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Tele2 to launch 4G and quad-play in December, as expected

Thursday 22 October 2015 | 12:56 CET | Market Commentary
Tele2 Netherlands reported zero net additions at its mobile business in the third quarter, while also announcing the need to invest more in its LTE network. The company attempted to play down the bad news by also announcing that it's bringing forward the launch of its LTE services. However, this is far from 'news'. 

First the good news. The Q3 results show a strong increase in ARPU. Tele2 is shedding its prepaid and low-value customers and gaining more high-value customers, something confirmed by Q3 data from the Telecompaper Consumer Panel. The latter shows Tele2 has been losing market share among customers spending less than EUR 30 per month, while gaining share among those spending more than EUR 30 per month. This is good news for its profitability and in line with its efforts to shed the 'cheap' image. Tele2 is aiming to reduce the costs of mobile data but without being known as a discounter. This means improving quality, something Tele2 hopes to achieve by moving customers to its own network. This will be not just LTE, but LTE-Advanced, offering more capacity by using multiple bands.

And then the less-positive news. Tele2 announced the early launch of its own LTE services as if it was news, but this was largely expected for late 2015. First off, the network was already launched earlier this year for its existing customers. Starting from The Hague area, customers are gradually moving from the T-Mobile MVNO network to Tele2's own network. It's also not about reaching near-national coverage. If anything Tele2 has delayed this milestone, talking now of March 2016 rather than Q1 2016 to complete the roll-out. 

The real news is launching new types of tariff plans based around the 4G services. The operator's MVNO costs to T-Mobile are on the one hand increasing due to higher data usage but on the other hand falling as customers move to its own network. This gives Tele2 room to introduce new tariffs. We assume it will offer lower prices with more data compared to its current offer. Again, this is hardly news and something we have long expected for year-end. New offers in the fixed market can also be expected, with the launch of quad-play, a new market segment where KPN, Ziggo and more recently Vodafone are already active. 

Overall, there was little to call good in Tele2's news. Nevertheless, the launch of new subscriptions in December, both for fixed and mobile as well as quad-play, will be highly anticipated by the market. 



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