Tele2 reports 4Q, full year results; losses at continuing ops narrowed

12 Feb 2008

Pan-European mobile, fixed line and broadband group Tele2 has announced its consolidated results for the fourth quarter and full year 2007. Operating revenue less divested operations in the three months ended 31 December 2007 amounted to SEK10.447 billion (USD1.611 billion), an increase of 7% from SEK9.731 billion in 4Q 2006. EBITDA less divested business in 4Q 2007 increased by 4% to SEK1.564 billion, EBIT less divestments was SEK247 million (including one-off items of -SEK328 million), compared to SEK708 million a year ago. For the full year 2007, revenue less divested operations grew by 9% to SEK40.313 billion, from SEK37.113 billion in 2006, and annual revenue from continuing operations increased by 1% to SEK43.42 billion (SEK43.098 billion). 2007 net loss from continuing operations narrowed to SEK302 million (SEK1.003 billion). The Swedish-based company’s net debt amounted to SEK5.198 billion at the end of 2007, down by 66% from SEK15.311 billion a year ago. Total mobile customers increased from 15.726 million at end-December 2006 to 17.427 million a year later, and fixed telephony resale customers fell from 8.82 million to 5.99 million, whilst direct access/unbundled local loop broadband and fixed line subscribers rose from 689,000 to 830,000. Overall customers numbered 24.721 million at end-2007, down from 32.103 million at the start of the year (down from 25.751 million in terms of continuing operations).

In the fourth quarter of 2007 Tele2 completed the sale of Tele2 Spain and Tele2 Italy to Vodafone Group, completed the divestment of its Hungarian operations to HTCC and announced the sale of its Austrian MVNO business to Telekom Austria, whilst subsidiary Tele2 Netherlands (formerly Versatel) wrapped up a deal offloading its Belgian division to KPN. Earlier in the year the group shed units in Portugal (September), France (fixed and broadband only, July) and Denmark (July).

Lars-Johan Jarnheimer, President and CEO of Tele2 commented on the results: ‘Russia continued to be the main growth driver and Tele2 is now the largest operator in six of the [Russian] regions where we operate. In Q4 2007, Tele2 was awarded 17 new regional GSM-1800 licences in Russia.’ He added that ‘at the end of 4Q 2007 we had 93,000 mobile broadband customers in Sweden [after adding 48,000 new customers in the quarter]…Tele2 offers [fixed] broadband services in nine countries. Our broadband operations less divested operations generated a revenue growth of 18%, driven mainly by our services on our own infrastructure. We see the broadband product as a good complement to our core mobile operations and it is important that profitability in this area improves in 2008 and contributes to the operations as a whole. Fixed telephony operations [less divestments] continued to deliver robust results and we strove to maximise value by being costs conscious. Our EBITDA margin within fixed telephony was a strong 18% in the quarter, despite a revenue decline of 17% year-on-year as the market is in a structural decline.’

Sweden, Tele2