Slimmed-down Tele2’s EBITDA up 29.1%

23 Jul 2008

Consolidated EBITDA at Swedish telecoms group Tele2 rose by 29.1% year-on-year in the second quarter to SEK2.07 billion (USD347 million), up from SEK1.60 billion in Q2 2007. Total group revenues in the three months to the end of June 2008 climbed 6.7% to SEK10.15 billion, compared to SEK9.51 billion a year earlier. The Stockholm-based operator’s quarterly CAPEX reached SEK1.41 billion, up from SEK1.04 billion in April-June last year. Net profit from continuing operations in Q2 2008 amounted to SEK114 million, compared to a loss of SEK331 million in the year-ago quarter.

After implementing a steady stream of divestments in countries across Europe, Tele2 currently offers mobile services in ten countries – Sweden, Norway, Russia, Croatia, Estonia, France, Latvia, Lithuania, Netherlands and Switzerland, with its own network in seven countries. Mobile revenue in Q2 2008 grew by 14% year-on-year to SEK6.10 billion (SEK5.36 billion in Q2 2007) and mobile EBITDA climbed to SEK1.59 billion (SEK1.33 billion), taking the EBITDA margin to 26% (25%). Net mobile customer intake amounted to 751,000 (compared to 906,000 in the previous year), driven mainly by Russia, Sweden and Croatia but also by the three Baltic countries. In its home market, Tele2 Sweden added a net total of 85,000 mobile customers (compared to 46,000 in the year-ago quarter), helped by the increasing popularity of its mobile broadband internet subscription service, which signed up 135,000 users by the end of June. During the second quarter Tele2 Sweden was awarded 20MHz of 2.6 GHz spectrum suitable for ‘4G’/LTE (Long Term Evolution) services.

Tele2 currently offers fixed broadband services in seven countries – Sweden, Austria, Germany, Lithuania, Netherlands, Norway and Switzerland, with its own or jointly-owned network in six countries. In the quarter ended June 2008 fixed broadband revenues increased by 15% year-on-year to SEK1.57 billion (SEK1.37 billion) and EBITDA loss narrowed to SEK21 million (compared to losses of SEK210 million a year before), mainly attributed to a focus on cost control. The total fixed broadband customer base grew by 4,000 net users in the three-month period (compared to net intake of 66,000 in the year-ago period).

Tele2 currently offers fixed telephony services in nine countries – Sweden, Austria, Estonia, Germany, Latvia, Lithuania, Netherlands, Norway and Switzerland. In Q2 2008, churn stayed high leading to a net loss of 415,000 users (higher than the 380,000 net user losses in Q2 2007). As a result, revenue declined by 16% year-on-year to SEK1.95 billion (SEK2.32 billion). However, the segment’s EBITDA contribution was SEK487 million (SEK409 million), corresponding to a higher margin of 25% (18%).

Tele2’s strategy of divestments is ongoing. On 26 June Tele2 announced the sale of Tele2 Luxembourg and Tele2 Liechtenstein to Belgacom, and on 30 June it announced the sale of Tele2 Poland to Netia. Completion is expected following approval from the respective regulatory authorities. Meanwhile, Harri Koponen was appointed new President and CEO of Tele2, effective from 18 August 2008.

Sweden, Tele2, Tele2 Sweden,

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