Tele2 boosts dividends after strong Q4 results

Tele2 reported strong growth in fourth-quarter results, led by continued expansion of its mobile activities. The company's sales rose to SEK 10.84 billion from SEK 10.11 billion a year earlier, equal to growth of 8 percent when excluding exchange rate effects. Growth was helped by the takeover of the rest of the Network Norway venture as well as expansion in Kazakhstan and continued strong growth in Russia. Group EBITDA increased to SEK 2.79 billion from SEK 2.49 billion, led by a 38 percent rise in Russia and double-digit growth in the Baltics and Netherlands. The EBITDA margin rose 1 percent point from a year ago to 26 percent. Net profit rose to SEK 1.31 billion from SEK 1.10 billion, and free cash flow increased to SEK 915 million from SEK 614 million. Tele2 increased its dividend 8 percent to SEK 6.50 and said it will also pay an extraordinary dividend of SEK 6.50 per share. 

The operator saw subscriber growth slow to a net 103,000 new customers in the quarter, for a total 34.186 million at year end. Growth in the mobile base slowed particularly in Russia, leading to a total intake of just 346,000. The fixed broadband base fell by 17,000 and fixed telephony customers declined by 226,000. Tele2 said it plans to increase capex in 2012 to around SEK 6 billion, from SEK 5.1 billion last year. That includes SEK 1.3-1.5 billion for Russia, SEK 550-600 million for Kazakhstan and SEK 850-900 million for Norway. 

The company forecast stable to improving EBITDA margins in its main markets this year. It also said it will look at setting up a 4G network to become the fourth player in the Dutch mobile market. While the Dutch spectrum auction is expected later this year, Tele2 already acquired spectrum last year in Sweden, Estonia, Lithuania, Latvia, Kazakhstan and Russia. In the latter market, the operator is awaiting regulatory clearance to launch LTE in the GSM bands.