Expert Corporate Governance Service (ECGS)
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Tele2 - EGM 22 August 2019

Under ITEM 7, the board of directors seeks approval to distribute an extraordinary dividend of SEK 6.00 per share. Although the proposed extraordinary dividend is covered by the proceeds of the divestment of Tele2’s equity stake in Kazakhtelecom (approx. SEK 1.6 billion), the repayment of the shareholder loan (SEK 2.1 billion) and the merger of the Company’s Dutch operations (SEK 1.9 billion), ECGS has general concerns over Tele2’s profit distribution and dividend policy. ECGS notes that dividends have been uncovered by EPS and/or FCF for five of the past 6 years. In addition, the Company has a net debt to EBITDA ratio of 4.9x as of June 30, 2019, which still (substantially) exceeds Tele2’s provided operating range of “between 2.5x-3.0x to maintain investment grade credit metrics”. In ECGS’ view, the Company could better use any excess cash to reduce the amount of (net) debt first instead of distributing any (extraordinary) dividend. Since ECGS favours a long-term approach to ownership and believes that a balanced remuneration of shareholders should be implemented, it recommends to vote OPPOSE.

Tele2 AB Cl B

Tele2 is engaged as a telecom operator. Co. provides mobile communication services, fixed broadband and telephony, data network services and content services. The mobile service comprises various types of subscriptions for residential and business customers as well as prepaid cards. Fixed broadband includes direct access, which is its own services based on access via copper cable and other forms of access, such as fibre networks, wireless broadband and metropolitan area networks. Fixed telephony includes resold products within fixed telephony. The product portfolio within resold fixed telephony consists of prefix telephony, pre-selection (dial the number without a prefix) and subscriptions.


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