Like many operators, Tele2 is trying to tread a fine line between providing some optimism for the future while also admitting that no one really knows how much damage will be wreaked on businesses by the COVID-19 pandemic.
The Sweden-based operator has just produced its results for the first quarter of 2020, and has already decided to refrain from providing financial guidance for the full year due to the uncertainty related to the global pandemic, although it reiterated its mid-term guidance. Furthermore, it has postponed the extraordinary dividend of SEK 3.50 ($0.35) per share "until there is more clarity on the duration and impact of the pandemic." Tele2 still plans to distribute an ordinary dividend of SEK 5.50 ($0.55) per share.
Anders Nilsson, president and Group CEO of Tele2, conceded that there are "a number of headwinds this year which will make it difficult to achieve our original plan for 2020." However, he insisted that Tele2 will continued with strategic initiatives that aim to create value in the long term.
These include the launch of a new digital brand called Penny, the ramp up of broadband under the Comviq sub-brand, and the rollout of the streaming service Comhem Play+. The operator also completed the sale of Tele2 Croatia and intends to continue with its program to reduce costs by at least SEK1 billion ($99 million) over three years. "We are confident that continued execution on this long-term strategy will help us deliver our mid-term guidance of low-single digit growth in EUSR [end-user service revenue] and mid-single digit growth in underlying EBITDAaL [EBITDA after leases] beyond 2020," Nilsson said. (See Tele2 has slashed hundreds of jobs and more cuts are coming.)
In the first quarter of 2020, Tele2 said revenue fell by 1% year-on-year to SEK6.9 billion ($686 million), while end-user service revenue was flat at SEK4.9 billion ($487 million). Underlying EBITDAaL fell 1% to SEK2.2 billion ($219 million), and the total net profit increased by SEK200 million to SEK 1.2 billion ($119 million). The operator also said its fixed-mobile convergence strategy is progressing well following the integration of Tele2 with fixed provider Com Hem, with 232,000 customers now signed up to fixed-mobile bundles.
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— Anne Morris, contributing editor, special to Light Reading