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Tele2 shares jump following Q2 results

The Local · 26 Jul 2005, 14:44

Published: 26 Jul 2005 14:44 GMT+02:00

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Tele2 AB reported a second quarter EBITDA of 1.689 billion kronor, firmly ahead of SME's average market expectations of 1.443 billion, supported by strong sales growth in Russia and central Europe, and an improved profitability at its Swedish mobile division, Comviq.

Sven Sköld at Hagströmer & Qviberg said the market is particularly heartened by the Q2 EBITDA of 797 million skr at Comviq, up from 737 million a year earlier. Comviq also made a EBITDA margin of 45%. The division has previously been labouring under the effects of a prolonged price war in the Swedish mobile market.

"What's driving the share price today is good results from Comviq and from the Baltics and Russia. Comviq is generating most of the cash in the group so its improved performance is really good news," said Sköld.

Total group sales increased 12% year on year to 12.043 billion, with sales increasing in the Baltics and Russia by 23%.

Customer intake for the second quarter was 722,000, below the consensus of 950,000 but dealers said there was some good news as group churn decreased as a percentage of sales.

Sköld said he is not concerned by the fall in overall customer intake as Tele2's report shows it increased intake among the high ARPU (average revenue per user) mobile telephony and ADSL customers.

"To me the important thing is what type of customers they have taken in. Dial up customers have an extremely low ARPU," said Sköld.

Dealers were also positive about the report.

"After six consecutive quarters of disappointment, Tele2 delivered results which will receive a positive reaction," said a dealer at a Swedish brokerage.

"The double message of stabilised operations and a refocused strategy should be clearly positive and should see shares rise 4-5%."

Sköld agreed. He said some of the company's intake problems were down to the Benelux and France but that Tele2 is tackling this with a strategy which includes a mixture of third party agreements and acquisitions.

Story continues below…

"They have sat down and thought about it and come up with a strategy for each market. So they are doing something about their problem markets," he said.


The Local (news@thelocal.se)

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