Good news, bad news for Tele2

21 Oct 2004

The pan-European fixed line and mobile operator Tele2 has reported a mixed set of third-quarter financial results. Operating revenue for the three months to the end of September rose 13.8% to SEK10.71 billion, with growth of over 20% recorded in its newer markets away from the Nordic region. Meanwhile, pre-tax profits reached their highest ever level, increasing from SEK685 million in 3Q2003 to SEK764 million in the most recent period. EBITDA was up slightly from SEK1.635 billion to SEK1.658 billion.

It was not all good news, however. Customer churn levels were up, especially for the group’s fixed line operations in the Netherlands and Southern Europe. Tele2’s President and CEO, Lars-Johan Jarnheimer, called the increase a “disappointment”, and said it was due to “the high level of marketing activity and aggressive win-back campaigns from the incumbents”. He added that measures had already been taken to counter the rising churn and that an improvement has already been seen in the first two weeks of October.

Customer intake slowed compared to the same period last year: the company added 1,016,000 subscribers in the most recent quarter, down from 1,637,000 in 3Q2003. The operator says the slowdown in growth was largely due to a stagnation in dial-up internet accounts, particularly in Southern Europe. ARPU levels are slowing as more subscribers are being added in lower ARPU areas, and the dilution was exacerbated by a rise in the number of internet users who Tele2 says spend less than telephony customers.

Tele2 ended September with 7.6 million mobile subscribers, 18.1 million fixed line customers and 200,000 cable TV subscribers, giving a 27% rise in total customer numbers compared to September 2003. Southern Europe, which includes the group’s operations in France, Ireland, Italy, Spain, Switzerland, Portugal and the UK, accounts for the largest slice of customers, although almost all of the region’s 8.4 million Tele2 subscribers have fixed line or internet accounts. The Nordic region is home to the largest number of Tele2 mobile subscribers.

Sweden, Tele2
PriMetrica's GlobalComms