Sweden's Tele2 is gaining an enviable reputation of finding ways to cut costs.
During Q1, the self-described "Baltic Sea challenger" – Tele2 also has operations in Estonia, Latvia and Lithuania – managed to grow EBITDAAL by 6%, year-over-year, to a shade over SEK2.3 billion ($274 million).
True, bad debt provisions during Q1 2020 helped boost the percentage increase, but still a solid enough performance, especially given that organic end-user revenue fell by 1%, to SEK4.7 billion ($559 million). Tele2 pinned the revenue-squeeze blame firmly on "headwinds related to the pandemic," including loss of international revenue.
CEO Kjell Johnsen described Q1 as "a story of disciplined focus," as the operator sticks to its business transformation program.
Under the three-program, unveiled by Tele2 last year – and before Johnsen took the helm in September – the aim is to cut operational expenditure in Sweden by SEK1 billion ($119 million) within three years.
Johnsen warned, however, that "we are not back to normal yet," although there is clearly optimism that the business is more on an even keel. Tele2's board of directors felt confident enough to propose an extraordinary dividend of SEK3 ($0.36) per share, to be distributed in July.
Impressive showing in the Baltics
Despite continued COVID-19 restrictions, Tele2's operations in the Baltics managed to increase organic revenue by 8%, to SEK763 million ($91 million). Growth was mainly driven, said Tele2, by stronger ASPU (average spend per user) courtesy of "continued monetization of growing data consumption," as well as migration of customers from pre- to post-paid subscriptions.
Sweden fared much worse when looking at the top line. "Sweden Consumer" decreased by 2% year-over-year, to SEK3.02 billion ($359 million), as gains made in mobile post-paid and fixed broadband were more than offset by declines in digital TV and mobile prepaid.
Revenue from "Sweden Business" fell by 5%, to SEK946 million ($113 million). Continued price pressure in the market, as well as a decline in legacy fixed services and a loss of roaming revenue, were the culprits here.
Total Tele2 revenue, at SEK6.55 billion ($780 million), was roughly flat organically compared to Q1 2020 as declines in end-user service revenue and operator revenue were offset by growth in equipment revenue.
Operating profit increased from SEK1.15 billion ($137 million) to SEK1.2 billion ($143 million), largely because of growth in underlying EBITDA.
— Ken Wieland, contributing editor, special to Light Reading