Tele2 predicted efforts to control costs, revamp its brand and boost network quality would fuel a return to revenue growth during 2020, following a marginal decline on an organic basis during the second quarter.
While headline figures showed a 33 per cent year-on-year rise in revenue to SEK6.7 billion ($714 million), the number was flattered by the inclusion of Com Hem numbers, the cable operator Tele2 acquired in November 2018. Without this, revenue was down 2 per cent due to declines in its domestic market, Sweden.
In its earnings statement, Tele2 President and CEO Anders Nilsson (pictured) noted efforts to integrate Com Hem progressed faster than expected during the quarter, with SEK100 million of cost synergies generated “mainly related to headcount reductions across the Swedish organisation” combined with structural changes to “improve collaboration across the network, IT and commercial departments”.
Tele2 also conducted a rebranding campaign and began heavily promoting FMC services in Sweden as part of a strategy to generate revenue growth by expanding subscriber numbers and lowering prices. Nilsson said it also embarked on an “audit of our mobile and IP core networks” to improve reliability and “find potential improvements in our processes” in the country.
With work to optimise its geographic footprint completed, Nilsson said Tele2 is now well placed to generate “sustainable revenue growth and cash flow generation” from core Baltic Sea markets: Lithuania, Latvia and Estonia. Combined, these markets generated a 6 per cent year-on-year increase in end-user service revenue during the quarter, which was offset by a 2 per cent annual decline in Sweden for a net reduction of 1 per cent.
The operator is taking steps to “ensure that we have the most reliable and cost-efficient networks in the countries where we operate”, Nilsson said, highlighting the establishment of a joint venture with Bite covering Latvia and Lithuania as an example.
Net profit grew from SEK443 million in Q218 to SEK2.1 billion in the recent period, although this figure included an SEK1.6 billion capital gain related to the sale of its business in Kazakhstan less a goodwill impairment of SEK500 million covering its Estonia operation.Subscribe to our daily newsletter Back