Tele2 revenues flatline in Q1, profit drops 2%

19 Apr 2011

Swedish telecoms group Tele2 has reported net sales of SEK9.57 billion (USD1.53 billion) in the first quarter of 2011, virtually flat on the SEK9.53 billion recorded in the same three months of 2010, whilst its net profit slumped by 2% year-on-year to SEK1.23 billion. EBITDA performance was positive, though, increasing by 4% year-on-year to SEK2.46 billion in the three months ended 31 March 2011, whilst the group’s CAPEX in Q1 amounted to SEK939 million, up from SEK582 in the corresponding period last year.

At end-March 2011 Tele2’s group-wide customer base reached 31.24 million, up from 27.66 million twelve months earlier, thanks to continuing progress in mobile subscriber take-up. Overall net customer intake across the mobile, fixed and broadband segments amounted to 399,000 in Q1 2011, and intake in mobile services amounted to 522,000, although this was down from 972,000 in the first quarter of 2010. 14,000 of the net new mobile additions in 1Q11 were mobile broadband users (compared to 33,000 in 1Q10). Mobile growth was mainly driven by a robust performance from Tele2 Russia. During the period under review, Tele2 Russia’s customer base grew by 547,000 customers, although this was less than the 949,000 reported in the same period a year ago. The total Russian customer base reached 18.99 million at 31 March 2011, up from 15.40 million a year earlier, helping drive the wider group’s mobile subscription total to 27.6 million (23.6 million).

Tele2’s total fixed broadband customer base lost a net 4,000 subscribers in Q1 2011, primarily attributable to operations in the Netherlands and Germany, but year-on-year the total figure rose from 1.19 million to 1.24 million. In line with expectations, the number of fixed telephony customers fell in Q1 2011, reaching 2.35 million at end-March, down from 2.84 million twelve months previously.

Tele2 issued forecasts for some of its subsidiaries, stating that operations in Kazakhstan should reach breakeven within two years from its commercial re-launch, which is planned to take place in H1 2011, while it predicted that Tele2 Croatia will reach free cash-flow breakeven by 2H11.