Another strong showing in the Baltics, an uplift in Sweden's B2B market, and continued cost savings translate into unchanged guidance.

Ken Wieland, contributing editor

July 19, 2022

3 Min Read
Tele2 sticks to "realistic" mid-term guidance

Tele2 shareholders, already buoyed perhaps by recent payment of an extraordinary dividend of 13 Swedish krona (US$1.3) per share following divestment of the operator's Dutch interests, were treated to a fairly solid set of Q2 results.

The self-styled "Baltic Sea challenger" posted a 3% year-on-year increase in organic EBITAaL – earnings before interest, taxes, depreciation, and amortization after leases – to SEK2.46 billion ($246 million).

The telco group said the slight uptick was driven by end-user service revenue growth and cost savings related to the business transformation program implemented on its home turf in Sweden.

Figure 1: Another strong showing in the Baltics, an uplift in Sweden's B2B market, and continued cost savings translate into unchanged guidance. (Source: Aleksey Zotov/Alamy Stock Photo) Another strong showing in the Baltics, an uplift in Sweden's B2B market, and continued cost savings translate into unchanged guidance.
(Source: Aleksey Zotov/Alamy Stock Photo)

Tele2 reported that annualized run-rate savings for the programme, which aims to cut operational expenditure in Sweden by SEK1 billion ($100 million), reached SEK650 million ($65 million) at the end of Q2. That's up from the SEK600 million ($60 million) savings chalked up during the 12 months ended March 31, 2022.

Group Q2 end-user service revenue, on an organic basis, rose 3% YoY to SEK5 billion ($500 million). Tele2 put this down by continued strong performance in the Baltics (up 12%, to SEK929 million/$9.3 million) and at Sweden Business (up 3%, to SEK989 million/$99 million).

Growth in mobile at Sweden Business is apparently offsetting declines in fixed-line services. Tele2 CEO Kjell Johnsen, in prepared remarks, added that Tele2 was continuing to work on 5G private networks during Q2 and claimed there was "good momentum in this new segment."

Increased international roaming also helped Tele2's top-line, chipping in with an extra SEK29 million ($2.9 million) compared with Q2 2021.

Sweden Consumer, however, which accounts for around 45% of group turnover, didn't manage any meaningful sales growth at all. At a shade over SEK3 billion ($300 million), Q2 revenue was flat compared with the same quarter last year. A decline in Sweden Consumer legacy services, said Tele2, was still offsetting growth in mobile and fixed broadband.

Steady as she goes

On the back of Q2 results, Johnsen struck a cautious but optimistic note in his message to shareholders. He said that Tele2 was "partly hedged" against operational challenges, including high energy prices and increasing inflation, and asserted that the operator was benefiting from improvements made to the business.

"Our ambition to continue delivering in accordance with our mid-term guidance is therefore fully realistic and with the initiatives we already have set in motion, we consider ourselves well.

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For fiscal year 2022, Tele2 has unchanged guidance of low single-digit growth in end-user service revenue and a mid single-digit growth of underlying EBITDAaL. Capex, excluding spectrum and leasing assets, is pegged at between SEK2.8 billion ($280 million) and SEK3.3 billion ($330 million).

Mid-term guidance is low single-digit growth of end-user service revenue; mid single-digit growth of underlying EBITDAaL; and annual capex, excluding spectrum and leasing assets, of between SEK2.8 billion ($280 million) and SEK3.3 billion ($330 million) during rollout of 5G and Remote-PHY.

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— Ken Wieland, contributing editor, special to Light Reading

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Europe

About the Author(s)

Ken Wieland

contributing editor

Ken Wieland has been a telecoms journalist and editor for more than 15 years. That includes an eight-year stint as editor of Telecommunications magazine (international edition), three years as editor of Asian Communications, and nearly two years at Informa Telecoms & Media, specialising in mobile broadband. As a freelance telecoms writer Ken has written various industry reports for The Economist Group.

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