a view of funds generated from operating activities that also includes investments in intangible and tangible assets. Management believes that equity free cash flow is meaningful to investors because it is the measure of the Group's funds available for acquisition related payments, dividends to shareholders, share repurchases and debt repayment.

Equity free cash flow: Cash flow from operating activities less capex paid and amortization of lease liabilities.

SEK million	Apr-Jun 2023	Apr-Jun 2022	Jan-Jun 2023	Jan-Jun 2022
CONTINUING OPERATIONS
Cash flow from operating activities	2,358	1,881	4,789	3,926
Capex paid	-889	-855	-1,814	-1,609
Amortization of lease liabilities	-293	-275	-679	-657
Equity free cash flow (eFCF)	1,176	750	2,296	1,660
eFCF per share (SEK)	1.70	1.09	3.32	2.40
eFCF per share after dilution (SEK)	1.69	1.08	3.30	2.39
OUTSTANDING SHARES
Number of shares	691,633,077	690,282,905	691,633,077	690,282,905
Number of shares after dilution	696,113,066	695,169,775	696,113,066	695,169,775

No equity free cash flow has been reported related to discontinued operations.

Non-IFRS measures – Net debt and economic net debt

Tele2 believes that net debt is relevant to present as it is useful to illustrate the indebtedness, financial flexibility, and capital structure. Furthermore, economic net debt is considered relevant as it excludes lease liabilities, and thereby consistently can be put in relation to underlying EBITDAaL when measuring financial leverage.

Net debt: Interest-bearing non-current and current liabilities excluding provisions, less cash and cash equivalents, current investments, restricted cash and derivatives.

Economic net debt: Net debt excluding lease liabilities.

Total operations SEK million	Jun 30 2023	Dec 31 2022
Interest-bearing non-current liabilities	28,475	29,848
Interest-bearing current liabilities	5,932	4,296
Reversal provisions	-1,302	-1,362
Cash & cash equivalents, current investments and restricted funds	-1,672	-1,274
Derivatives	-620	-401
Net debt	30,813	31,108
Reversal:
Lease liabilities	-4,958	-5,460
Economic net debt	25,855	25,647

Organic

Tele2 believes that organic growth rates are relevant to present as they exclude effects from currency movements but include effects from divestments and acquisitions as if these occurred on the first day of each reporting period and are therefore providing an indication of the underlying performance.

Organic growth rates: Calculated at constant currency, meaning that comparative figures have been recalculated using the currency rates for the current period, but including effects from divestments and acquisitions as if these occurred on the first day of each reporting period.

Reconciliation of figures is presented in an excel document (Q2-2023 financial-and-operational-data) on Tele2's website www.tele2.com.

Other financial metrics

Certain other financial metrics that are presented in this report are defined below. It is the view of Tele2 that these metrics provide valuable additional information to investors and other readers of this report.

ASPU

Average monthly spending per user for the referenced period. ASPU is calculated by dividing the monthly end-user service revenue by the average number of RGUs for the same period. The average number of RGUs is calculated as the number of RGUs on the first day in the period plus the number of RGUs on the last day of the respective period, divided by two.

Average interest rate

Annualized interest expense on loans (excluding penalty interest etc.) in relation to average interest-bearing liabilities excluding provisions, lease liabilities, debt related to equipment financing, balanced bank fees as well as adjusted for borrowings and amortizations during the period.

Earnings per share

Profit/loss for the period attributable to the parent company shareholders in relation to the weighted average number of shares outstanding during the fiscal year.

Economic net debt / Underlying EBITDAaL (financial leverage)

Economic net debt divided by underlying EBITDAaL (rolling twelve months) for all operations owned and controlled by Tele2 at the end of each reporting period.

End-user service revenue

Revenue from end-users excluding equipment revenue. End-user service revenue is presented to provide a view of revenue attached to the customers usage of services provided by the company.

Operating profit/loss (EBIT)

Revenue less operating expenses.

RGU

Revenue generating units, which refer to each service subscribed to by a unique customer. A unique customer who has several services is counted as several RGUs but one unique customer.

TSR

Total shareholder return including change in the share price and reinvested dividends.

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