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Tele2 cost-cutting cushions Q2

Swedish operator Tele2, which seems hell-bent on cutting operational expenditure – primarily through streamlining IT operations – produced a respectable set of Q2 figures.

True, sales aren't great. Largely because of COVID-19, claimed Tele2, end-user revenue on an organic basis dipped 2% year-on-year, to 4.9 billion Swedish kroner (US$542 million).

Total revenue (organic) was also down 2% over the same period, to SEK6.7 billion ($741 million).

Where things look a little bit rosier is earnings. Due to cost reductions and "activities to mitigate the pandemic impact," said Tele2, underlying EBITDAal on an organic basis was up 4%, to SEK 2.3 billion ($254 million), compared with Q2 2019.

Despite mitigation efforts, Tele2's "underlying EBITDAaL" metric was not immune to the coronavirus. At a Group level, COVID-19 impact had a negative effect here of SEK135 million ($15 million).

Tele2 was hit in the pocket by lower international roaming, declining equipment and mobile prepaid sales, and suspension of premium sports in TV.

Outgoing CEO Anders Nilsson nonetheless had some good news for shareholders. "With a better view of the pandemic impact and a solid plan of mitigations we are reinstating our guidance for 2020 and planned extraordinary dividend," he said.

When Tele2 announced its Q1 results, the operator ditched full-year guidance and postponed the extraordinary dividend of SEK 3.50 ($0.39) per share "until more clarity on the duration and impact of the pandemic."

The Tele2 board now intends to call an Extraordinary General Meeting, expected September, to approve the extraordinary dividend. The dividend will cost Tele2 a chunky SEK2.4 billion ($390 million).

Full-year guidance, which assumes a negative quarterly impact on underlying EBTIDAaL from the pandemic of SEK100-120 million ($11.1-13.3 million), is flat compared to 2019.

Capex, excluding spectrum and leasing assets, is expected in the SEK2.5-3.0 billion ($276-332 million) range.

Nilsson will step down from the Tele 2 helm on September 15. He's to be replaced by company outsider Kjell Morten Johnsen, whose resume includes stints as chief operating officer at VEON (formerly VimpleCom) and head of Telenor Europe.

One of Johnsen's main tasks will be to deliver on an existing plan to cut annual operational expenditure by "at least" SEK1 billion ($110 million) over the next three years.

— Ken Wieland, contributing editor, special to Light Reading

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