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Eurobites: Tele2 cutbacks fatten profit margins

Also in today's EMEA regional roundup: ITV sets up streaming unit; VEON invests in ShopUp; Arm takes wraps of latest design.

  • Tele2's third-quarter presentation starts with a cutesy image of a (presumably) Swedish family at breakfast. The kids are blonde and perfectly behaved, the parents smile as mum takes a photo with her Tele2 phone and the breakfast exudes wholesomeness. Mornings will be more fraught for many employees at the Swedish operator, which cut nearly 700 jobs last year, about 13% of the total, and is targeting 1 billion Swedish kronor (US$110 million) in cost savings by 2022. Only SEK150 million ($17 million) have been realized so far, said Tele2 in its presentation today, and so most of those cuts will happen next year and in 2022. For investors, the good news is that net profit received a welcome boost from earlier savings efforts. It was up around 18% for continuing operations, to SEK1.16 billion ($130 million), compared with the year-earlier period, despite a 3% dip in revenues, to SEK6.64 billion ($750 million). Tele2 reckons coronavirus wiped about SEK100 million ($11.4 million) off underlying earnings for the quarter and is guiding for a relatively stable figure this year. Although it is slashing operational costs, it also plans to invest SEK2.5-3 billion ($280-340 million) in capital expenditure excluding spectrum licenses – up from SEK2.4 billion ($270 million) last year – as it pumps money into 5G and higher-speed fixed-line networks. (See Tele2 cost-cutting cushions Q2 and Tele2 has slashed hundreds of jobs and more cuts are coming.)

    Mornings are less idyllic in Eurobites Towers.
    Mornings are less idyllic in Eurobites Towers.

  • UK broadcaster ITV is to set up a new streaming business in a restructuring that reflects what it describes in a statement as "changing viewing habits." The company said it would form a new media and entertainment division that includes a traditional broadcast unit as well as an on-demand one. The latter will take responsibility for all of ITV's online activities, including its Hub and Hub+ digital platforms and the BritBox subscription service that it has set up with the BBC. Cutbacks are planned too, including a reduction in London office speed and "leaner central support services." Kevin Lygo, ITV's director of television, will be managing director of the media and entertainment division and have full responsibility for the broadcast unit, while Rufus Radcliffe, ITV's chief marketing officer, will be in charge of on-demand.

  • Amsterdam-headquartered VEON says it has made an investment in ShopUp, a business-to-business e-commerce platform in Bangladesh. VEON co-CEO Sergi Herrero, a former executive at Facebook, said VEON would be able to combine its expertise in digital financial services with ShopUp's sourcing and logistics capabilities. VEON generates about half its revenues in Russia but operates in a range of emerging markets worldwide. In Bangladesh, it runs a mobile network under the Banglalink brand. VEON joins Sequoia Capital and Flourish Ventures as investors in ShopUp. (See Malik out as VEON CTO.)

  • UK-based Arm Holdings unveiled its latest chip design – a so-called neural processing unit (NPU) branded the Ethos-U65, and a successor to the Ethos-U55. The company, whose designs are used in most of today's smartphones, said the latest innovation would power "a new wave of edge AI" in forthcoming 5G networks. Arm is currently the target of a $40 billion takeover attempt by Nvidia, a US chip-making giant, although some market watchers reportedly think the deal will run into opposition from authorities on competition grounds. (See Nvidia's $40B Arm takeover is the stuff of nightmares.)

    — Iain Morris, International Editor, Light Reading

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