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Tele2’s Q1 total sales fall 3%, but mobile service revenue rises by same percentage

25 Apr 2014

Consolidated net revenues at Swedish telecoms group Tele2 fell by 3% year-on-year in Q1 2014 to SEK7.108 billion (USD1.082 billion), mainly as a result of lower wholesale mobile interconnection rates and a drop in consumer fixed telephony and fixed broadband turnover following the sale of Tele2’s Swedish residential cable/fibre network operations. The group’s underlying mobile service revenue grew 3% in January-March 2014, however. Tele2 reported that consolidated EBITDA in the three-month period stood at SEK1.381 billion, down from SEK1.488 billion in the same period of last year, whilst quarterly net profit in 1Q14 reached SEK475 million, up from SEK353 million a year earlier. Q1 CAPEX was reported at SEK963 million, compared to SEK2.123 billion in the year-ago quarter, with the largest spending focused on network expansion in Sweden, the Netherlands, Norway and Kazakhstan.

Mats Granryd, CEO of Tele2, stated in the company’s report: ‘Our focus for 2014 is clear. The Netherlands and Kazakhstan is building a mobile business for the future, contributing strongly to overall growth. Sweden stands as the role model when it comes to creating a profitable and data centric business model.’ Illustrating this statement, mobile end-user service revenue in Sweden grew by 3% in Q1 2014, driven by increased usage in the post-paid segment, and the Swedish mobile EBITDA contribution in the quarter improved to SEK745 million, an improvement from SEK732 million in 1Q13. Tele2 Netherlands continued to gain market share by adding 47,000 (compared to 57,000 in 1Q13) customers in three months, taking its total base to 741,000, while mobile end-user service revenue in the Netherlands amounted to SEK273 million in the first quarter, up by 39% year-on-year. Tele2 Kazakhstan’s work to improve its commission structure yielded a positive sequential customer intake of 20,000 in January-March 2014 compared to a net loss of 393,000 in October-December 2013. End-user service revenue in Kazakhstan grew by 11% y-o-y to SEK216 million in 1Q14, while thanks to improved operational scale and lower interconnect levels, the Kazakh unit posted positive EBITDA of SEK1 million (compared to EBITDA loss of SEK45 million twelve months earlier), the first quarterly positive EBITDA since its launch.

Tele2 completed the sale of its Swedish residential cable and fibre operations to Telenor (announced in October 2013) for SEK793 million on 2 January 2014 following regulatory approval; Tele2 booked a capital gain from the sale in Q1 2014 of SEK257 million. Meanwhile, Tele2 has initiated a strategic review of Tele2 Norway to explore future options for the unit, following the 4G licence auction in the country in late 2013, in which Tele2 did not obtain any new spectrum.

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