Tele2 ups cost cutting target from fixed buy - Mobile World Live

Tele2 ups cost cutting target from fixed buy

13 FEB 2019

Tele2 drastically increased its cost reduction goal and slashed the timescale for savings related to absorbing newly acquired fixed business Com Hem into its core operation.

In CEO Anders Nilsson’s (pictured) first financial results call since taking charge of the operator in November, covering Q4 2018, he updated the amount Tele2 aims to shed from annual costs to SEK1.35 billion ($147 million), with SEK900 million of that total to be delivered within three years.

When it announced its acquisition of Com Hem, Tele2 had targeted annual synergy savings of SEK900 million, with half to be achieved in the first five years.

The cost of integration is expected to reach SEK1 billion in the first three years, SEK400 million than first expected.

Nilsson said once the integration process started, the company identified additional savings with the potential opportunity to make further structural changes “further down the line” in areas including IT, network and brand.

“This next step is more transformational and would turn Tele2 into what it needs to be in the future, a truly integrated fixed-mobile convergence challenger.”

Strategy
In addition to deeper cuts, on an earnings call Nilsson announced the company was set to launch a Com Hem mobile brand, as this was the “quickest way” to cross-sell mobile into its new fixed base rather than selling-in Tele2.

Under its new management the operator will also change its strategy in the business segment in its home market of Sweden. Here, it aims to improve market share and revenue by focusing on “volumes rather than price”.

During Q4, Tele2 recorded a net loss of SEK339 million compared with a profit of SEK461 million in the same period of 2017.

The decline, it said, was due to the impact of deferred tax payments. In Q4 2018 it booked income tax charges across its international operations of SEK1.18 billion compared with SEK165 million in the same period of 2017.

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Chris Donkin

Chris joined the Mobile World Live team in November 2016 having previously worked at a number of UK media outlets including Trinity Mirror, The Press Association and UK telecoms publication Mobile News. After spending 10 years in journalism, he moved...

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