Tele2’s annual revenues slide 2.9%; strikes fibre deal for 4G backhaul with Eurofiber

7 Feb 2014

Sweden’s Tele2 has announced its consolidated results for 2013, in which annual revenues fell by 2.9% to SEK29.871 billion (USD4.584 billion), down from SEK30.742 billion the previous year, mainly as a result of lower mobile interconnection rates and negative net sales development in consumer fixed broadband and fixed telephony, partly offset by continuing growth in mobile service revenue. Consolidated annual EBITDA also fell, by 4.0% to SEK5.990 billion, although operating income (EBIT) climbed 3.7% to SEK2.626 billion. Group CAPEX was raised from SEK3.704 billion in 2012 to SEK5.169 billion in 2013, driven largely by network expansion in Sweden, the Netherlands, Norway and Kazakhstan. Net profit for the Tele2 group sunk to SEK655 million in FY2013, down from SEK976 million in the previous year.

Tele2’s total mobile customers fell to 12.656 million at the end of December 2013, down from 12.979 million twelve months earlier, including a net decrease of 417,000 in Q4 2013 – which was largely accounted for by a net loss of 393,000 mobile accounts in Kazakhstan in the fourth quarter, which the group attributed to a recent change in the commission structure for its retail vendors in the country to improve the quality of the customer base (resulting in higher ARPU levels). In the fourth quarter, Tele2’s group mobile service revenue grew by 5% year-on-year to SEK3.724 billion, driven by increasing mobile data usage, offsetting lower revenue from mobile voice and SMS.

Tele2 saw improved operational performance at Tele2 Sweden, where mobile service revenue grew by 3% y-o-y in Q4 2013, although the Swedish mobile EBITDA contribution in the quarter shrank to SEK722 million (SEK748 million in 4Q12), due to increased marketing spend and a shift from pay-as-you-go to bucket price plans.

Tele2 Netherlands continued its marketing push within the mobile segment, accelerating its net customer intake to 62,000 in Q4 2013 (55,000 in 4Q12) and taking its total mobile customer base to 694,000 (478,000). Mobile net sales amounted to SEK447 million (SEK288 million) and mobile end-user service revenue grew by 65% in Q4 2013.

Tele2 Kazakhstan’s mobile revenues grew by 24% y-o-y in Q4 2013 to SEK365 million, with underlying service revenue up by 33% y-o-y. Thanks to improved operational scale and lower interconnect levels, EBITDA losses were reduced to SEK7 million in Q4 (compared to EBITDA loss of SEK83 million in 4Q12).

Tele2’s consolidated fixed broadband customer base decreased by a net 22,000 users in Q4 2013, primarily attributable to operations in the Netherlands, while as expected, the number of fixed telephony customers continued to fall. As of 31 December 2013 Tele2’s total group mobile, fixed line and broadband customer base amounted to 14.764 million (down from 15.446 million at the end of 2012).

Also today, it was announced that wholesale network provider EuroFiber has agreed to connect a large portion of Tele2 Netherlands’ mobile sites, as the operator builds out its own 4G infrastructure spanning around 3,500 base stations. High speed fibre backhaul is crucial to support the network’s transport of large quantities of mobile data traffic, and the agreement forms ‘the last major building block for the efficient deployment of Tele2’s mobile network,’ while the collaborative project will start immediately, according to Connexie.nl. Ernst Jan van Rooijen, CEO of Tele2 Netherlands, said of the cooperation with EuroFiber, which complements Tele2’s own fibre rollouts: ‘We want a smart way to build a high-quality 4G network in the Netherlands … [to] take advantage of existing infrastructure and sites. The cooperation with Fiber is an important part of this strategy and we are pleased that we can benefit from their excellent coverage throughout the country.’

Kazakhstan, Netherlands, Sweden, Tele2, Tele2 Sweden, Tele2 NL, Tele2 Kazakhstan, Eurofiber (Netherlands),

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